HONIARA, December 6, 2018: The World
Bank Group has today welcomed the signing of a series of key agreements
which will help deliver cheaper and more reliable, renewable energy to
Solomon Islands through the Tina River Hydropower Project.
People in Solomon Islands pay among the highest
prices in the world for electricity, placing huge strains on families and
businesses. The Tina River Hydropower Project aims to increase the amount
of renewable energy in the Honiara national grid by nearly 70 percent while
reducing reliance on expensive diesel power. The project will also pave
the way for the country to exceed its 2025 greenhouse gas emissions reduction
target by two and a half times.
The five agreements signed today are the culmination
of over 10 years of preparatory work and three years of negotiations between
the Solomon Islands Government, including the state-owned power utility
Solomon Power and the private developers of the project, Korea Water Resources
Corporation (K-water) and Hyundai Engineering Corporation (HEC). The International
Finance Corporation (IFC), a member of the World Bank Group, is transaction
adviser to the government of Solomon Islands.
Tina River Hydropower Development Project
is Solomon Island’s first large-scale infrastructure project to be developed
as a public-private partnership in Solomon Islands and was designed to
help lower electricity prices for consumers.
Since it was first considered by the Solomon
Islands Government in 2006, the World Bank Group has supported the Tina
River Hydropower Project, including through IFC’s transaction advisory
support during project preparation and commercial negotiations. The Multilateral
Investment Guarantee Agency, also a member of the World Bank Group, is
expected to provide equity political risk insurance cover to the sponsors.
“Today’s signing represents the culmination
of considerable work by many parties who have supported the Solomon Islands
Government in preparing this significant project”, said Solomon
Islands Minister for Finance and Treasury, the Hon. Manasseh Sogavare.
“This is an important day in the history of renewable energy in the
country and we look forward to the economic and social benefits Tina River
Hydropower Project will bring to the people of Solomon Islands.”
“Since this project was first proposed,
all parties have remained focused on delivering cheaper and more reliable
power to Solomon Islanders through renewable energy,” said Guido
Rurangwa, the World Bank’s Country Representative in Solomon Islands.
“We congratulate the Solomon Islands Government and Solomon Power on
reaching this important milestone that will ultimately improve the lives
of thousands of Solomon Islands families, businesses and the country as
“This project will lead to a shift from
nearly 100 percent diesel to majority renewable energy for the people of
Solomon Islands,” said Milissa Day, IFC’s Representative for Solomon
Islands. “This dramatic transition from diesel to renewable
energy and from public to private investment shows what is possible for
small island nations seeking lower energy costs and with a commitment to
renewable energy, which is vital for this region as it adapts to the challenges
of climate change.”
The agreements signed today include the Power
Purchase Agreement between Solomon Power and Tina Hydropower Limited, a
partnership between K-water and HEC, and the Government Guarantee Agreement
and Implementation Agreement between the Solomon Islands Government and
Tina Hydropower Limited.
Agreements were also signed between the Solomon
Islands Government and the World Bank for US$33.6 million in support to
the project from the International Development Association, the World Bank’s
fund for the world’s most in need countries. The Australian Government
is providing an additional US$12.7 million in project funding as part of
the Australia Pacific Islands Partnership (APIP). Australia will support
the construction of the access road to the project site and technical assistance
for the Solomon Islands Government to manage project implementation. Over
the past 10 years, the Australian Government has provided AU$10 million
to support project preparations through the APIP and Pacific Regional Infrastructure
Facility Trust Funds. Other financing sources that supported the project
preparation include the Global Infrastructure Facility and the Energy Sector
Management Assistance Program.
In addition to the World Bank Group and Australian
Government, financial support has been confirmed by the Abu Dhabi Fund
for Development/International Renewable Energy Agency, the Green Climate
Fund, and the Economic Development Cooperation Fund of Korea.
IFC’s work in Solomon Islands is guided by
the Pacific Partnership. Australia, New Zealand, and IFC are working together
through the Pacific Partnership to stimulate private sector investment
and reduce poverty in the Pacific. The project also received invaluable
support from DevCo, a multi-donor facility affiliated with the Private
Infrastructure Development Group (PIDG), with funding from the Netherlands