In the energy sector, ATIDI provides Political Risk or Investment Insurance to Independent Power Projects (IPPs) and/ or Independent Transmission Companies. Such insurance, which can be for the benefit of lenders and/or equity holders, can cover the following risk perils:
- Confiscation, Expropriation, Nationalization, and Deprivation (CEND);
- Currency Inconvertibility/ Transfer Restrictions;
- War and Civil Disturbance;
- Arbitral Award Default or Breach of Contract; and
- Embargo
ATIDI’s ability to provide such political risk insurance cover is subject to the following:
- The power plant or transmission line must be located in an ATIDI member country;
- For grid-connected generation projects, the IPP must enter into contractual agreements with the state-owned power utility (such as a Power Purchase Agreement) and the host-government. The latter may take the form of an Implementation Agreement, Government Guarantee, Concession Agreement, or Letter of Support/ Comfort, depending on the country’s specific requirements;
- Satisfactory due diligence by ATIDI including an acceptable country and sector assessment;
- Risk retention by the potential insured (typically a minimum of 10%); and
- Receipt of a No-Objection from the host government prior to policy issuance
Projects Supported
Some of the projects that have benefited from ATIDI’s PRI cover include the following: