ADFD funding

ADFD provides sovereign funding to governments of developing countries in the form of concessionary loans to support their development priorities and assist in achieving sustainable economic development.

If the applicant is a government entity not involved in the international borrowing affairs of the country (e.g., Ministry of Energy), a letter of intent from the government entity that deals with the international borrowing affairs (e.g., Ministry of Finance or International Cooperation) is required by ADFD. The letter of intent should indicate that the project is consistent with government development priorities and that the government supports the project. A template of the Guarantee Letter can be viewed/downloaded here.

If the applicant is a private or semi-governmental agency, ADFD requires that applications be supported by a government guarantee letter issued by the ministry or the authority that deals with international cooperation and funding. ADFD can enter into a loan agreement with a private or semi-governmental agency only if a loan guarantee agreement is signed between ADFD and the government (represented by the ministry that deals with the international borrowing affairs, e.g. Ministry of Finance, Ministry of International Cooperation). A template of the Guarantee Letter can be viewed/downloaded here.

Note that there is now a Note Verbale that can be used to inform the respective government entities involved in the international borrowing affairs of countries about the IRENA/ADFD Project Facility and the ADFD requirement for a government guarantee.

ADFD funding details are as follows:
  • The total amount of concessional loans committed per annual project selection cycle shall not exceed USD 50 million unless there is a rollover from the previous cycle if there is a shortfall of projects selected for funding.
  • The concessional loan value for project(s) will range between USD 5 million and USD 15 million.
  • The loan amount for each project shall not exceed 50 percent of the estimated project cost.
  • LOAN RATES: Please refer to the eligibility list to view your country’s category:
    Category Loan rate Loan period
    Least developed countries and other low-income countries 1% 20 years including a 5-year grace period
    Lower middle-income and Upper middle-income countries 2%
  • The project must demonstrate economic feasibility.
  • Loans are intended to cover as many recipients and regions as possible per application cycle. There are no limits to the number of project proposals presented by each country, but applicant governments are advised to prioritise their proposals.

ADFD loan agreement terms and conditions:

  • The final terms and conditions of the loan will be set by ADFD. There will be a bilateral engagement between the ADFD and the project proponent after final selection.
  • As soon as the preliminary approval loan offer is made by ADFD, a letter of consent to the loan terms and conditions needs to be sent by the government.
  • An onsite appraisal will be arranged in consultation with the beneficiary (the ministry/government authority/organisation that has submitted the project).
  • A loan agreement will be signed with the Ministry that deals with the international borrowing of the country if the beneficiary is a government entity.
  • A loan guarantee agreement will be signed with the government in line with signing the loan agreement with the borrower, if the borrower is a semi-governmental or private entity.
  • If a project is selected for ADFD funding, the loan and guarantee agreements should be signed within a maximum period of two years from the date of the official notification by ADFD.
  • The loan agreement including all works and services shall be free from any taxes, fees and dues of any nature under any laws in force in the country.
  • Ratification of the loan agreement is in accordance with borrowing country law.
  • A qualified and experienced Project Implementation Unit (PIU) would need to be identified and established by the beneficiary (e.g. Ministry/Authority) behind the project to be responsible for the overall administration of the execution of the project and will be subject to the approval of ADFD.
  • Project implementation shall be in accordance with the tendering and procurement procedures of ADFD. Technology providers can only be awarded contracts after the project is selected and a loan agreement has been pursued with ADFD. ADFD oversees these procedures to ensure transparency of the tendering and delivery process.
  • Tendering, procurement and the establishment of the PIU can start in parallel with the process of signing the loan agreement. However, disbursement of funds will not commence until the loan agreement has been declared effective.
  • Disbursement shall be made directly to the services provider depending on the financing percentage. ADFD does not finance more than 50% of the total project costs.
  • The borrower shall take appropriate measures to acquire the ownership of land or rights over it and ensure it is free of any encumbrances according to the requirements of the execution of the Project. The borrower shall provide access to the site for the engineering consultant and the contractor, suppliers etc. for execution purposes.

For project applicants exploring co-funding and/or funding of feasibility studies, contact and/or:

Joao Cunha
Coordinator (Sustainable Energy Fund for Africa – SEFA)
African Development Bank

Chingiz Orujov
Senior Energy Economist
Islamic Development Bank

Marcel Alers
Head, Energy, Infrastructure, Transport and Technology
UNDP – Global Environment Facility

For project applicants with projects less than USD 10 million in total project costs, contact and/or:

Impact Investment Exchange

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© 2016 IRENA