Korea Water Resources Corporation (K-water) and Hyundai Engineering Corporation (HEC) have signed agreements to develop the Tina River Hydropower Project in Solomon Islands, the country's first large-scale infrastructure project to be developed as a public-private partnership (PPP).
The agreements signed include the Power Purchase Agreement (PPA) between state-owned power utility 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. 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.
These agreements are the culmination of over 10 years of preparatory work and three years of negotiations between the Solomon Islands Government, K-water and HEC. The International Finance Corporation (IFC), a member of the World Bank Group, is transaction adviser to the Solomon Islands Government.
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.
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 Solomon Islands to exceed its 2025 greenhouse gas emissions reduction target by two and a half times.