Alternative and renewable energy business Renergen has today signed a $40m loan agreement with the US Government’s development finance institution.
The Overseas Private Investment Corporation (OPIC) helps American businesses invest in emerging markets.
The agreement with OPIC marks a significant milestone for Renergen as it provides access to the capital required to construct the first phase of the Virginia Gas Project in South Africa.
Renergen said the loan is also a major endorsement of the Virginia Gas Project by the US Government, and the increasing importance of securing helium with significant supply shortages forecasted.
Commenting on the agreement, Renergen CEO, Stefano Marani said, “Today’s announcement is special on multiple fronts, not only does the agreement provide access to an efficient source of capital to progress the Virginia Gas Project towards production, but it is also a huge endorsement by the US Government through the OPIC of both the project and the significant importance of securing helium supply.”
“We are extremely proud to be working with the OPIC as our financial partners and we look forward to developing the Project together as we ascertain the full extent of the amount of helium that could be produced during a time of severe supply constraint.”
“As our track record has demonstrated over the last two years, we remain focused on our philosophy of setting achievable milestones and delivering on our commitments, as the Company develops the Virginia Gas Project.”
Renergen first announced the OPIC’s intention to finance the Virginia Gas Project in February 2019, prior to the company’s listing on the Australian Stock Exchange.
The commitment was subject to execution of a final binding agreement between the parties by no later than the end of September 2019.
Having executed the final binding agreement, Renergen said it will receive the first disbursement from the loan in the coming days.
The loan has a 12-year term, with a grace period before principle is due of just less than three years, taking into consideration the construction and commissioning time.
“OPIC is pleased to partner with Renergen and provide financing to support private sector-led economic development in South Africa, expand trade and commercial ties between the US and Africa, and ultimately increase the global supply of helium,” said OPIC Vice-President for Structured Finance Tracey Webb.
The signing of the loan agreement follows the announcement of the appointment of EPCM Holdings subsidiary EPCM Bonisana as the engineering, procurement and construction (EPC) contractor to commence construction of the Virginia Gas Project.
Renergen said the collective completion of these agreements provides a greater degree of certainty on the commencement of revenue from the project, which is now anticipated in the first half of 2021.
Renergen will now focus on commencement of construction activities, whilst finalising parameters around the drilling targets. Updates will follow in due course.
Last week gasworld caught up with Renergen CEO Stefano Marani to learn more about the Virginia Gas Project, how significant this will be for helium and what the next step forward for the project will be.
Read the exclusive interview here.