Public Sector Lending

PublicSector 2016

Activities in 2016

With US$412.4m in new financing, the energy sector attracted close to one-third of aggregate commitments in 2016. The sum is almost double that approved in 2015 and will directly benefit 21 countries. More than half the total (US$233.3m) was approved through the private sector window for operations focusing chiefly on the construction of photovoltaic, hydropower, thermal or heavy fuel oil power plants. The beneficiary countries are: Bangladesh (US$12.6m), Côte d’Ivoire (US$26.4m), Egypt (six loans totaling US$98.5m), Jamaica (US$20m), Jordan ($40m), Mali (US$15.8m), and Uganda ($20m). In the area of trade financing, around US$99.3m was delivered for the import of petroleum products under a scheme run by the ITFC in Cameroon (US$24.3m), Egypt (US$50m), and Pakistan (US$25m).

The public sector attracted an aggregate US$77.6m for projects:

  • Burkina Faso. US$13m. Zano-Koupela Transmission Line
  • Cameroon. US$13m. Rural Electrification
  • Paraguay. US$32m. Metropolitan Area Electricity Transmission and Distribution System Improvement
  • Pakistan. US$19.6m. Golan Gol Hydropower

Resources provided through OFID’s grant program totaled US$2.3m and will support a diverse range of small-scale renewable energy schemes as well as knowledge development and exchange.

OFID maintained its advocacy efforts throughout 2016, working both independently and with other lead actors to move forward the energy poverty agenda. A key achievement was the launch in March of the OFID- and WPC-led Oil and Gas Industry Energy Access Platform. The EAP will serve as a framework for the industry to harness its vast pool of expertise, technologies and capital, and collaborate with other stakeholders in support of universal energy access. In July, eight parties signed up to the EAP Charter.

Among the high-level events utilized as advocacy platforms in 2016 was October’s World Energy Congress, where OFID Director-General Al-Herbish highlighted the important role of DFIs in building bridges to the private sector. “As DFIs, our role is to help developing countries recognize the risks and barriers that deter private sector investment [in renewable energies] and help them gain investor confidence,” he stated. Other events attended included the COP22 climate change conference and Oxford Energy Seminar, as well as meetings of the Arab Energy Club and the Vienna Energy Club.

Accounting for almost two-thirds of total, cumulative commitments, Public Sector Lending represents the main pillar of OFID’s operations. Through this window, and as of December 31, 2016, an aggregate US$13,069m had been approved in 1,517 concessional loans to 106 developing countries. In line with OFID’s founding mandate, the lion’s share of these resources has gone to the low-income nations, which continue to receive priority attention, even as the institution has broadened its scope to include more middle-income partners.

All public sector operations are co-financed with the recipient government and frequently with other donors, including the regional development banks, the specialized agencies of the UN, and, in particular, the bilateral and multilateral development agencies of OPEC Member States. In keeping with the principles of the Global Partnership for Effective Development Cooperation, OFID harmonizes its activities with sister and other organizations in order to streamline joint efforts and maximize results. In the interests of sustainability, both capacity building and institution strengthening are integral components of all OFID public sector operations. The projects themselves are demand-driven, based on the strategic priorities of the partner countries. On a cumulative basis, the energy-water-food-nexus—supported by the transportation sector—had attracted 78% of all public sector lending as of end-2016.

Also included under the umbrella of the public sector is OFID’s contribution to the Heavily Indebted Poor Countries (HIPC) Initiative. OFID has supported the Initiative since its inception in 1996, utilizing several mechanisms to provide its relevant share of debt relief to 26 HIPC countries. These include loans worth US$281m that were made available to ease the debt burden of these countries, together with debt restructuring operations.

Activities in 2016

Public Sector Lending accounted for 47% of total commitments in 2016, attracting a total US$615.4m toward 27 projects in 23 countries. With substantial amounts going to the Maldives (US$50m) and Vietnam (US$45m) for transportation projects and to Pakistan (US$50m) for a rehabilitation and reconstruction program, Asia received the largest share, securing US$246.4m (40%) of committed resources. The Africa region received US$179.6m (29.2%), followed by LAC with US$136.7m (22.2%), and Europe with US$52.8m (8.6%).

In keeping with established practice, the sectoral distribution of commitments reflected the priorities of the concerned countries, with almost one-half (49.5%) of the resources going to the transportation sector. Agriculture and energy projects also drew considerable funds, attracting US$106m and US$77.6m, respectively. The remainder was divided among the following sectors: multisectoral (9.4%), education (4.9%), health (4.3%), and water and sanitation (2.1%).