Nachtigal: Development finance as it should be
As more governments look to mimic Chinese-style development finance offerings, the recently signed Nachtigal hydro project financing is a perfect example of why they shouldn't.
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Henri d'Ambrieres, HDA Conseil 12 December 2018
Do you really mean that the right solution for Development Finance should be the exclusion of ECA debt ? While financial needs linked to Development Finance are increasing, it might be wise to check how commercial banks supported by ECAs could finance more Development projects and what should be done to attract more players, instead of excluding some of them ! You are right when you mention that a financial offer should not be a tool to impose later on a commercial contract, as Chinese sometimes do. But Nachtigal was not managed that way. The commercial contracts to Bexis, NGE, GE,…were awarded after tenders. This project might have been then partially financed by an Export Credit. The presence of an ECA does not mean no competition ! Hence, DFIs might have reduced their involvement in Nachtigal and supported another project which could not be financed by commercial banks supported by ECAs…. Does this mean that ENEO would not have restructured its debt ? No, as the IBRD and the IFC would have probably asked for it in order to confirm their commitments ! And maybe an ECA participating in the OECD Arrangement would have asked for it too ! What do we do to promote Development projects, combining the resources of DFIs, ECAs and commercial banks to finance more of them ? Henri d'Ambrieres