The SA Land Bank launched the Agro Energy Fund (“AEF”) in partnership with the Agriculture department (DALRRD).
Summarised below are the main features of the program. (The official brochure is available on the Land Bank website).
- It is a blended finance program, in other words, part grant and part loan. You cannot have the grant without the loan.
- The program is specifically aimed at providing funding support for the acquisition of alternativeenergy assets and its required infrastructure, for farming operations and the agricultural sector. So, typical systems supported would be solar, wind, biogas, biomass and anaerobic digestors.
- The AEF is available for on-farm energy intensive production in primary and secondary agricultural activities. These would include activities such as irrigation, dairy, piggeries, poultry, and cold chain related activities. Off-farm processes are not eligible for this support.
- Upon enquiry, the Land Bank confirmed that the program has no BEE requirements.
- Smallholder producers receive a 70% grant, maximum R500,000, with the remaining 30% being a commercial loan. So, their maximum package would be R715,000. Medium-scale producers receive a 50% grant, maximum R1 million, so their maximum package would be R2 million. Large-scale producers receive a 30% grant, maximum R1,5 million, so their maximum package would be R5 million.
- Small-scale would be those with gross income not exceeding R1 million p.a. and medium-scale would be those with gross income not exceeding R10 million p.a. In the case of the AEF, it appears there is no cut-off for large-scale farmers, so it would be anyone larger than medium-scale. In fact, the AEF also lists mega Commercial producers as eligible for support.
- The AEF is available through Land Bank only. Submit a complete loan application, as would normally be required for a finance application at the Land Bank. Compliance with Land Bank’s typical financing criteria would be required. The usual Land Bank interest rates will be charged on the loan portion. The repayment period would be medium term, maximum 10 years.
- The Land Bank has limited loan funds available for this program. If the package on offer is not sufficient for purposes of your project, you may add funds from other sources.
- Registered entities may apply, as well as Individuals, provided they are South African and do not hold dual citizenship. Politicians in public office are disqualified until 12 months after leaving office. Politically exposed persons and Government employees are also disqualified. Applicants must be full time farmers. Only one application per entity.
- Applications must include a formal quotation by an accredited supplier/installer. Quotations should include lifespan specifications, warranties and after care service plans. Applications should also include a report by an energy expert regarding your energy requirements and significant energy uses of the farm. Furthermore, for existing operations, historical energy consumption records must be submitted, which may be in the form of municipal bills for the last three months. All other legal and statutory requirements need to be met, obviously.
- The program is already open for applications. Processing of an application is expected to take between 2 and 6 months, depending on the intricacies of each case. The available fund is R1,2 billion p.a. of which R500 million is for grants and R700 million for loans.
- No program termination date was announced, which means the application window is open until further notice.
This article was placed with permission from DECTRA – PROJECT FINANCE AND GRANT SPECIALISTS. You can call them at 021 939 7496, or write to Theo@dectra.co.za