Musings From Abroad

Rwanda, Singapore’s GenZero to collaborate on carbon offset initiatives

Published

3 months ago

September 21, 2024

Singapore’s low-carbon, state-backed investment business, GenZero, has announced that it will work with Rwanda to generate carbon credits to offset emissions.

Australia and Britain have rejected offsets for meeting net zero commitments, while Singapore relies on them due to limited area for large-scale renewable projects.

The deal between GenZero, Rwanda Green Fund, and Gold Standard promotes project integrity under Article 6 of the Paris Agreement on climate change. The clause allows countries to satisfy climate targets by investing in low-carbon projects in other nations through bilateral agreements or a future U.N. trading regime.

“We will review potential projects with the Rwandan Green Fund and the Rwanda Environment Management Authority over the coming months, to determine their eligibility and suitability to be included in the collaboration,” Frederick Teo, chief executive of GenZero, an arm of the state investment fund Temasek, said.

“Projects can be nature-based solutions such as nature restoration, or technology-based solutions such as improved waste management.”

While Article 6 negotiations continue, Singapore has inked memoranda of understanding with Laos and the Philippines and legally binding “implementation agreements” with Ghana and Papua New Guinea.

Ravi Menon, Singapore’s Ambassador for Climate Action, told a conference last week that Bhutan, Paraguay, and Vietnam pacts have been reached.

Article 6 credits can offset up to 5% of taxable carbon emissions for Singapore enterprises.

While Article 6 negotiations are still in progress, Singapore has legally binding “implementation agreements” with Ghana and Papua New Guinea, as well as memoranda of understanding with Laos and the Philippines.

Additionally, agreements with Bhutan, Paraguay, and Vietnam have been finalised through negotiations, as stated in a presentation last week by Singapore’s Ambassador for Climate Action, Ravi Menon. Singaporean businesses can purchase credits through Article 6 transactions to offset up to 5% of their taxable carbon emissions.

Following the breakdown of negotiations on a final text in Dubai last year, Article 6 will be a top concern during the COP29 climate conference in Azerbaijan in November.

The functioning of the United Nations-run carbon market has proven difficult for the parties to agree upon, and some are concerned that bilateral accords may influence national sovereignty.

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Musings From Abroad

World Bank doubts Ethiopia-IMF debt assessment

Published

1 day ago

December 24, 2024

Ifeoluwa Dada

Some officials of the World Bank have questioned if the study supporting Ethiopia’s debt restructuring may be “faulty” after criticising an evaluation of the country’s finances done with the International Monetary Fund (IMF).

World Bank consultant, Brian Pinto, and its head economist, Indermit Gill, evaluated the July Debt Sustainability Analysis (DSA), which was created by the IMF and employees of the International Development Association (IDA), the World Bank’s fund for the world’s poorest countries, in an internal document seen by Reuters.

According to the authors, Ethiopia is experiencing a short-term cash shortage rather than a long-term solvency problem, which is a source of conflict between the government and holders of its $1 billion international bond that is in default, based on the DSA.

“We found that the bondholders have interpreted the DSA correctly, but the DSA itself may be faulty,” Pinto and Gill wrote in the paper from earlier this month. “The disagreements about Ethiopia’s debt sustainability will be repeated as other countries become debt distressed.”

A World Bank representative responded to a question regarding the paper by saying, “We generally don’t comment on internal deliberations between the World Bank and the IMF or any of our partner institutions.”

As part of the most recent review of the Fund’s loan program, Ethiopian State Finance Minister Eyob Tekalign told Reuters that the DSA had just been reviewed by IMF and World Bank teams and that the status had not changed significantly.

Without providing further details, an IMF representative acknowledged that its officials travelled to Ethiopia in November for the second review of the Fund’s loan program and added that every review incorporates an update to the DSA. Regarding the memo, the spokeswoman remained silent.

A request for comment from Pinto and Gill was not answered. There has been a tense confrontation between Ethiopian officials and bondholders.

The main point of contention is whether, as bondholders contend, Ethiopia is experiencing a liquidity shortage that may be resolved by rescheduling debt or if it is experiencing longer-term financial issues that necessitate haircuts, or debt write-downs.

According to the DSA, certain statistics on exports indicated pressures on both liquidity and solvency.

It was reported in October that the DSA indicated a solvency problem and that writedowns were inevitable. Investors have criticised a government proposal that suggests an 18% haircut in addition to rejecting the evaluation.

Musings From Abroad

Swiss company Mercuria partners Zambia’s IDC in new metals trading firm

Published

4 days ago

December 21, 2024

Ifeoluwa Dada

According to a statement released by Swiss commodities trader, Mercuria, on Thursday, it has established a metals trading arm with Zambia, the second-largest producer of copper in Africa.

The trading unit is jointly owned by Mercuria and an arm of Zambia’s Industrial Development Company (IDC), and its purpose is to allow Zambia to engage directly in the minerals trading market.

The joint venture “envisages the establishment of a vehicle to market and trade Zambian copper by mutual leverage,” according to a statement from Cornwell Muleya, the CEO of IDC.

The southern African nation wants to increase copper output to roughly 3 million metric tonnes within the next ten years, and in 2023, it produced roughly 698,000 tonnes of copper, down from 763,000 metric tonnes the year before.

In June, the Zambian government announced that it would establish a minerals trading unit.

Investors including First Quantum Minerals and Barrick Gold are ramping up production, with output set to receive a further boost once Vedanta Resources’ Konkola Copper Mines restart activity.

“Our joint venture with IDC marks a significant milestone for Zambia as it positions itself more strategically in the global minerals market,” Kostas Bintas, Mercuria’s global head of metals and minerals, said in the statement.