To scale up clean energy production capacity in Gabon, IFC, the Government of Gabon, Meridiam Infrastructure Africa Fund FIPS (MIAF), Meridiam Infrastructure Africa Parallel Fund FIPS (MIAPF) and the Fonds Gabonais d'Investissements Strategiques (FGIS), with the support of the Government of Canada, today announced a financing package for the Kinguele Aval hydropower plant, the first Independent Power Producer (IPP) in Gabon.
The 35 MW hydropower plant, sponsored by Meridiam and FGIS, will bring low-cost, clean power generation capacity to Gabon's capital Libreville. IFC expects the project to generate 203 GWh of electricity, amounting to approximately 13 percent of the Estuaire's Province (or nine percent of the country's) current total output, enough to serve 32,000 customers and saving more than 90,000 tons of CO2 emissions per year.
"The Kinguele Aval hydropower plant is a landmark project for Gabon that has benefited from an array of complementary services and instruments from the World Bank Group. By adding electricity supply that meets Gabon's growing demand, the Kinguele Aval hydropower plant will increase economic productivity in Gabon and create hundreds of jobs to spur a green, inclusive and resilient growth," said Sylvain Kakou, IFC's Country Manager for Central Africa.
Gabon has suffered from underinvestment in the power sector, especially in generation. The Kinguele Aval hydropower plant underscores Gabon's efforts in energy transition by displacing expensive & polluting thermal power and demonstrating a commercially viable and sustainable way of developing the country's under-exploited hydro potential.
The total project cost is estimated at EUR 178 million. To support the project, IFC is lending up to EUR 33 million from its own account and providing a concessional senior loan of up to US$25 million (or up to EUR 20 million) from the Canada-IFC Renewable Energy Program for Africa.
IFC has also mobilized an additional EUR 98 million financing through the African Development Bank (AfDB), Emerging Africa Infrastructure Fund (EAIF) and the Development Bank of Southern Africa (DBSA). In addition, IFC's sister organization, the Multilateral Investment Guarantee Agency (MIGA), is expected to provide guarantees in favor of Meridiam. IFC will also provide interest rate and cross currency swaps required for the financing.
IFC will work extensively with all stakeholders and support project implementation in alignment with IFC's environmental and social standards. This includes a multi-party agreement involving the Government of Gabon, The Nature Conservancy (TNC) and IFC for the consolidation of a management strategy to guide any further development of hydropower in the Mbé-Komo River system in a way that safeguards ecosystem services and biodiversity.
IFC's participation in the Kinguele Aval hydropower plant is well aligned with the World Bank Group's new Climate Change Action Plan (CCAP) that aims to mobilize private sector solutions to help emerging and developing countries foster clean energy investments and generate non-oil revenue to contribute to economic diversification.
The construction of Kinguele Aval hydropower plant is expected to start in the third quarter of 2021 and will be completed in 40 months.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
About the Canada-IFC Renewable Energy Program for Africa
The Canada-IFC Renewable Energy Program for Africa promotes private sector financing for renewable energy projects in Sub-Saharan Africa as a means to improve access to affordable and sustainable energy services that can play an important role in reducing poverty, reducing gender inequality, and tackling climate change. Canada has committed $150 million Canadian dollars to this climate program to structure blended finance solutions that enable high-impact energy projects in Sub-Saharan Africa. The program is part of Canada's support for the Africa Renewable Energy Initiative: http://www.arei.org/.