A group of financial institutions led by the IFC, the World Bank’s private sector arm, have agreed to provide debt financing totalling around €151 million towards the project’s total estimated cost of €178 million, according to agreements signed by the parties on 2 July. To support the project, IFC is lending up to €33 million from its own account, and providing a concessional senior loan of up to US$25 million (or up to €20 million) from the Canada-IFC Renewable Energy Program for Africa. The IFC has also mobilized an additional €98 million financing through the African Development Bank, Emerging Africa Infrastructure Fund and the Development Bank of Southern Africa. In addition, IFC’s sister organization, the Multilateral Investment Guarantee Agency, is expected to provide guarantees in favour of Meridiam. IFC will also provide interest rate and cross currency swaps required for the financing. The French international law company Gide Loyrette Nouel advised the developers. Blakes of Canada advised the Government, and Allen Overy LLP advised the financiers.
The construction of Kinguélé Aval is expected to begin in the third quarter of 2021, and be completed in 40 months. The run-of-river project, which will be 100 km east of the capital Libreville, is being developed by Asonha Energie, a project company owned 60 per cent by Meridiam and 40 per cent by GPC, under a 30-year concession signed with the Government of Gabon in October 2019. China’s state-owned contractor Sinohydro will build the project on behalf of Asonha Energie under an EPC contract signed in October 2020 (see also H&D Issue 6, 2020). The new facility, which is being developed downstream of the existing 58 MW Kinguélé Amont and 69 MW Tchimbélé plants, to optimize the hydropower potential of the Mbei river, when complete in late 2024, will generate around 205 GWh/year for the national grid, equivalent to about 13 per cent of the electricity needs of the network serving Libreville and its environs. Its entire output will be sold to the national utility Société d’Énergie et d’Eau du Gabon under a 30-year PPA. In addition to supplying low-cost energy to help meet growing demand in Libreville and stabilizing the grid, the project will save more than 150 000 tonne/year of CO2 emissions, equating to around 3 per cent of Gabon’s annual emissions based on 2016 figures from the World Bank. The public private partnership project will also help promote social and economic development in the region. Meridiam has announced that the purchase of construction equipment and materials from Gabonese companies would be favoured, thus supporting the diversification, development and economic recovery of the country. During the construction period, 800 jobs will be created on site. Later, during the operation phase, 20 Gabonese professionals will be responsible for running the plant.
It will also benefit the electrification of rural areas such as Andock Foula, contributing to social inclusion in Gabon. “The Kinguélé Aval hydro plant is a landmark project for Gabon. By adding electricity supply that meets Gabon’s growing demand, the project 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. Kinguélé Aval underscores Gabon’s efforts to displace expensive and polluting thermal power and demonstrate a commercially viable and sustainable way of developing the country’s under-exploited hydro potential.
The project has been the subject of detailed preliminary studies, to mitigate its environmental and social impact, according to Meridiam. Asonha Energie has developed an action plan designed to generate biodiversity net gains, based on the ‘avoid-reduce-restore-compensate’ method. This plan is carried out in close collaboration with the National Agency for the Protection of Nature (ANPN) and the Ministry of Water, Forests, Sea and Environment. The IFC announced that it would work extensively with all stakeholders and support project implementation in alignment with IFC’s environmental and social standards. This includes a multi-party agreement with the Government of Gabon and The Nature Conservancy 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.