The 20-year guarantees, totalling €25.3 million (approximately US$ 28.7 million), provide protection from breach of contract, expropriation, transfer restriction and currency inconvertibility, and war and civil disturbance, the World Bank’s political risk insurance arm announced on 15 March.
The project, on the Mbei river in northwestern Gabon, which is being undertaken under a 30-year concession on a Build, Operate and Transfer (BOT) basis by Asonha Energie, is Gabon’s first IPP project. The project company is 60 per cent owned by Meridiam. The Fonds Gabonais d’Investissements Stratégiques (FGIS), Gabon’s sovereign wealth fund, owns 40 per cent through its wholly owned subsidiary Gabon Power Company.
Financing for the €179 million (US$ 196.6 million) project was closed in July 2021 (see H&D Issue 4, 2021). A group of financial institutions led by the International Finance Corporation (IFC), the World Bank’s private sector arm, agreed to provide debt financing totalling around €151 million. 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 (EAIF) and the Development Bank of Southern Africa (DBSA).
The run-of-river project, located 100 km east of the capital Libreville, will be built by China’s state-owned contractor Sinohydro under an EPC contract signed in October 2020 (see 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, is designed, to generate net annual output of 205 GWh for the national grid, equivalent to about 13 per cent of the electricity needs of the network serving Libreville and its environs. It is scheduled for completion in 2024.
Gabon has a comparatively high national electrification rate of 93 per cent, with about 374 000 customers supplied by its five regional interconnected networks. However, the country’s power generation capacity is under strain as a result of the growing population, increased urbanization and industrial development. Historically, electricity has been generated mostly by hydropower plants. Given the rapid growth of demand and lack of planning in recent years, reliance on expensive and polluting thermal generation using liquid fuels has increased, and now accounts for more than half of national electricity production. Besides increasing the cost of service, this growth in thermal capacity has increased the sector’s carbon footprint.
Gabon’s electricity demand is expected to increase by as much as 3.7 per cent annually. In addition to supplying low-cost clean power to support electricity demand in Libreville, and restore the financial viability of Gabon’s power sector, the plant will also supply around 32 000 new customers, increase GDP by US$ 40 million, and create an estimated 880 indirect and induced jobs.