Out-Law News | 27 Apr 2017 | 10:08 am | 2 min. read
The initiative has been launched by the UK’s development finance institution (CDC) with the Aga Khan Fund for Economic Development (Akfed) and Akfed’s industrial and infrastructure development arm, Industrial Promotion Services (IPS).
CDC said the joint platform will house IPS’s existing power projects in Kenya and Uganda “and will focus on new power projects” in greater East Africa and West Africa.
CDC said it will “invest up to $70 million in the formation of the joint venture and subsequently the partners will invest $140m – including a further $70m from CDC – and mobilise project funding of $1bn for new power projects”.
The new projects will include the 147-megawatt (MW) Ruzizi III project to help develop the power generating sector in Burundi, the Democratic Republic of the Congo (DRC) and Rwanda, CDC said. “The Ruzizi project is expected to double Burundi’s current capacity, increase Rwanda’s capacity by 30% and provide much needed baseload power in Eastern DRC, a region that is otherwise isolated from DRC’s interconnected grid,” CDC said. “It will also reduce reliance on thermal, fossil fuel-based generation in these countries.”
In addition, both IPS and CDC “intend to partner on mini and off-grid projects that will directly provide reliable and affordable electricity to rural populations away from regional and national grids”, CDC said.
CDC’s chief executive officer Diana Noble said: “Power infrastructure is vital for Africa’s economic growth and job creation and CDC has identified early-stage development as the area with the greatest need for investment in this priority sector. The market needs long-term, committed investors like CDC and Akfed to bring the capital, time horizons and expertise necessary to boost power generation for the continent.”
Noble said the partnership would see CDC “tapping into Akfed’s proven power sector expertise, including in hydropower and excellent local relationships, with the aim of bringing reliable power to many millions of individuals, families and businesses across Africa”.
Lutaf Kassam, executive director of Akfed, said: “IPS has been investing and co-developing power projects in West and East Africa for over 20 years. We co-developed sub-Sahara Africa’s pioneering independent power projects in the 1990s and 2000s, namely the Azito power plant in Cote d’Ivoire, the Kipevu II (Tsavo Power) plant in Kenya, as well as the Bujagali Hydropower Project in Uganda.”
“It has been an evolving journey, involving both public and private partners, which has seen a recent shift in focusing investments on renewable energy, taking advantage of advancement in solar and wind technologies, as well continuing to provide the reliable baseload power which many sub-Saharan African countries need,” Kassam said.
In 2015, a partnership was launched by CDC and the Norwegian Investment Fund for Developing Countries (Norfund), to acquire a “significant minority” stake in Globeleq Africa from the Actis infrastructure 2 fund. The funds said their partnership aimed to tackle “bottlenecks” that can interrupt infrastructure projects in the early stages of development.
African Development Bank vice-president Pierre Guislain said earlier this year electricity was “at the top of the list” of infrastructure investment needs for the continent.