green bond Green Climate Fund
Image credit: Stock

Infrastructure development finance institution, Africa Finance Corporation (AFC) has announced the financial close of a bridge loan facility contracted by Ivoire Hydro Energy (IHE) for the construction of the 44MW Singrobo-Ahouaty hydroelectric power project (SAHP) in Côte d’Ivoire.

AFC’s commitment towards IHE amounts to a total of €174 million ($197 million), comprising a majority equity investment of €24.4 million ($276 million, and a bridge loan facility of €149.6 million ($170 million).

The first disbursement of the bridge loan facility occurred in December 2018. 

IHE’s other shareholders include Themis, a project development company, and IHE Holding, a company incorporated by Ekolan Alain Etty, a local entrepreneur. The SAHP will be built by Eiffage, a French leading EPC contractor, selected following an international competitive bidding.

AFC adopted an innovative financing strategy for the project.  This involved utilising a bridge loan to shorten the project cycle and commence project construction. 

SAHP’s financing structure was designed to shorten the development phase for projects of this type from circa 10 years to fewer than five years.

It is expected that this approach will accelerate the process of developing projects in Africa and enable more power projects to come on stream. Read more: Côte d’Ivoire: Energy sector forms part of economic reforms programme

Bridge loan facility

AFC arranged the bridge loan facility to kick-start construction while awaiting long-term lenders to secure their final credit approvals.

The African Development Bank is arranging the long-term debt financing, most of which has already secured approvals. 

Côte d’Ivoire currently generates 2,200MW of electricity making it one of the leading generators of power in West Africa with approximately 70% through thermal generation with the remainder being renewables, mainly hydroelectric.

The SAHP will increase the country’s overall power capacity as well as reduce generation costs due to the low operating cost of hydroelectric power.

The hydropower project will also further Côte d’Ivoire’s goal of becoming a forerunner in the field of renewable energy.

In respect to the bridge facility closing, Samaila Zubairu, President and CEO of AFC, commented: “Since 2015, when AFC began working with SAHP as a financier and co-developer, we have achieved many development milestones. We are proud to be a major investor and facilitator in the Singrobo-Ahouaty Hydropower Project because this new source of renewable power will be integral to Côte d’Ivoire’s economic growth and social development. 

“As our first equity investment in a hydro Independent Power Producer and our first power equity investment in a Francophone country, SAHP is an optimal step in diversifying AFC’s power portfolio, building our balance sheet and expanding our reach across French-speaking Africa,” Zubairu added.