Africa50, an infrastructure fund for Africa, Scatec Solar and Norfund signed a long-term financing documentation on 27 October for the 400MWDC utility scale photovoltaic (PV) power plants in Egypt. The parties had previously entered into a Joint Development Agreement (JDA).
Africa50 chairman and AfDB president, Akinwumi Adesina, said: “This is an important milestone for Africa50. The project is the fund’s first early stage investment through its Project Development arm to be converted into a long-term equity investment made by its Project Financing arm.”
The plants are supported by 25-year power purchase agreements with the state-owned Egyptian Electricity Transmission Company (EETC), backstopped by a sovereign guarantee.
Access roads and interconnection facilities (substations and a 12km high voltage line) have already been funded collectively by the Benban project developers under a cost sharing agreement with EETC and the New and Renewable Energy Agency.
With a 25% stake, Africa50 is contributing equity to fund construction alongside Scatec Solar and Norfund, leveraging total funding of around $450 million. Senior debt will be provided by EBRD, FMO, the Green Climate Fund, the Islamic Development Bank, and the Islamic Corporation for the Development of the Private Sector.
The investment supports Egypt’s power sector reform, which focuses on cost effectiveness, expanded and diversified generation, and increased private sector participation.
Thermal energy currently outranks all other generation technologies in Egypt, comprising of 90%. The six solar PV plants will generate around 900,000MWh annually, avoiding emissions of more than 350,000 tonnes of CO2. Read more...
In addition, the partners are committed to training and using local workers for plant construction and operation as much as possible.
Making the connection between AfDB and Africa50, Adesina said: “This investment contributes significantly to AfDB’s High 5 priority of increasing access to power in Africa and demonstrates how Africa50 can use its capital to leverage substantial resources from other partners to fund much needed infrastructure.”
Africa50 CEO Alain Ebobissé added: "This project is a good example of how Africa50, working with effective partners such as Scatec and Norfund, as well as the Egyptian authorities, can facilitate infrastructure project development in Africa. We are pleased to help Egypt, an important shareholder, diversify its power generation mix while lowering greenhouse gas emissions.”
“There was an acknowledgment that governments cannot fund the entire infrastructure gap,” Ebobissé said. “The private sector has a big role to play, and in Africa we’re just not getting enough private investment in infrastructure.”
Featured image: 123rf