Africa Finance Corporation (AFC) has announced a US$63mn strategic investment to construct and operate a 60MW wind project in the Ghoubet area, near Lake Assal in Djibouti
The wind project is expected to begin commercial operations in 2021.
AFC has made this investment as lead developer together with Great Horn Investment Holdings (GHIH) and inviting further investment from Climate Fund Managers (CFM) and FMO, the Dutch entrepreneurial development bank.
AFC has led the development of the project since 2017, developing it from concept to bankability, securing a 25-year take or pay power purchase agreement with Électicité de Djibouti as the off-taker, an implementation agreement and with the government of Djibouti backed by a government guarantee. The project has MIGA guarantee cover.
AFC and its partners adopted a financing approach, which enabled the start of construction within two years, a significant reduction from the typical three to five years development cycle.
As part of this investment, Oliver Andrews, chief investment officer, as well as Amadou Wadda, head of project development at AFC, will join as nominee non-executive directors to the Board of the project and the holding company, Red Sea Power SAS and Djibouti Wind LP.
Addressing Djibouti’s power sector challenges
Less than 100MW power are reliably available for the Djibouti population. The electricity demand is expected to considerably increase due to various large-scale infrastructure projects including ports, free-trade zones and railways that the government of Djibouti has undertaken.
This wind project will be a major contribution to the electricity demand as the country aims to transition towards 100 per cent-renewable energy-based electricity production by 2030.
Samaila Zubairu, president and CEO of AFC, commented, “We have invested in many renewable projects in Africa, including the Cabeolica Wind Farm in Cape Verde, which won recognition in the International Finance Corporation Emerging Partnerships top ten private-public partnerships in Africa. We see renewable and green projects as a key part of our investment strategy as we look to support a sustainable future in Africa.”
Oliver Andrews, chief investment officer of AFC, added, “This is a significant project for Djibouti as its first renewable energy project and signifies the country’s efforts to establish its own energy production from its own resources. By taking this position on the board, I am delighted to be adding my expertise to the development of the project with my colleague Amadou Wadda.”
