AfDB approves $100 million guarantee to 205-MW Sahofika hydropower in Madagascar

The Board of Directors of the African Development Bank (AfDB) has approved a partial risk guarantee (PRG) of $100 million to support the 205-MW Sahofika hydropower project in Madagascar.

The bank’s support will include risk mitigation to the project developers and the debt providers by supporting the payment obligations of JIRAMA, the state-owned off-taker.

The Sahofika project, located on the Onive River 100 km southeast of the capital Antananarivo, will involve the design, construction and operation of the power plant, the construction of a 110-km-long transmission line to the site, and construction of camp facilities and 112 km of access roads.

The project will generate 1,570 GWh of renewable power annually. AfDB says the project will enable Madagascar to displace up to 90% of thermal energy generation, to unlock its great hydropower potential, and to expand its energy mix to more renewable sources. “The displacement of thermal power generation will also enable JIRAMA to considerably reduce its fuel purchase and decrease subsidies from the government to sustain its operations,” said Aida Ngom, the bank’s acting director for Energy Financial Solutions, Policy and Regulation.

It will also contribute to the reduction of average end-user tariffs and of greenhouse gas emissions amounting to 32,469 kt of CO2 over the 35-year concession period.

“The Bank’s support to the national utility, JIRAMA, through the PRG provides much needed credit enhancement as JIRAMA continues to build its track-record as a bankable electricity off-taker that will in-turn mobilize investments into Madagascar’s energy sector,” said Wale Shonibare, the bank’s acting vice president for Power, Energy, Climate Change & Green Growth. “This will enable the country to achieve its strategic goals in terms of increased energy access, a more diversified energy mix and least cost generation”.

The Sahofika project is aligned with the bank’s High 5 Priority to “Light Up and Power Africa,” the bank’s focus on energy access, and strengthening infrastructure for inclusive growth, as well as Madagascar’s Nationally Determined Contributions (NDCs) and the country’s Emergence Plan, which prioritizes boosting the power sector and increasing electricity access.

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