The Multilateral Investment Guarantee Agency (MIGA) has issued guarantees to Meridiam for equity investments into Asonha Energie SA, which will build and operate the 35MW Kinguélé Aval Hydropower Plant in Gabon.
Gabon has among the highest potential for hydropower in Africa. The government of Gabon (GoG) is therefore taking steps to transition into sustainable energy sources and create a single national integrated grid using hydropower. GoG intends to rely on independent power producers (IPP) to exploit its largely untapped hydro potential.
The 20-year guarantees totalling €25.3 million (approximately $28.7m) provide protection from breach of contract, expropriation, transfer restriction and currency inconvertibility, and war and civil disturbance.
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Gabon has a comparatively high national electrification rate of 93% with about 374,000 customers connected to its five regional interconnected networks. However, the country’s power generation capacity is under strain due to the growing population, increased urbanisation and industrial development. Historically, electricity has been generated mostly by hydropower plants.
Given the rapid growth of demand and lack of planning in recent years, reliance on expensive and polluting thermal generation using liquid fuels has increased and now accounts for more than half of national electricity production. Besides increasing the cost of service, this growth in thermal capacity has increased the sector’s carbon footprint. Gabon’s electricity demand is expected to grow as much as 3.7% annually.
The Plant is the first IPP undertaken in Gabon at a cost of €179m ($196.6m). It will bring low-cost clean power generation capacity to support electricity demand in Gabon’s capital, Libreville, and restore the financial viability of Gabon’s power sector. Additionally, the Plant will supply around 32,000 new customers, increase GDP by $40m, and create an estimated 880 indirect and induced jobs.
“Gabon’s first IPP project highlights a commercially viable way to generate clean energy that will avoid over 90,000 tons of CO2 emissions per year,” said MIGA Executive Vice President, Hiroshi Matano.
Asonha Energie SA was created to develop the Kinguélé Aval Hydropower Project by way of a BOT concession for 30 years. The company is owned 60% by Meridiam SAS France (Meridiam) through its Meridiam Funds. The Fonds Gabonais d’Investissements Stratégiques (FGIS), Gabon’s sovereign wealth fund, owns 40% through its wholly owned subsidiary Gabon Power Company. FGIS was established in 2012 to assist Gabon in developing new industries to generate revenues other than oil-related income.
MIGA guarantees for this project are considered critical given Gabon’s electricity sector challenges and risks posed by the broader political and economic environment.
“Kinguélé Aval Hydropower plant will bring positive benefits to Gabon’s economy, support its social development but also contribute concretely to its ongoing ecological transition. Leading to the replacement of existing thermal capacity, it is expected to supply around 13% of the electrical needs of Libreville, and help Gabon save more than 150,000 tons of CO2 emissions per year. Finally, and thanks to the project, more than 800 local jobs will be created during the construction and operation phase,” said Thierry Déau, Founder and CEO of Meridiam.
Originally published by Nasi Hako on esi-africa.com
