Skip to navigation Skip to main content Skip to site map

Projects

Summary of proposed guarantee

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
AES Sonel
Project ID
12214
Fiscal year
2014
Status
Active
Guarantee holder
Energy Cameroon Coöperatief B.A.
Investor country
Netherlands
Host country
Cameroon
Environmental category
B
Sector
Power
Date SPG disclosed
February 20, 2014
Project Board date
April 22, 2014
Gross exposure
 $300.0 million
Project type
Non-SIP
Strategic priority area
Complex Project
IDA
ESRS
Original ESRS in PDF version, February 20, 2014

Project description

This summary covers an equity investment by Energy Cameroon Coöperatief B.A of the Netherlands in AES Sonel in Cameroon. The investor, a wholly owned subsidiary of Actis Energy 3 Funds and co-investors of the United Kingdom, has applied for a MIGA guarantee of $300 million for a period of up to 15 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.

The project involves the acquisition of AES Corporation’s share, and subsequent investment into, AES Sonel in Cameroon. AES Sonel is currently owned 56 percent by AES and 44 percent by the government of Cameroon. AES Sonel holds a generation concession that covers about 933 megawatts of the existing generation (mostly hydropower), as well as the electricity transmission and distribution concessions for the entire country, servicing about 800,000 customers.

Environmental Categorization

The project is a category B under MIGA’s Policy on Social and Environmental Sustainability. Click here to view the Environmental and Social Review Summary.

Development Impact

Energy shortages and the high cost of electricity have slowed growth in Cameroon for the past 15 years, with an estimated loss in GDP growth of one to two percent each year. According to the World Bank’s 2007 Investment Climate Assessment, two-thirds of manufacturing firms cite power deficiencies as a constraint to doing business, leading to losses as high as five percent of production value on average.

The investment will help AES Sonel expand and enhance the electricity distribution network, primarily by replacing poles, extending electricity service to new (unserved) areas, and reducing outages. These investments will increase the reliability of the current service and access to electricity, which will reduce revenue losses in the sector. It should also help reduce the use of costly and polluting self-generation. The investor will provide additional training to staff, allowing them to leverage Actis’ international experience in the sector.

MIGA’s proposed support for this investment is aligned with the Agency’s strategic priorities of supporting investments into complex infrastructure projects and countries eligible for concessional financing from the International Development Association.

 
The World Bank Group logo