This summary covers equity, quasi equity, and/or shareholder loans investments by a consortium comprising Africa Finance Corporation (“AFC”), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (“FMO”, the Dutch Development Bank) and Climate Investor One (“CIO”), into a 60 MW wind power project (the “Project”) near Ghoubet in the Arta Region of Djibouti.
The consortium, on behalf of the Guarantee Holder, has applied for the MIGA guarantee covering up to US$250 million of the Guarantee Holder’s equity, quasi equity, and/or shareholder loans and senior loans investment into the Project. The MIGA guarantee will have a term of up to 20 years, providing coverage against the risks of Breach of Contract, Transfer Restriction and Inconvertibility, Expropriation, and War and Civil Disturbance.
The Project consists of the development, design, construction, operation and maintenance of a 60-megawatt (MW) wind farm and interconnection facilities, comprising of a 220kv substation and 5km overhead transmission line to connect to the nearest substation in Ghoubet, in the Arta Region along the border with the Tadjura Region of Djibouti. The electricity output will be sold to Electricite de Djibouti (“EDD”), the Djiboutian state-owned national electricity utility, under a 25-years take or pay power purchase agreement.
Currently, Djibouti’s energy demand is met primarily through imports from Ethiopia, and overall demand for electricity is expected to increase in the medium term driven by the country’s economic development strategy. The development impacts associated with the Project include: increased generation capacity in Djibouti, supporting domestic energy security and economic development; the provision of clean energy, limiting the country’s incremental additional carbon emissions; and the potential positive demonstration effects for the country’s new Independent Power Project (IPP) framework and wind power development in Djibouti.
MIGA’s support for this project is aligned with the Agency’s strategic focus on supporting investments in Climate Change and IDA and FCS countries.