Hydelec BPA
MIGA has provided Hydelec of France with guarantees totaling $2.06 million for its $2.21 million equity investment in, and shareholder loan to, Hydelec BPA for a power project in Madagascar. The guarantees are for ten years and provide coverage against the risks of transfer restriction and inconvertibility, expropriation and war and civil disturbance.
The project is the construction/installation, operation, and maintenance of a greenfield 10 MW thermal peaking power station, which will provide electricity to the capital city of Antananarivo. Madagascar suffers from daily brownouts and blackouts, and the project will help alleviate this problem by supplying approximately 10 percent of the capitals electric consumption in peak periods. The reliability of the power supply will be improved, and one immediate consequence will allow a number of electricity-dependent local companies will be able to extend their daily hours of operation. The project will employ and train 17 people, 16 of whom are local.
This is the first private foreign energy project in Madagascar, and through a positive demonstration effect, it is expected to encourage further foreign direct investment into Madagascars electricity sector. It will also free up capacity at the state-owned utility company to proceed with required maintenance of its own generating facilities, which at present are over-strained. The project will pay approximately $2.2 million in taxes, including royalties and duties, to the government.