Project description
On February 23, 2024, MIGA entered into a contract issuing a guarantee of US$16.29 million to Konexa Power Holdings PCC of Mauritius for its equity and quasi-equity investments in Konexa Solar 1 Ltd, a C&I electrification project, in the Federal Republic of Nigeria. The guarantee is issued against the risks of expropriation and war and civil disturbance (including temporary business interruption) for a guarantee period of up to 20 years.
Located in Kaduna City, Kaduna State in Nigeria, the Project consists of the ownership, construction, operation and maintenance of distributed energy systems to be installed at two Nigerian Breweries sites, including transformers, switchgear, metering, double inverter and battery energy storage system (BESS), ring main units, and associated equipment and buildings (the C&I Assets) and the refurbishment, upgrade, extension, operation and maintenance of existing 33kV lines, switching stations, and other related interconnection infrastructure (the Interconnection Infrastructure). Under a Trading License the Project will purchase electricity from the Gurara Hydroelectric Power Plant and wheel electricity through the grid to Nigerian Breweries.
The Project is expected to deliver an average of 20.5 GWh annually from new renewable energy resources (the 30 MW Gurara hydroelectric power plant) to Nigerian Breweries displacing the existing fossil fuel based energy systems. Nigerian Breweries is a subsidiary of Heineken and has been a market leader in Nigeria in pursuing renewable energy solutions. The Project will help accelerate the company’s transition to renewable energy while increasing electricity reliability.
MIGA’s risk exposure under the guarantee will be shared with the IDA Private Sector Window (PSW). For more information on the IDA PSW, please access the IDA19 Private Sector Window website here . The PSW involvement will be via a shared first loss facility that will assist in spreading the risk and result in a reduced cost of the guarantee for the project enterprise. The Project meets the minimum concessionality principle and the amount of subsidy is estimated to be less than 0.91% of the total project cost over the envisaged 20-year guarantee period.
The Project also benefits from a technical assistance grant from MIGA’s Fund for Advancing Sustainability (the FASTF). The technical assistance grant will support Konexa in undertaking a series of tasks to help build its capabilities in relation to environmental and social management and gender as well as to enhance its integrity framework and systems. These tasks are also included as actions under the Gender Action Plan (GAP), Environmental and Social Action Plan (ESAP), and Integrity Action Plan (IAP) in the Contract of Guarantee which became effective on February 23, 2024.
Environmental Categorization
The project is a category B under MIGA’s Policy on Environmental and Social Sustainability.
Development Impact
The Project’s primary development impacts will stem from improved consumer quality (better reliability and quality of power) and improved environmental effects by increasing the supply of renewable energy generation (hydro) and displacing fossil-fuel based generation. This Project is expected to result in a reduction of over 8,000 tons of carbon dioxide equivalent per year (tCO2e), with potential future guarantees for subsequent phases of Konexa’s investment program contributing to a total expected emissions reduction of 78,000 tons of carbon dioxide equivalent per year (tCO2e). In addition, the project is highly innovative and demonstrates that foreign investors can invest in an otherwise troubled sector in the midst of significant reform.
This project will be a gender flagged project. Konexa has agreed to several gender related interventions, relating to women as employees and women as leaders, allowing women to benefit from direct employment and leadership opportunities.
The Project aligns with the World Bank Group’s (WBG) Country Partnership Framework FY2021-25 in Nigeria under its strategic objectives of promoting jobs and economic transformation and diversification, including increasing access to reliable and sustainable power for households and firms. The guarantee also supports the Maximizing Finance for Development principles, leveraging foreign direct investments in support of an innovative approach to catalyzing renewable energy and reducing the use of scarce public resources.
