Mega First Solar IPP

Project Description

The project entails the installation and operation of 11.43 MW solar photovoltaic (PV) systems and interconnection facilities on a design, build, finance, own, operate, and transfer (DBFOOT) basis in nine sites across six outer islands of the Republic of Maldives (Maldives) where major population centers of the country are located. The solar PV facilities are designed to be multi-purpose considering the scarce land area, serving as shades for parking spaces, markets, and walkways while generating electricity. 

The project is being developed by Mega First Corporation Berhad (MFCB) of Malaysia. MIGA has been requested to provide its Political Risk Insurance to Mega First Power Industries Sdn. Bhd. (the Guarantee Holder), a wholly owned, Malaysia-based subsidiary of MFCB, to cover up to US$12.35 million of their Shareholder Loan or Quasi-Equity investment in Mega First Solar (Maldives) Consortium Pvt Ltd (the Project Enterprise) against the risk of Breach of Contract for a period of up to seven years.

In particular, the project was developed on the foundation of the World Bank’s Accelerating Sustainable Private Investment in Renewable Energy (ASPIRE) project, which aims to reduce the Maldives’ reliance on fossil fuel and increase solar power generation through private sector investment. The Project represents the ASPIRE Phase 3 sub-project and the third Independent Power Producer (IPP) project in the country.

Environmental Categorization

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

Development Impact

The Maldives depends heavily on fossil fuel imports, which account for around a fifth of total merchandise imports, while imported diesel provides around 94% of the country’s power generation. The dependence on fuel, which is subsidized, results in persistent fiscal pressure and vulnerability to external shocks, such as volatility in fuel prices. The project aims at tackling these challenges by increasing solar power generation to help reduce fossil fuel imports and improve the country’s fiscal and external resilience.

The main development impacts are (i) contribution to increasing renewable energy (RE) installed capacity and production consistent with the government’s strategic direction, thereby enhancing energy security and advancing the country’s Nationally Determined Contributions (NDCs); (ii) enabling government savings by substituting more expensive fuel imports with cheaper RE, thus contributing to a reduction in spending on fuel and electricity subsidies; (iii) facilitating Greenhouse Gas (GHG) emission reduction through its status as a fully climate finance project that displaces conventional fuel generators; and (iv) generation of positive demonstration effects as one of the first and largest IPPs in the Maldives to date, showcasing the IPP model for RE and encouraging private sector investment in RE with important replication potential.