Africa Finance Corporation has announced a USD 63 million investment to construct and operate a 60 MW wind project in the Ghoubet area of Djibouti.
Africa Finance Corporation (AFC), the leading infrastructure solutions provider in Africa, has announced a USD 63 million strategic investment to construct and operate a 60MW wind project in the Ghoubet area, near Lake Assal in the small African nation of Djibouti. AFC has made this investment as lead developer together with Great Horn Investment Holdings (GHIH) and inviting further investment from Climate Fund Managers (CFM), and FMO, the Dutch entrepreneurial development bank.
AFC has led the development of the project since 2017, developing it from concept to bankability, securing a 25-year take or pay power purchase agreement with Électicité de Djibouti as the off-taker, an implementation agreement and with the Government of Djibouti backed by a Government Guarantee. The Project also has MIGA guarantee cover. The wind project is expected to begin commercial operations in 2021.
AFC and its partners adopted an innovative financing approach, an all sponsor equity financing for this transaction, which enabled the start of construction within 2 years, a significant reduction from the typical 3-5 years development cycle. As part of this investment, Oliver Andrews, Chief Investment Officer, as well as Amadou Wadda Head of Project Development at AFC, will join as nominee non-executive directors to the Board of the project and the holding company, Red Sea Power SAS, and Djibouti Wind LP.
Samaila Zubairu, President & CEO of AFC, said “we are delighted to have the opportunity to invest and develop such a significant renewable power project in Djibouti. We have invested in many renewable projects in Africa, including the Cabeolica Wind Farm in Cape Verde, which won recognition in the International Finance Corporation Emerging Partnerships top ten private-public partnerships in Africa. We see renewable and green projects as a key part of our investment strategy as we look to support a sustainable future in Africa.”
Currently, Djibouti’s power sector faces significant challenges, with less than 100 MW reliably available for the population. Its electricity demand is also expected to considerably increase due to various large-scale infrastructure projects including ports, free-trade zones and railways that the Government of Djibouti has undertaken. This wind project will be a key contribution to the electricity demand as the country aims to transition towards 100 percent-renewable energy-based electricity production by 2030.