Africa Finance Corporation (AFC), the continent’s leading infrastructure development finance institution, will invest in a Cameroonian €1.2-billion power generation project, the corporation has said.
The Nachtigal Hydro Power Company, located 65KM north of Yaounde, the capital and second-largest city, will consist of a 420MW hydro-electric power station as well as a 50KM transmission line, AFC said in an emailed statement.
The project will be financed 76 percent with debt and 24 percent via equity, with AFC providing €50 million in debt and an additional 18-year interest rate swaps of up to €75 million, the corporation added.
Other lenders in the investment consortium include the International Finance Corporation (IFC), the private-sector arm of the World Bank; European Investment Bank; Proparco; Société Générale, and Standard Chartered.
The sponsors of the project are Electricité de France International, which is globally recognised for its expertise in hydro-electricity power (has 40% shareholding in NHPC); InfraVentures, the World Bank’s infrastructure project development fund (30% shareholding in NHPC), and, the Government of Cameroon, with 30 percent shareholding in the project.
This investment into Cameroon’s power sector follows a steady rise in the demand for electricity in the country for both domestic and industrial use, AFC explained. It said that during the 2012 – 2016 period, demand grew at a Compound Annual Growth Rate of 7.6 percent, from 4.2TWh (Terawatt hour) to 5.7TWh in the grid to which Nachtigal will connect. Currently, demand in that grid will be connected is expected to more than double from 5.7TWh in 2016 to above 13TWh by 2030, the organisation said.
AFC’s decision to invest in the Nachtigal hydro project was based on NHPC’s potential to drive economic development as well as its wider impact, the corporation said.
“Cameroon is a textbook example of a nation that has, in recent years, demonstrated a deep-rooted commitment to surmount its power deficit challenges by successfully creating a highly investible sector,” Samaila Zubairu, President & CEO of AFC , said after the project close.
He added that with the International Monetary Fund having raised Cameroon’s economic growth outlook to 4.2% from 2017’s 3.2%, AFC is “pleased to be investing in the country’s essential infrastructure that will help unlock further economic growth in the years to come, and for the people of Cameroon reach their developmental aspirations.”
, Africa Finance Corporation