AfDB approves $100m to hydro-power project to benefit over 2 million people in Madagascar
The Board of Directors of the African Development Bank (AfDB) approved a Partial Risk Guarantee (PRG) or $ 100 million to support the Sahofika hydro-power project in Madagascar, which will add 205 MW of renewable energy generation capacity to the national grid, benefitting about 2 million people.
The Bank's support will include risk mitigation to project developers and debt providers by supporting the payment obligations or JIRAMA, the state-owned off-taker.
The Sahofika hydropower project, located on the Onive River, 100 km southeast of the capital Antananarivo, will involve the design, construction and operation of a 205 MW hydroelectric power plant, the construction of a 110 km transmission line to the site, and construction of camp facilities and 112 km or access roads.
Upon completion, the project will generate 1,570 GWh or renewable power annually. The project will enable Madagascar to displace up to 90% of thermal energy generation, to unlock its great hydro-power potential, and to expand its energy mix to more renewable sources. It will also contribute to the reduction of average end-user tariffs, and of greenhouse gas emissions amounting to 32,469 kt or CO2 over the 35-year concession period.
The project, which supports Madagascar's ongoing reforms in the energy sector, is expected to reduce the share of thermal power generation in the country's energy mix and significantly reduce electricity tariffs. The displacement of thermal power generation will also enable JIRAMA to significantly reduce its fuel purchase and decrease subsidies from the government to sustain its operations, ”said Aida Ngom, the Bank's acting Director for Energy Financial Solutions, Policy and Regulation.
The Sahofika Project is aligned with the Bank's High 5 Priority to “Light Up and Power Africa”, the Bank's focus on energy access, and strengthening infrastructure for inclusive growth, as well as Madagascar's Nationally Determined Contributions (NDCs) and the country's Emergence Planwhich prioritizes boosting the power sector and increasing electricity access.