Freetown, Sierra Leone, October 24, 2016—IFC,
a member of the World Bank Group,
today announced a commitment of $27 million
in senior debt to support the Western Area Power Generation Project in
Sierra Leone—the first of its kind in the country. The successful implementation
of the project will rely on sustained commitment to broader reforms aimed
at revitalizing the power sector. These reforms are being supported across
the World Bank Group.
IFC also acted as the lead arranger and interest rate swap provider to
mobilize a further $82 million in long-term financing from other development
finance institutions, including the African Development Bank, CDC Group
plc (the United Kingdom’s development finance institution), Emerging Africa
Infrastructure Fund, and FMO (the Dutch development bank). The debt financing
package will support an independent power generation facility in an industrial
zone about four kilometers outside of Freetown, the capital of Sierra Leone.
The project covers the development, construction, and operation of a 57
megawatt heavy oil fuel-fired power plant.
Karim Nasser of TCQ Power said, “Five years ago we set out on the incredibly
challenging task of developing the first IPP in this post-conflict African
nation. With the support of IFC and other lenders we move ever closer to
realizing that objective and paving the way for further independent power
generation in Sierra Leone. IFC has been a leader in structuring a commercially
viable project and helping us mobilize support from other lenders.”
Power sector reform is being supported across the World Bank Group through
products to reduce exposure to real investment risks (including operational
and off-taker risks) that can make private investment financially viable.
The World Bank Group’s IDA (International Development Association) is
working toward providing a partial risk guarantee in addition to a package
to rehabilitate and upgrade the national distribution network. MIGA (the
Multilateral Investment Guarantee Agency) aims to provide a political risk
guarantee to cover equity, shareholder loans, and retained earnings.
Vera Songwe, IFC Director for West and Central Africa, said, “Private
sector investors require tailored solutions to make large, long-term power
sector investments in Sierra Leone, where less than 15 percent of the population
has access to electricity. IFC’s ability to leverage products and advice
across the World Bank Group reduces risk and helps mobilize investment
in countries where we are most needed and the policy environment is robust.”
The country’s power sector suffers from decades of underinvestment in
power generation, transmission, and distribution. Transmission losses are
at 38 percent, among the highest in Africa. Grid connection rates are low,
and there is regular load shedding and a non-cost recovery tariff scheme.
The national power utility company—Electricity Distribution and Supply
Authority, or EDSA—has faced challenges that trapped the country’s power
sector in a vicious cycle keeping residents in the dark and hindering economic
Once the project has received various approvals, it is expected the power
project will be sponsored by CDC and Abu Dhabi energy company, TCQ Power
Limited. Globeleq, a leading independent power producer in Africa, is expected
to manage CDC’s direct investment in the asset and will provide development,
construction and asset management expertise. Electricity generated by the
facility will be sold to the national off-taker EDSA under a 20-year power
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with 2,000 businesses worldwide, we use our six decades of experience to
create opportunity where it’s needed most. In FY16, our long-term investments
in developing countries rose to nearly $19 billion, leveraging our capital,
expertise and influence to help the private sector end extreme poverty
and boost shared prosperity. For more information, visit www.ifc.org.