Africa Finance Corporation has worked up a $63Million strategic investment to construct and operate a 60MW wind project in the Ghoubet area, near Lake Assal in 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 says it adopted, along with its partners, an all sponsor equity financing for this transaction, which enabled the start of construction within two 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, have joined as nominee non-executive directors to the Board of the project and the holding company, Red Sea Power SAS, and Djibouti Wind LP.
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.