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EAIF announces milestones for clean energy projects for Mozambique, Uganda and Tanzania

Two Emerging Africa Infrastructure Fund (EAIF) renewable energy projects that will produce a total of 54MW of clean power have celebrated important milestones.

  • Mozambique’s president declares Mocuba solar plant open
  • Financial close reached for new Uganda-Tanzania Kikagati hydro power project

On 10th August, Mozambique’s President, His Excellency Filipe Jacinto Nyusi, declared open the 40MW Central Solar de Mocuba (CESOM) solar power plant.

On 7th August the 14MW Kikagati hydro power station being built on the border between Uganda and Tanzania reached financial close, meaning that the first tranche of debt funding has been released to the Kikagati Power Company (KPC), which will own and operate the plant when construction is complete.

EAIF, which is a PIDG company, specialises in providing high value long-term loans to private sector infrastructure projects in Africa. It draws its funds from the governments of the UK, The Netherlands, Sweden and Switzerland and private banks and financial institutions.

EAIF Executive Director, Emilio Cattaneo, says;

“CESOM is our first renewable energy project in Mozambique. Kikagati hydro power station is the 10th renewable energy plant EAIF has supported in Uganda. EAIF was a pioneer in financing private sector renewable energy projects in Africa. We are helping companies and countries stimulate long-term economic development impact on business growth, jobs and skills and contributing to weakening the grip of poverty on communities.”

Regional economic development

CESOM is a core element in the Mozambique government’s strategy of incentivising the creation of small and medium-sized businesses in the mainly rural Mocuba area of the country. EAIF signed a Participation Agreement with the IFC to provide a US$16.9 million B Loan, with a 16-year term. In addition, PIDG provided a US$ 7million Viability Gap Funding grant for the project (raised from its Technical Assistance Facility).

The energy being generated will be a catalyst for regional economic development in the north of Mozambique. CESOM is majority owned by the Norwegian energy business Scatec Solar, with Mozambique’s public electricity utility owning 25% and the Norwegian investment organisation, Norfund, holding 22.5%.

Financial close for Kikagati

The announcement of the financial close of the US$54 million debt finance package for the Kikagati hydro-electricity station brings closer a new source of electricity that will be equally shared between Uganda and Tanzania. The plant is located on the Kagera River, which is on the border between the two nations. 100% of the energy generated by KPC will be bought by the Uganda Electricity Transmission Company Limited, Uganda’s single-buyer and transmission organisation, which will then sell half the energy on to Tanzania.

EAIF is lending US$27 million and the Dutch development bank, FMO has contributed the same amount. Both loans have 16 year terms. The overall cost of the project is US$87 million.

Kikagati Power Company Limited is backed by the Africa Renewable Energy Fund, a US$205 million fund managed by Berkeley Energy The plant will benefit from the “GETFiT” programme, which is funded by a number of European governments and the EU. GetFiT funding brings down the average cost of power to consumers.