Africa Finance Corporation whose mission is to address infrastructure development needs in Africa would be investing in the Nachtigal Hydro Power Company (“NHPC”), located 65KM north of Yaounde in Cameroon.
The project which is worth 1.2 billion euros would contain a 420 MW hydroelectric power station and a 50 KM transmission line as the financing structure will take a debt-equity ratio of 76:24. AFC would provide 50 million euro in debt with an added 18 years interest rate swap while construction of the power plant is scheduled for the end of 2018.
This investment in Cameroon’s power sector is due to the constant rise in demand for electricity across the country.
Demand for electricity grew between 2012-2016 at a compound annual growth rate of 7.6 percent from 4.2TWH to 5.7TWh in the grid which this new power station would be built. However, demand in the grid where Nachtigal Hydro Power Company would connect is also projected to hike from 5.7TWh in 2016 to over 13TWh by 2030.
While Cameroon’s main electricity company, Eneo Cameroon S.A has been able to deliver significant operational improvement, the decision to go forward with the Nachtigal hydro project was based on its potential to drive economic development while also considering its broader impact.
“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. The financial close of projects such as these and the Kribi IPP are a testament to their earnest efforts,” said Samaila Zubairu, President & CEO of AFC while commenting on the announcement.
“Moreover, with the International Monetary Fund has raised Cameroon’s economic growth outlook to 4.2% from 2017’s 3.2%, we are 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.”
Apart from AFC investing in this Cameroon’s power project, Electricité de France International, which is globally recognised for its expertise in hydro-electricity power, InfraVentures, the World Bank’s infrastructure project development fund and the Government of Cameroon are major sponsors of the Hydroelectric power project.
The NHPC will be the cornerstone of Cameroon’s low carbon development plan and was selected because it was ranked as the best future hydro project to be developed in the LCDP.
