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The United States International Development Finance Corporation (DFC) says it has committed to provide $217 million in debt financing for a new 83-megawatt power plant to be established in Freetown, Sierra Leone. This is equivalent to the entire capacity of the Bumbuna Hydro-electricity Plant in the north of the country.
The Western Area Power Generation Project (WAPGP), sponsored by Milele Energy and TCQ Power Limited which has been in the pipeline since 2012 under the former government of President Ernest Bai Koroma, will generate and sell electricity to the Electricity Distribution and Supply Authority (EDSA) based on a 20-year power purchase agreement if it comes to fruition.
“DFC’s investment will substantially increase access to energy for people all across Sierra Leone, providing power generation to meet approximately 24 percent of projected electricity demand in a country where only 15 percent of the population has reliable access to power,” said David Marchick, DFC’s Chief Operating Officer.
“This highly developmental project represents the United States’ long-term investment in Sierra Leone’s future. We also look forward to working on Sierra Leone’s transition to renewable energy sources like solar and wind power,” he said.
United States Ambassador to Sierra Leone – David Reimer said: “This plant will increase Sierra Leone’s generation capacity significantly. The power generated will make substantial improvements in the lives and livelihoods of Sierra Leoneans – allowing households to access power for the first time, students to study at night and health workers to save more lives.
“This project builds on the critical work accomplished during the Millennium Challenge Corporation Threshold Program and will open up the energy sector to more private sector investment.”
“The Government of Sierra Leone, through the President, Brigadier Rtd. Julius Maada Bio, expresses its sincere thanks and gratitude to the lender, the United States International Development Finance Corporation, mentioning that “our presence in the project speaks volumes about our commitment to the development of Sierra Leone.” The Government thanked the Sponsors Milele Power Limited and TCQ Power Limited for their relentless efforts and contribution to the project and in realizing the Country’s National Development Plans.
“The Government is deeply committed to accelerating energy access in the Country. The Government is also pleased that “the project has been re-engineered into cleaner energy that will enhance the nation’s resilience and response to climate shocks by improving the management of climate disaster risks.” The Government commitment to this project as a baseload “will support the country’s post COVID-19 economic recovery by providing electricity to the people of Sierra Leone especially the Western Area, which is a critical part of the recovery process. It also supports the replacement of costly fossil fuel generation plants with low-cost cleaner power, which would free up scarce fiscal resources for other urgent socio-economic needs,” the statement published yesterday by DFC reads.
DFC’s financing of the WAPGP project is contingent upon certain conditions, including that the Government of Sierra Leone enact implementing legislation for the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards under local law. Sierra Leone has acceded to the convention and ratified it, and it is working to pass implementing legislation.
TCQ Power Limited CEO Karim Nasser stated, “the project is a monumental step for the country and will unlock opportunities for all; it also demonstrates the government’s ability to draw private investment into complex infrastructure projects. All this would not have been possible without the government’s implementation of bold and decisive reforms to make the energy sector bankable and our lender’s creativity in finding solutions that helped the project become more bankable.”
“With the signing of the commitment letter, we have moved one step closer to delivering critical and reliable electricity to the people of Sierra Leone,” said Erik Granskog, CEO of Nairobi-based Milele Energy.
“We are grateful to TCQ, who has been working diligently on the Project since 2012 and DFC for quickly appreciating the impactful nature of the Project and being a proactive partner in its advancement. The Government of Sierra Leone has been impressive in its implementation of bold and decisive reforms to make the energy sector bankable, which demonstrates the government’s desire and ability to draw private investment into complex infrastructure projects.”
“The United States Government congratulates the Government of Sierra Leone on the signing of this agreement and the ratification of the New York Convention,” stated Ambassador Reimer.
The project is expected to be commissioned fourth quarter of 2024.
About DFC
U.S. International Development Finance Corporation (DFC) is America’s development bank. DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world today. DFC invests across sectors including energy, healthcare, critical infrastructure, and technology.
DFC also provides financing for small businesses and women entrepreneurs in order to create jobs in emerging markets. DFC investments adhere to high standards and respect the environment, human rights, and worker rights.
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