The African Development Fund (AFD) approved a loan of 4.02 million euros with a grant element to finance the Malagasy government’s equity investment of 30 million euros in the Sahofika hydroelectric project.

The project involves the construction of a 205 MW hydroelectric power plant on a build-own-operate-transfer basis.

This includes the construction and rehabilitation of 110 km of access roads and the construction of a 75 km 220 kV transmission line.

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In December 2019, acting as mandated lead arranger, the Bank approved a partial risk guarantee of $ 100 million for the Sahofika project to mitigate liquidity risk.

The Bank is also supporting the project to strengthen and interconnect the electricity transmission network, aimed at strengthening and extending Madagascar’s transmission network in order to evacuate the additional electricity generated by this large hydroelectric project.

Additional funding for the project is expected to come from the European Union and the Arab Bank for Economic Development in Africa

Dr Kevin Kariuki, the ADBThe Vice President of Electricity, Energy, Climate Change and Green Growth said: “Support for the Sahofika project illustrates the Bank’s commitment to provide access to affordable and quality energy to across the continent for sustainable and inclusive growth, while helping member countries responsibly harness their vast renewable but underdeveloped energy resources.

He continued: “As the largest hydropower project under development in the country, the Sahofika project will unleash Madagascar’s hydropower potential and diversify its energy mix in favor of renewables at 90%.

According to Mohamed Cherif, Bank Country Manager for Madagascar: “The Sahofika project is the cornerstone of the Bank’s strong support to the electricity sector in Madagascar. The commissioning of Sahofika would save the national public service (JIRAMA) around 100 million euros per year in fuel costs, while gradually eliminating the need for state subsidies.

The Sahofika project is aligned with the Bank’s New Deal on Energy for Africa and the Bank’s Climate Change Action Plan, whose collective goals include expanding green energy infrastructure for sustainable growth. and inclusive. It is also part of the energy policy of the Malagasy government.

The ADF is the Bank Group’s concessional financing window that provides low-income regional member countries (RMCs) with concessional loans and grants in support of projects that stimulate poverty reduction.

Once commissioned, the Sahofika project should help avoid 900,000 tonnes of CO2 equivalent per year.

The Sahofika project is expected to generate clean and affordable energy for the benefit of some eight million people. It is located 100 km southeast of the capital Antananarivo on the Onive River.

The government is committed to reinvesting the profits from the project in order to reduce electricity tariffs for the people of Madagascar.