The European Investment Bank (EIB) has confirmed its support for Cameroon’s 420-MW Nachtigal hydro project, the largest private project in Africa’s power sector this year.
It has issued an 50 million euro (US$56 million) long-term project finance loan to Nachtigal Hydro Power Company (NHPC), the group building the project, to become the latest lender to support the scheme.
The total project cost of around 1.2 billion euros (US$1.4 billion) is being put together under a public-private partnership, coordinated by the World Bank’s International Finance Corporation (IFC) and involves a dozen lenders.
The power plant will eventually boost Cameroon’s electricity supply by around 30%.
“EIB is very proud to finance the largest hydro power project ever built in Africa under a project finance structure,” said EIB Vice-President Ambroise Fayolle.
“This project will significantly increase Cameroon’s electricity capacity through clean, low-cost energy while transforming the daily life of millions of people.” The project will be owned by NHPC — which will operate the scheme for a 35-year period — alongside Electricite De France (EDF), IFC and the Republic of Cameroon.
The dam itself is located on the Sanaga River near the Nachtigal Falls, 65 km to the north-east of Yaoundé.
The development includes the construction of a 50 km power transmission line.
As well as providing a huge boost to Cameroon’s electricity system, the project is significant in other ways, perhaps highlighting an increased appetite for private sector power deals in Africa.
The large-scale financing includes a host of other lenders, from development finance institutions through to local commercial banks, all coordinated by the IFC.
As well as the EIB and IFC, others supporters include: the African Development Bank (AfDB), Africa Finance Corporation, Agence Francaise de Developpement (AFD), Attijariwafa SCB Cameroon, BICEC, CDC Group, DEG, PIDG company - the Emerging Africa Infrastructure, FMO, OFID, Proparco, Société Générale Cameroun and Standard Chartered Bank Cameroon.
For the EIB, Fayolle said the objective is to increase investments in Africa “that boost growth and job creation while applying high sustainable and social impact.”
With 20 billion euros (US$22.5 billion) of investments in the past 10 years, the bank is becoming a key financing actor in Africa, supporting both public and private sector projects.
The Nachtigal project is located downstream of the Lom Pangar dam, also financed by EIB, and harnesses the water from this strategic reservoir to produce all-season electricity.