InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), announced on 20 July that it had signed an agreement with Joule Africa to invest $6m in the 143MW Bumbuna II hydropower project in Sierra Leone. The funding is part of a package designed to push the project to financial close. InfraCo said that construction is expected to begin next year.
Joule Africa has been developing Bumbuna II, located in Tonkolili, since 2011. The project has a minimum four-year construction period and consists of an extension to the existing Bumbuna I facility which will result in 88MW of new generating capacity, incorporating a 4MW environmental flow powerhouse, as well as a new reservoir 30km upstream at Yiben which will provide a further 55MW of generating capacity and flexible storage for the system. The plant will provide 80MW year-round.
The project’s power purchase and implementation agreements were unanimously ratified by Sierra Leone’s parliament in November 2017, but it has struggled to make headway since then, along with several other projects in the country.
When Bumbuna II was ratified, the government’s focus was on progressing the Kissy thermal power plant, then majority owned by CDC Group, whose stake was managed by Globeleq, alongside Tempus Constant Qualitas Power. Kissy has also had difficulties, however, with elections causing delays and then serious compliance issues coming to light with Lebanon’s Blue Flare, which signed the early agreements with the government in 2011 but is no longer involved with the project. CDC sold its stake to Everstrong Capital in late 2019, which has since changed the plant design to combined cycle and increased capacity from 57MW to 85MW.
As well as waiting for Kissy to progress, environmental and social challenges facing the project have complicated financing. “InfraCo Africa’s commitment to Bumbuna II and Joule Africa comes at a crucial stage for us as we enter the last lap in the development of the project”, Joule Africa chief executive Paul Kunert said. “With InfraCo Africa’s commitment and a respected equity partner shortly to come in, we now have the funding in place to reach financial close next year.”
Bumbuna II has previously received grants from the PIDG Technical Assistance and the Emerging Africa Infrastructure Fund is likely to lend to the project. The project received a $3.5m commitment from the ElectriFI programme last year as well as $4.9m from the Development Bank of Southern Africa. African Alpha Investment Partners has also provided funding for the project.
Salini Impregilo and Hydrochina-Sinohydro were shortlisted as potential engineering, procurement and construction contractors in July 2016. The preferred bidder was selected in February 2018 but has not yet been announced.
Africa Investment Exchange: Gas
DEVELOPING PARTNERSHIPS ALONG THE VALUE CHAIN
September to December 2020 – online
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