Mozambique is set to build its first-ever utility-scale solar farm after receiving $55 million in debt financing from the Investec-managed Emerging Africa Infrastructure Fund and the International Finance Corporation.
The debt package includes a joint loan from the EAIF and the IFC worth $17 million, to which the EAIF added a further $7 million as a Viability Gap Funding grant raised from its umbrella organisation, the Private Infrastructure Development Group. The latter is funded by the UK, Australian, Dutch, Swedish, Swiss, Norwegian and German governments.
The financing also includes $19 million coming from the IFC’s own accounts, as well as a further $19 million from the Climate Investment Funds. The equity contribution for the $76 million project is coming from the 40MW solar farm’s owners, which comprise developer Scatec Solar (52.5 percent), Norway’s development finance agency Norfund (22.5 percent) and Mozambique’s utility Electricidade de Moçambique (25 percent).
“Loans from conventional commercial lenders to projects in fragile states like Mozambique are infrequent and often simply unavailable,” explained Nazmeera Moola, head of the EAIF at Investec Asset Management. “Without support from highly specialist and focused funds like the EAIF, catalytic progress in difficult investment climates would often be impossible.”
The Macuba project, which has a 25-year power purchase agreement with EDM, will account for about 4.8 percent of Mozambique’s current generation capacity, although it will provide 40 percent of the power available on the country’s northern grid once completed in mid-2018.
The EAIF came under Investec’s management last year, having previously been run by Harith. Recent investments have included supporting Helios Towers Africa, a telecom infrastructure and power operator, and the world’s largest single-stream fertiliser plant in Nigeria.
The fund has invested $1 billion across 57 projects since its creation in 2002. It has also helped mobilise more than $9 billion of private capital, according to the EAIF.