DRC Engages Linklaters on UK-Backed Solar Initiative
Linklaters has advised the Ministry of Hydraulic Resources and Electricity of the Democratic Republic of Congo on a solar project development.
The DRC’s Ministry of Hydraulic Resources and Electricity has been advised by Linklaters on the Essor Access to Electricity (A2E) Initiative, an initiative launched in 2019 and funded by the United Kingdom government, for the development of solar mini-grids.
Essor is a distributed renewable energy project, operating independently of the national grid.
The Democratic Republic of Congo (DRC), the 11th largest country in the world, “has one of the lowest rates of electrification in the world” according to the United States Agency for International Development.
As stated by the membership organisation DevelopmentAid, “DRC has ambitious plans to scale up access to energy, further increase its renewable energy generation and to implement Sustainable Energy for All”, an organisation working in collaboration with the United Nations, government leaders and the private sector, among others, to achieve sustainability goals.
On 3 June, the DRC government signed three 22-year concession agreements with an international consortium comprising UK investment company Gridworks Development Partners, Spanish energy developer and contractor AEE Power and French company Earanove, which is focused on electricity and water production in Africa as well as the management of public services. The three companies will be branded under the name Moyi Power.
The contracts with these three companies will cover the construction, development and operation of three hybrid solar plants as well as various distribution systems for the supply of energy to three cities which have limited access to electricity, namely Bumba, Isiro and Gemena. Collectively, these three cities comprise approximately 460,000 residents.
Essor has attracted strong interested from development finance institutions (DFIs) “because it provides a new approach for off-grid investment” stated DFI and Gridworks founder, CDC Group, in a company press release on 3 June.
The Essor project also aims to promote the growth of business, create employment opportunities including green jobs, and improve health and education in the DRC by providing affordable and reliable electricity from the solar projects.
The project will initially require about USD 100 million in funding, which will be secured via grants, external financing and equity. The three concession agreements allow for limited recourse financing, with the hope of attracting high-level investors for the solar projects.
Gridworks, AEE Power and Eranove are currently in discussions with the Emerging Africa Infrastructure Fund (EAIF) and the African Development Bank (AfDB) for the securing of debt finance.
Discussions regarding grants are also underway with Private Infrastructure Development Group (PIDG), The Rockefeller Foundation and AfDB’s Sustainable Energy Fund for Africa.
In a statement, Gridworks’ CEO Simon Hodson said: “Moyi Power has the critical mass and regulatory support that is missing from most mini-grid models. It can set an example to the off-grid industry, pushing down costs for consumers and attracting long-term capital from investors.”
AEE Power’s chairman José Ángel González added: “We strongly believe that the participation of private capital is key for the development of the electricity distribution sector on the continent.”
Financing and development of the projects is expected to take a minimum of 14 months, after which Moyi Power will commence an 18-month construction process.
Linklaters’ advisory team was led by partner François April, with counsel Justin Faye, senior associate Pierre Sikorav and associate Sandra Hoballah Campus.
Independent financial advisory firm Philae Advisory provided financial and transactional advice to the DRC’s Ministry of Hydraulic Resources and Electricity, with Innovation Energie Développement acting as technical adviser.
The EAIF agreed to lend EUR 29 million for the in one of West Africa’s poorest countries, in April.
Source: iclg
