Chad - Djermaya PV Project – Partial Risk Guarantee


Project Summary

Approval Date 26 Sep 2019
Planned Completion Date 05 Sep 2018
Sovereign / Non-Sovereign Sovereign
Sector Power
DAC Sector Code 23630
Commitment U.A 7,978,171.72
Status Approved

Project General Description

The proposed operation concerns an African Development Fund (ADF) Partial Risk Guarantee (PRG) of approximately [UA 8.065.231,59 (EUR 10,000,000 equivalent)] to the Republic of Chad in line of the Djermaya Solar PV Independent Power Producer (IPP) project implementation. The Djermaya 28 MWe Solar PV Independent Power Producer project involves the purchase by the Societé Nationale de l’Electricité (SNE) of the power generated by a solar PV power plant in Djermaya, under a 25-year Power Purchase Agreement (PPA), 30km north of N’Djamena. This PV power plant is designed, constructed, operated and transfered on a build-own-operate-transfer basis (BOOT) by the independent power producer Djermaya CDEN Energy (DCE). The electricity will be sold to the grid at an initial tariff of XAF 79 per Kwh. The Partial Risk Guarantee (PRG) offered by the African Development Fund (ADF) which this document describes will mitigate for the IPP and for the providers of debt financing to the IPP the risk of non-payment of electricity bills by SNE’s under the PPA. Specifically, the PRG will provide credit enhancement to SNE on their payment obligations. The provision of an ADF PRG will facilitate the SNE to procure from a commercial bank that is acceptable to project parties a standby letter of credit at sustainable conditions. The letter of credit will provide liquidity in support of SNE’s electricity bill payment obligations under the PPA and will enable financial closure of the project, by reducing project risk and improving the bankability of the overall financing structure of the investment. The proposal concerns bills for power generated, as well as issued bills during the testing period and bills issued in the case of no intervention from the date of electricity delivery to the target date due to a failure of the Government or of the SNE or in case of political force majeure.

Project Objectives

The main objective of the Project is to diversify the energy mix, provide clean, reliable, low-cost power and to strengthen Chad’s national grid by increasing national installed renewable power by approximately 15%.

Beneficiaries

The Independent Power Producer (IPP) will increase the supply of electricity to households benefitting 60,000 households, which will largely benefit women and children; enterprises and industries, which will create employment opportunities for youth and women; social services such as schools and hospitals; as well as government facilities in Chad, which will enhance service delivery. The project will add 28 MWe to the installed capacity in Chad, which is equivalent to 15% of installed capacity. Access to affordable and reliable renewable energy will contribute to overall economic growth in Chad through among other things increased firm productivity and creation of small and medium sized businesses and as such contribute to poverty reduction and tax revenue generation. PRG will also allow SNE, an institution of relatively recent origin, to build a solid track record in the sector which will benefit future Independent Power Producers in the future.

Participating Organization

Funding
African Development Fund
Implementing
Société Nationale d#Electricité (SNE)

Information

IATI identifier 46002-P-TD-FA0-007
Last Update 19 Oct 2020

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Contact Details

Name KOUYATE Carolin Simone
Email c.kouyate@afdb.org

Geographic Location

Country Chad