Out-Law / Your Daily Need-To-Know

Out-Law News 2 min. read

Joint venture to build and operate ‘pipeline of hydropower plants’ across Africa


African Infrastructure Investment Managers (AIIM) is forming a partnership with French hydropower equipment manufacturer Mecamidi to develop “a pipeline of hydropower plants” in several African nations.

AIIM, a company owned by Australian investment bank Macquarie and South Africa’s Old Mutual Investment Group, said the 50-50 joint venture with Mecamidi subsidiary Hydroneo Afrique will “develop, finance, build, own and operate” the facilities.

The plants will be built in a number of countries (1-page / 41 KB PDF) including Cameroon, Cote d’Ivoire, Gabon, Ghana, Guinea and Mozambique, AIIM said. “With a total investment of approximately $500 million, these projects are expected to represent an installed capacity of 200 megawatts (MW) over the next five years.”

Hydroneo Afrique’s chief executive officer Samuel Zekri said the joint venture will allow the companies involved to “jump start sub-Saharan Africa’s hydropower industry”. Zekri said the partnership can build on Hydroneo Afrique’s initial investments in similar projects under development in Kenya, Uganda and Rwanda.

Zekri said: “This strategic alliance will allow us to make the most out of the region’s great hydro potential and address its ever growing energy need.”

Akshai Fofaria of Pinsent Masons, the law firm behind Out-Law.com said: “Focussing on renewables will diversify the region’s energy sector and garner interest from Western players. The variety of localities will also encourage foreign investment as it allows for partitioning of risk, a particular concern in African projects.”

According to AIIM, “about 15% of the world’s hydropower potential is in Africa, of which less than 10% is currently utilised”. The objective of the partnership is to “unlock the hydropower potential in Africa mainly through run-of-river hydropower plants, which have less of an environmental and social impact than large-scale hydropower projects”, AIIM said.

AIIM chief executive officer Jurie Swart said the “combination of a critical requirement for core infrastructure and the development of private investment programmes is driving a strong pipeline of infrastructure opportunities through which investors are able to generate strong risk-adjusted returns”.

Swart said the new joint venture “represents an attractive opportunity to support the development of a pan-African infrastructure platform”.

Swart said that with a generating capacity of more than 1,000 MW, AIIM’s power portfolio is “advancing the development of the sub-Saharan African energy sector”. “Complementary to the partnership with Mecamidi, AIIM has built strong relationships with power project developers including international power developer, Joule Africa and renewable energy developer, African Clean Energy Development, to enhance its infrastructure investment pipeline.” 

AIIM, which develops, advises and manages private equity infrastructure funds aimed at investing in long-term institutional equity in African infrastructure projects, said it has around $1.2 billion of funds under management across five infrastructure funds.

AIIM said its flagship ‘African Infrastructure Investment Fund 2’ has made several strategic investments for the African continent. These investments include the Cenpower Generation Company, that is developing the 350 MW Kpone independent power plant (IPP) in Ghana, a combined cycle gas turbine facility in the Tema industrial zone near Accra and the Azura-Edo IPP in Nigeria, a 450 MW open cycle gas turbine facility near Benin City.

A report published earlier this year by McKinsey & Company said sub-Saharan Africa’s electricity sector will need capital investment of about $835bn by 2040 to be able to meet the continent’s increasing demand for electricity.

The report said hydropower and solar are projected to “loom larger in absolute terms”, with output almost tripling from 92 terawatt hours (TWh) of electricity to 256 TWh by 2040. “Where in 2010, there was effectively no solar capacity on the continent, if each country builds for domestic demand only, we expect solar to produce about half as much as hydro by 2040,” the report said.

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.