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Euro 4 million loan from African Development Fund for Sahofika hydropower project in Madagascar

A loan of euro 4.02 million with a grant component has been authorized by the African Development Fund (ADF) to finance an equity investment of euro 30 million in the Sahofika hydropower project by the government of Madagascar.

The Sahofika hydropower project is located 100 km southeast of the capital Antananarivo on the river Onive. The project involves the construction of a 205 MW hydroelectric power plant on a Build-Own-Operate-Transfer basis (BOOT) and once commissioned is expected to contribute to the avoidance of 900,000 tons of CO2 equivalent annually.

The Sahofika project also includes the construction and rehabilitation of 110 km of access roads and construction of a 75 km, 220 kV transmission line.

ADF Vice-President for Power, Energy, Climate Change & Green Growth, Dr.Kevin Kariuki said:

“The support to the Sahofika project exemplifies the Bank’s commitment to delivering quality, affordable energy access across the continent for sustainable and inclusive growth, while helping member countries to responsibly harness their vast, yet underdeveloped renewable energy resources. As the largest hydro power project under development in the country, the Sahofika project will unlock Madagascar’s hydropower potential, and diversify its energy mix in favor of renewable at 90%.”

In December 2019, acting as Mandated Lead Arranger, ADF authorized a Partial Risk Guarantee of $100 million towards the Sahofika project to mitigate liquidity risk.

The Bank is focusing on strengthening and increasing Madagascar’s transmission network in order to relinquish the additional power generated by this major hydropower project and is supporting the Power Transmission Network Reinforcement and Interconnection Project in order to reach these goals.

ADF Country Manager for Madagascar, Mohamed Cherif said:

“The Sahofika project is a cornerstone of the Bank’s strong support to the power sector in Madagascar. The commissioning of Sahofika would enable national utility (JIRAMA) to save around 100 million euros annually in fuel costs, while phasing out the need for state subsidies.”

In addition to the ADF loan the government expects to receive extra subsidies for the project from the European Union and the Arab Bank for Economic Development in Africa.

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