The project objective is to bring additional solutions (through technical assistance) to achieve the diversification of energy resources in the East African region and help the region’s transition towards renewable energy solutions that are technically, economically and financially viable. The targeted investments are mainly projects of a maximum amount of EUR 5m in hydroelectricity, biomass, biogas, solar and wind power. Other types of projects eligible to the AFD financing are energy efficiency projects, especially in the Agribusiness sector. These solutions, both energy efficiency (EE) and renewable energy (RE) projects, will also contribute to the improvement of the investors’ sustainability, through a more secure power supply and a lower energy bill.
The Project consists of three successive lines of credit at concessional terms (tenor of over 10 years, below market interest rate) to the local banks who in turn will lend at soft conditions to local investors. To be eligible to the credit line, these investors, mainly medium scale enterprises, will have to sponsor renewable energy (RE) projects – for the main part - or energy efficiency (EE) projects. As at June 2014, two credit agreements have been signed between AFD and two banks in Kenya and one with a Tanzanian bank and the negotiation are still ongoing with several Ugandan Banks.
End of 2014, additional euros 60 million were approved by AFD for Kenya and in 2015, Chase Bank and Commercial Bank of Africa have joined the project. In 2016, two additional banks in Kenya (DTB and Coop Bank) joined the project, one bank in Uganda (DTB Uganda) in July 2016 and one bank in Tanzania (Bank of Africa Tanzania - BOAT) in November 2016.
The first EU-AITF technical assistance grant is completed. This support has helped to (i) assist the sponsors in carrying out feasibility studies and preparing project presentations to banks; (ii) assist the banks in assessing the projects, to build up their financial and technical expertise through the appraisal of the projects; (iii) contribute to the monitoring of the first stages of the projects' implementation (during the construction phase and the first stage of the projects' operating phases), etc.
During Phase I of the project, the Regional Technical Assistance team has built a project pipeline with 123 active projects, accounting for an installed capacity of 450 MW, an energy flux of 2079 GWh/year, and an annual CO2 abatement of over 1.5 million tonnes per annum. The total investment amounts to USD 1,045m, with a debt finance requirement of USD 694m.
To date, nine enterprises benefit from loans under these credit lines and 96 sponsors are in contact with the Regional Technical Assistance Programme (RTAP). Examples of financed projects are: (i) small hydro power plants developed in the tea sector; (ii) an energy efficiency project implemented at a dairy, which will also ensure sustainability of the dairy plant dedicated to process the milk production of small farmer members of the cooperative; and (iii) a biogas project associated with avocado oil production which intends to find a sustainable and cost effective solution to the issue of waste avocado (skins, stones, pulp) after extraction of oil and enable production growth.