The project consists of the construction of a 147 MW Hydropower Plant on the Ruzizi River bordering DRC and Rwanda. It will be developed as a Public Private Partnership, through a concession provided by the Governments of Burundi, DRC and Rwanda to the preferred investor (Sponsor), IPS-SN Power, to develop, finance, build, operate and maintain the plant. Ruzizi III will be the third hydropower development on the Ruzizi River following the existing plants, Ruzizi I (29.8 MW) and Ruzizi II (43.8 MW). The Governments are responsible for the construction of the entire public infrastructure necessary to evacuate the power to the three countries.
The project will supply capacity and energy under long-term Power Purchase Agreements (PPAs) to the respective public utility companies that distribute electricity in the three countries in the Great Lakes Region, namely: (i) Régie de Production et Distribution d’Eau et d’Electricité of the Republic of Burundi (“REGIDESO”), Société Nationale d’Electricité of the Democratic Republic of Congo (“SNEL”), and Energy and Water Sanitation Authority of the Republic of Rwanda (“EWSA”) (collectively, the “Offtakers”).
The contracting states may hold up to 30% of the equity in the form of preferred shares with a fixed dividend. The private partner will hold the majority in the project company and will have management control. Ruzizi III will be the first project in the region with this type of structure, and will be a flagship for private sector participation in infrastructure development in the region. It will not only provide low-cost, safe, and environmentally friendly electricity in a region suffering from a lack of energy, but it is also expected to have a positive impact on future private sector investments.
The EU-AITF Investment Grant will be used for the funding of a potential financing gap or to accomodate a total financing that does not exceed the targeted maximum electricity tariff level.