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IG for the Pan Africa Katsina Solar Power Project

Region
Western Africa
Sector
Energy
Scope
IG
Grant Amount
EUR 4,000,000
Total project cost
EUR 150m
Status
Approved
PFG Lead Financier
PIDG

The project is a 96.24MWp utility scale ground mounted solar Photovoltaic Power Plant to be located in Katsina State. The project focuses on a stable state in the North of the country, where, due to lack of available hydro resources and gas supply—renewables are the only long term sustainable option.

The project is expected to cost circa €142 million to construct and will be financed by an international consortium.

The offtaker of the electricity is the National Bulk Electricity Trader (NBET) under a Power Purchase Agreement (PPA) with a fixed tariff and 20 year tenor that was signed in July 2016. The project will also benefit from a Put Call Option Agreement (PCOA) and Partial Risk Guarantee (PRG) provided by the World Bank. The connection line to the substation will be owned by the Transmission Company of Nigeria (TCN), but the works will be carried out by the Sponsor’s installation contractor (EPC).

A transmission line and switchyard station needs to be funded and constructed to connect the solar farm to the city of Katsina. If the project were to assume this cost, then the tariff would need to increase thereby making the power less affordable. Consequently, an investment grant was sought to cover the cost of constructing the transmission line thereby enabling the project to provide a more affordable tariff. The investment grant will be invested directly in the construction of the transmission line and switchyard (the progress of which will be monitored by the NSIA) and will belong to the state-owned Transmission Company of Nigeria. With the support of the EU-AITF, the Sponsors were able to reduce the tariff even further for NBET in order to increase the sustainability of the rate of the operation of the plant.

12/2016