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Upfront Subsidy for the CLSG Power Interconnection project

Region
Western Africa
Sector
Energy
Scope
IRS
Grant Amount
EUR 12,500,000
Total project cost
EUR 374,400,000
Status
Approved
PFG Lead Financier
EIB
PFG co-Financier
KfW, AfDB

The CLSG Interconnector project involves constructing a 1,357 km transmission line allowing power exports initially from Ivory Coast to Liberia, Sierra Leone, and Guinea. The interconnector aims to create incentives to explore the hydropower potential in Sierra Leone and Guinea which, if realised, would provide all the countries with an increased supply of electricity to meet growing demand. Approximately 12.5% of the total project cost will finance rural electrification.

As at 31 December 2016, the procurement process for the respective Lots of the Transmission line has been finalized. The corresponding No Objections for the bid evaluation report are being financed, following the completion of the tender prequalification. It is expected that in Q1 2017, the contract for the Lot related to the transmission line connection Man (Cote d’Ivoire), Yekepa (Liberia) and Nzerekora (Guinea) shall be signed and corresponding advance payment remitted. In Q2 2017, the respective works for this Lot shall commence.  It should be noted that the project is currently facing a financing gap and efforts to address this issue are being undertaken.

The upfront subsidy of maximum EUR 12.5 million will limit the financial risk of the project in the early years of operation, by reducing the costs of the Special Purpose Company during this ramp-up period. Indeed, the financial projections for the project show that lower than expected trading in the early years of operation of the line would generate insufficient revenue from transmission tariffs, which have to remain affordable, to cover all costs incurred. The upfront subsidy would apply during the first three years of operation.

12/2016