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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 the construction of a 1,350 km transmission line allowing power exports from Côte d’Ivoire to Liberia, Sierra Leone, and Guinea. The interconnector aims to provide these countries with an increased supply of electricity to meet growing demand and to create incentive for hydropower potential, such as in Sierra Leone and Guinea, to be realised. Approximately 12.5% of the total Project cost will finance rural electrification, with an ITF Direct Grant Operation to cover the extra costs of implementing this in Sierra Leone.

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.

12/2017