SEFA Approves Energy Grant for Madagascar

Project aims to construct a sustainable power generation complex on one of the continent's top tourist destinations.

February 10, 2013
Manufacturing Group

The Sustainable Energy Fund for Africa (SEFA) has approved a $1 million grant to finalize pre-investment activities for a hybrid renewable energy project in Nosy Be Island in Madagascar.

The grant will be used to finance:

  • Feasibility studies for a combination of hydro, wind, and solar technologies;
  • Technical assistance to the national power utility;
  • The transactions advisory for a Public Private Partnership.

Through this intervention, the African Development Bank (AfDB) will play a catalytic role and pave the way for private investors and other financiers to work towards delivering a sustainable energy solution with huge socio-economic impacts on the island.

Nosy Be Island is one of the most appreciated touristic zones of the country, but is severely challenged in terms of access to reliable, affordable, and clean energy. The project – of an estimated investment cost totalling $30 million – aims at constructing a more sustainable power generation complex with an initial capacity of 8MW to partly substitute and complement the existing high-cost thermal electricity generation. Seventy new businesses and around 300 additional jobs per year mostly from tourism and hospitality sector would be created as a result of additional electricity supplied by the project. The project will as well reinforce the quality of services to the benefit of the existing customers of the utility and double the electricity access rate in Nosy Be to 70% in five years from the operational start. As a result, around 50,000 people will benefit from more reliable energy services. In addition, there will be significant carbon emissions reduction benefits.

The project is in line with both the government of Madagascar and the AfDB strategies. From year 2012, the government of Madagascar has granted significant fiscal incentives on investments in renewable energy.