InfraCo Africa to partner with Virunga Power and local communities to develop 2.5MW mini-hydro in Tanzania.

1st Aug 2017

InfraCo Africa signed a Convertible Loan Agreement (CLA) with Virunga Power (a developer of rural utility projects in East Africa) committing US$0.4m to complete development activities for a 2.5MW mini-hydro project (“Lilondi”) in south-west Tanzania. The CLA also anticipates further support from InfraCo Africa to cover construction costs for the Lilondi project.

Situated at Lingatunda falls, on the Lilondi river within the Ruvuma region of Tanzania, the project will design and construct a 2.5MW run-of-river hydropower plant. The project will also develop a mini-grid, connecting local villages to power for the first time and providing electricity to more than 2,000 households and small businesses. Construction is intended to commence in 2018 with the plant being fully operational in 2020.

Matching InfraCo Africa’s public risk capital and robust project development, health and safety standards to Virunga Power’s rural utility ambitions and technical knowledge creates a strong partnership. Further partnering with Ruvuma Electricity, a community-owned power company led by the local Catholic Diocese of Songea, creates an even stronger project team which benefits from committed local involvement. By working together, the project team will provide reliable renewable power whilst also setting the standard for future power projects in the region.

InfraCo Africa is increasingly seeing the need to develop mini-grid power to reach remote families and businesses; Lilondi and its pioneering partnership with local communities will provide us with a model that we can replicate across our portfolio of projects.” (Brian Count, Chairman, InfraCo Africa)

It is estimated that Tanzania has 480MW of small hydro potential. Recognising this potential, Tanzania’s electricity regulator (EWURA) has developed a template PPA for small hydro which some private sector developers have applied to successfully operate plants. To date, these grid-connected plants have tended to be discrete and collectively contribute just 26MW to Tanzania’s energy mix. Lilondi could change this by being the first of a portfolio of run-of-river hydropower plants.

Using public risk capital provided by InfraCo Africa, the Lilondi project will be developed, constructed and run as a pilot to demonstrate the viability of community partnership hydropower and mini-grid projects in south west Tanzania. Once operational, Lilondi could not only stimulate local economic development, by providing businesses with much needed electric power, but also mobilise additional private sector investment into mini-hydro. Virunga Power has identified a further five project sites, ranging in size from 2.5MW to 16MW and InfraCo Africa is already working to support the development of this 48MW portfolio.

“Support from InfraCo Africa will enable Virunga Power to expand its unique portfolio of utility-scale rural renewable energy projects in Tanzania. By working with rural communities to translate their locally available renewable resources into a source of low-cost, reliable power, Virunga Power and InfraCo Africa will be stimulating rural economic growth, enabling productive-use electrification and providing clean energy to families, farms, businesses, and other local institutions.” (Brian Kelly, Managing Director, Virunga Power)

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