Value of PIDG investmnent
Number of people benefitting
The west African nation of Mali is recognised by the OECD as a fragile and conflict-affected state. Instability has severely restricted investment in the country’s basic infrastructure. With Mali’s population growing at an average rate of 2.9% per annum, increasing strain is being placed on basic services, such as energy. The Government of Mali’s National Energy Policy makes specific mention of the need to strengthen international co-operation in the field of energy.
In response to Mali’s crippling power deficit, Albatros Energy Mali, a company based in the country’s industrial Kayes Region, initiated development of a 90MW heavy fuel oil power plant. The plant will deliver much-needed baseload power to the country’s national grid via a new transmission line. Albatros Energy approached GuarantCo to support an efficient financial structure for the project to ensure its viability and attract investment. GuarantCo committed US$4.06m, creating a 13-year Debt Service Reserve Account (DSRA), enabling Albatros Energy to pay back its loans over a longer period whilst still offering comfort to lenders in Mali’s challenging, post-conflict investment climate. GuarantCo’s guarantee will also help to keep electricity prices affordable for Malian consumers, 49.3% of whom live below the international poverty line. The Albatros Energy project was the first project in Mali for PIDG companies. Alongside GuarantCo, TAF provided US$500,000 to support legal and environmental studies and EAIF provided long-term financing split between a conventional Euro-denominated loan tranche and a Sha’ria Euro loan. EAIF’s involvement marks its first participation in a Sha’ria loan alongside other Islamic lenders, ICD and IDB. Local commercial banks are unable to provide the long-tenor loans necessary to deliver large-scale energy infrastructure due to liquidity constraints and tenor restrictions imposed by the Central Bank.
Delivering 90MW of additional baseload power to Mali’s national grid will give up to 4.5 million people improved access to power. Access to power will stimulate growth of the country’s key industries, creating employment and boosting the national economy. Using modern electricity in the home reduces reliance on biomass fuels, which contribute to deforestation and respiratory illness.
By establishing a long-tenor DSRA, GuarantCo created a financial structure for the project which is unique to Mali and to the country’s energy sector. GuarantCo’s ability to call on key expertise and finance available from other PIDG companies enabled it to fulfil its commitment to overcoming the challenges and delays inherent in establishing the country’s first IPP. The Albatros Energy plant became operational in October 2018. The project has served to deepen the country’s debt capital markets and to demonstrate the potential investment opportunities presented by Mali’s growing energy sector. The successful development of the project has also allowed Albatros to invest in health care, drinking water, and education facilities for the local community.
Working with the PIDG companies is of great value to us. They bring specialist expertise, innovative thinking and a determination to help us succeed in challenging environments.