AfDB agrees Euro 45 million loan for Cameroon power plant
The Board of Directors of the African Development Bank (AfDB) has approved a loan of Euro 45 million towards the construction of a gas-fired power plant in Cameroon to help meet the country’s fast-growing demand for energy.
The plant will be located nine kilometers inland north of the southern coastal city of Kribi and the transmission line will be connected to Cameroon’s southern interconnected power grid, which supplies 90 percent of total demand in the country.
The project, which is estimated to cost Euro 255.8 million in total, is a joint venture between the Republic of Cameroon and AES Kribi Holding BV, a subsidiary of AES Corporation. AES Corporation is a US-based power group that operates in 29 countries around the world, and is listed on the New York Stock Exchange. The company already owns and operates power plants in Cameroon and Nigeria.
The new plant will help Cameroon keep pace with its growing demand for energy. It has increased rapidly over recent years due to a combination of growth in the economy and a rising population.
Demand for energy has been increasing at six percent annually over recent years, and this growth is forecast to increase at the same rate for the foreseeable future. Without additional capacity in the short term, the country will suffer from a significant energy deficit.
Cameroon’s population of 19 million is forecast to grow at three percent annually over the medium term. In addition, access to electricity by the rural population of the country is predicted to increase, putting further pressure on supply.
While Cameroon is using its abundant hydropower resources, hydropower is not reliable all year round and the supply tails off during the dry season. This is a significant problem for Cameroon because hydro supplies 77 percent of the country’s power.
The Kribi plant will operate at higher production levels during the dry season In addition, the plant will displace inefficient thermal power plans with a consequent reduction in environmental impact, including lower carbon emissions.
The Kribi project is well aligned with the AfDB’s strategy in Cameroon, which includes focusing on improving infrastructure to promote economic growth and help to reduce poverty. Studies have shown the strong correlation between power supply and economic growth.
Ms. Tas Anvaripour, Head of Infrastructure Finance & PPP, Private Sector Department said: ‘Kribi will be the second Independent Power Producer (IPP) that the Bank is financing in Cameroon. The Bank continuous support to the energy sector in the country has shaped a favorable environment for other replications; I look very much forward to seeing many other IPPs in the years to come.’