The Power Purchase Agreement (PPA) was initially signed between Albatros Energie and EDM (the local government owned utility and offtaker of the electricity produced by the power plant) on the basis of certain pre-agreed project and finance costs. However, due to significant delays that resulted from the political and security issues from 2010 to 2013, project costs increased substantially. The tariff agreed in the PPA was therefore potentially too low for the project to be viable and a more efficient financing structure was required in order to maintain the same tariff and avoid an increase in costs to the end users. GuarantCo’s DSRA guarantee helped Albatros Energie to achieve that, by reducing the debt component which eases the debt service obligations on the company. The significant benefit of the DSRA guarantee is that the legal obligation to reserve cash to service interest and principal payments on the debt, can now be used for other purposes.
Developing the energy infrastructure is a government priority in Mali. Not only to increase access to energy for households, but also to improve power supply for the country’s main industries: mining and cement production that drive economic growth.
The development of the HFO power plant by Albatros Energie in the Kayes region, will add up to 90 MW of power generation capacity to the national grid, of which the 66 MW minimum offtake by the government will represent circa 8% of the 2019 projected generation capacity for Mali. According to EDM, if the HFO plant was online now, it would represent 30% of the generation capacity for Mali.