- Date written
- October, 2020
- Contact for guarantco
- Marjolein van Kampen
- Communications Director
- +44 (0)738 8857097
- First GuarantCo transaction in Madagascar (OECD DAC1 country)
- Affordable access to electricity and acceleration of new solar projects to help Madagascar reach its objective to have 80 percent of renewable energy in its energy mix by 2030
- African Guarantee Fund provided a co-guarantee for MGA 14.8 billion (c. USD 3.8 million)
GuarantCo, a Private Infrastructure Development Group (PIDG) company, provided developer GreenYellow, a company owned by GreenYellow SAS and Axian Energy, with a guarantee of 36.9 billion MGA (Malagasy Aviary), circa USD 9.3 million.
The guarantee supports debt funding for the operational Ambatolampy solar plant developed by GreenYellow, a 20MW solar power plant which was the first solar plant in Madagascar. The credit enhancement will also enable GreenYellow to accelerate investments in new greenfield projects that could contribute to Madagascar reaching its objective of an 80 percent renewable energy mix by 2030 and improving its energy security. Africa Guarantee Fund, supported by GuarantCo with a USD 50 million portfolio guarantee facility in 2016, provided a co-guarantee for MGA 14.8 billion (c. USD 3.8 million).
GuarantCo’s guarantee will help provide access to affordable clean energy to households and companies, create local jobs and stimulate wider economic development. With its ability to mitigate risks and lower the cost of financing, GuarantCo has played an active role in shaping the transaction, leading to additional local capital becoming available through BFV Société Générale Madagascar, Banque de Madagascar et de l’Océan Indien and Banque Nationale d’Investissement Madagascar.
Madagascar’s energy mix is presently dominated by heavy fuel oil and diesel. The government owned vertically integrated utility that operates most of the country’s grid infrastructure requires the involvement of the private sector to address the acute shortage of electricity access. Private developers, such as GreenYellow and Axian Energy, will not only significantly improve access to renewable energy in Madagascar but also offer stability of energy supply which will ultimately support the country to make progress toward achieving the United Nations Sustainable Development Goal 7 (affordable and clean energy).
Lasitha Perera, CEO at GuarantCo, said:
“GuarantCo’s involvement will help to increase private sector activity in the Malagasy renewable energy sector by reducing the high costs of funding, contribute to creating an enabling environment for private, domestic, local currency financing and support project development. The transaction is helping to crowd in three private sector banks to lend to a solar power plant and is playing a major role in building the capacity of these local banks to finance these types of projects which is key for the development of future projects in Madagascar.”
Otmane Hajji, CEO at GreenYellow, said:
“With this transaction and this new partnership, GreenYellow is reinforcing its strong presence in Madagascar and in the Indian Ocean, where we are already the first producer of clean energy. The refinancing of the Ambatolampy power plant will allow GreenYellow and Axian to go further and finance the development of future renewable energy projects in Madagascar.”
Jules Ngankam, CEO of African Guarantee Fund, said:
“Renewable energy is among the priority investment sectors of AGF. We are delighted to co-guarantee this power plant with GuarantCo and to ultimately contribute to the achievement of renewable energy mix in Madagascar. Through this partnership, we will increase our mandate in Madagascar, where we have so far unlocked USD 21 million of SME financing and created more than 1,000 jobs.”