JOHANNESBURG (Reuters) - France’s EDF Group signed an agreement on Thursday to build and operate a 1.2 billion euro ($1.37 billion) hydropower project in Cameroon, the first step in a plan to expand its hydropower business in Africa, a company executive said.
The 420-megawatt project will be located on the Sanaga River near Nachtigal Falls, around 65 km (40 miles) northeast of the capital Yaounde and, when operational, will contribute 30 percent of Cameroon’s total electricity generation capacity.
“It’s the first of its kind (in Africa) for EDF to have all these industrial roles together: to design, negotiate, piloting the project, building, operating and maintenance,” Marianne Laigneau, who heads EDF’s international division, told Reuters.
EDF will own a 40 percent stake in the project and the Cameroon state will hold 30 percent.
The International Finance Corporation (IFC), the World Bank’s investment arm, will also own 30 percent and is coordinating lending from 11 development finance institutions and four local commercial banks.
The contracts were signed in Paris between representatives from EDF, the IFC and the government of Cameroon, along with lenders involved in financing the project.
EDF will put 120 million euros in equity into the project and will operate the facility for 35 years, selling the power to the grid via a power purchase agreement.
Construction is due to begin by the end of this year with the project expected to go into operation in 2023.
EDF has 432 hydropower plants in operation around the world. And as its global strategy focuses more on Africa, it aims to develop more hydroelectric projects on the continent.
“We are completely convinced there is a large hydro potential in Africa,” Laigneau said.
“We are looking for opportunities with partners, because we are always operating with local partners, in Cameroon after Nachtigal ... in Ivory Coast, in South Africa, in Zambia just to mention a few of them.”
As it seeks to spur growth in businesses outside its home market, EDF has turned to Africa, where a rapidly expanding population is underserved by often unreliable power grids.
Less than 40 percent of African households have access to national power networks, according to the International Energy Agency.
EDF is already active in the renewable energy sector in Africa with industrial wind and solar projects. And has taken stakes in several off-grid solar start-ups, a strategy Laigneau said the company was ramping up.
“We started with pilot projects in a limited number of countries. And now we are developing in more countries - Togo, Kenya, Ghana, Senegal. More countries. Ambitious targets. More products ... It’s a competitive market,” she said.
($1 = 0.8753 euros)
Reporting by Joe Bavier; Editing by Adrian Croft