UK development finance institution, CDC Group, is backing Virunga Energy, a hydro-electric power business backed by The Virunga Foundation, a UK charity, with a 10-year loan of up to $9 million for its project to build two new plants with almost 50MW generation capacity in North Kivu, Eastern Congo. The investment is being made with funds drawn from the UK Government’s Department of International Development’s Impact Acceleration Facility.
The financing is the project’s first commercial capital transaction and is thought to be the first development finance investment in North Kivu in 35 years. To date, Virunga Energy has had to rely on grant funding, but last year the Congolese Government passed legislation opening up the energy sector to new types of investment and management. Once complete, the project will establish power infrastructure in a region of 4 million people, many of whom have no access to electricity.
It’s expected the financing will be made in two tranches – the first, an initial investment of $2.5 million will go primarily towards the expansion of the electricity grid around the recently-completed and operational Matebe hydroelectric plant which can generate 12.6MW. The balance of $6.5 million will become available once certain conditions are met, allowing the construction of two new hydroelectric plants with 35MW of generation capacity near Lubero and Butembo.