The Green Climate Fund board approved the Mali solar rural electrification project at its 22nd meeting in February 2019. The project is expected to provide funding to solar-based mini-grids for rural electrification, with a total investment of EUR 46.2 million of which EUR 33.64 million in high concessional sovereign loan and EUR 2 million grant for technical assistance. GCF funding will additionally mobilise EUR 10.6 million from the West African Development Bank (BOAD). The first approved stage of the project will deliver access to clean energy to 50 localities in Mali, reaching 28,300 households.
"The Mali solar electrification project will build the capacity of rural electrification players while supporting access to financial services for productive users,” said Mr Christian Adovelande, President of BOAD. “The Bank seeks to align itself with the Paris Agreement aiming to set aside more than EUR 200 million for the promotion of private sector investments in solar energy”, he added.
Public-private partnership is the business model chosen for the project where the ownership of electrical assets will lie within the responsibility of the Government. For construction, competitive public tenders will be used to selected EPC companies. Operations and maintenance of the assets, on the other hand, will exclusively lie within the responsibility of the private sector through 15 years concession agreements. Selected operators will be required to invest 20% of assets value while gaining in exchange the ability to collect revenue from the sales of electricity over the 15 years at the approved tariff.
“Finding the right balance between cost recovery of electricity prices and consumers’ ability to pay is a major barrier to commercial off-grid rural electrification activities in Sub Sahara Africa,” said Mr Pierre Telep, Renewable Energy Senior Specialist at GCF. “To bridge this gap, the Government of Mali has borrowed from GCF at concessional terms, which are 40 years at 0% interest rate with a 10 years grace period. These concessional terms will help the Government support private sector operated mini-grids while achieving a uniform tariff”, he added.
Source: Green Climate Fund
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