Tunis, Tunisia, September 26, 2023—Tunisia will soon be able to lower the cost of power generation, bringing clean, renewable energy to its 12 million citizens, reduce greenhouse gas emissions by almost 100,000 tons annually, and accelerate its green transition.
This will be done through a landmark, privately financed solar project implemented by UAE-based AMEA Power, with financing from IFC and the African Development Bank (AFDB). The project will be the first large-scale, privately financed solar project in Tunisia and one of the largest infrastructure public-private partnership projects in the country in over a decade.
IFC will provide its longstanding partner, AMEA Power, with up to $26 million in debt financing, including $13 million in concessional finance as the implementing entity of the Clean Technology Fund, a program of the Climate Investment Funds (CIF). This is alongside AFDB's debt financing of up to $26 million, which includes $13 million from the Sustainable Energy Fund for Africa (SEFA). The financing package will support the development, financing, construction, operation, and maintenance of the $86 million 100-MWac[1]/120-MW Peak[2] solar plant in the Kairouan governorate of Tunisia.
Blended finance is an approach that uses small amounts of concessional funding to mitigate the risks associated with investment projects in emerging markets and developing economies, make a project commercially viable, and "crowd-ing" in private capital for high impact investments.
Tunisia is one of the region's most exposed countries to climate change because of its dependence on climate-sensitive agriculture and high levels of urbanization prone to flooding. The country's overreliance on imported hydrocarbons to meet rising electricity demand has also threatened its energy security and made the sector vulnerable to price and exchange rate fluctuations.
The Kairouan Solar project aims to harness private financing to reduce dependence on imported fuel and gas-generated electricity, enhance the Tunisian power sector's competitiveness, and contribute to restoring macro-fiscal stability.
"The Government is expressing its firm commitment to successfully bring to term the 120MW Kairouan PV Solar project, which represents a significant step forward in the country's energy transition," said Tunisia's Prime Minister, Ahmed Hachani.
"We are delighted to reach financial close on this 120MW solar power plant in Tunisia, our first project in the country. This is a significant milestone for AMEA Power and for Tunisia, as it represents the largest solar project fully developed in the country to date. Despite all the challenges that the market has been experiencing since the COVID pandemic, we are proud that we are delivering this project and honoring our commitment to supporting Tunisia's transition to clean energy. We are grateful for the strong support of our lenders and the Tunisian government in making this project a reality," said AMEA Power's Chairman, Hussain Al Nowais.
"We are delighted to reach this milestone, the signing of project agreements, making the first disbursement, and therefore commencement of construction of Tunisia's first solar Independent Power Producer (IPP) project imminent. This accomplishment is testament to AfDB's dedication to promoting sustainable energy solutions in Africa. Moreover, the successful collaboration between the Government of Tunisia, AMEA Power, the African Development Bank, SEFA, and the IFC speaks volumes about our collective commitment to helping Tunisia reach its 35% clean energy target by 2030," said Dr Kevin Kariuki, Vice President of Power, Energy, Climate, and Green Growth at the African Development Bank.
"This project represents a positive stride towards Tunisia's green transition. South-South investments such as this one underscore the essential role that private sector partners can play in the energy transition. This project is in line with our strategy to enable South-South investments, including from Gulf Cooperation Council countries to emerging markets," said Hela Cheikhrouhou, IFC's Regional Vice President, Middle East, Central Asia, Türkiye, Afghanistan, and Pakistan.
"This ambitious, renewable energy project will not only bring more affordable, clean energy to the people of Tunisia, but it will help Tunisia achieve its energy goals and attract more private investments into future green projects," said Sérgio Pimenta, IFC's Vice President for Africa. "Through the project, we're proud to build on our partnership with AMEA Power to expand their operations across North Africa, helping address the effects of climate change in the region."
The project is part of a pioneering renewable energy program outlined by the government of Tunisia in 2018, with help from IFC which, together with international partners, provided the government with early-stage services in 2018 paving the way for the current project.
IFC has long supported AMEA Power in expanding across Africa and the Middle East, including Jordan, Egypt, and Burkina Faso. In November 2022, IFC provided a $770 million financing package to the company, alongside international partners, to support the company's twin solar and wind projects in Egypt that will deliver more than 1 gigawatt in combined renewable energy capacity at the lowest price in Africa.
This new project in Tunisia aligns with IFC's strategy to increase access to clean energy and support cross-border investments from the Gulf Cooperation Council countries to emerging markets. To date, IFC's cross-border investments with GCC-based companies have reached $6 billion from IFC's own account and $4.77 billion in mobilization, financing 170 projects.
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org
About Climate Investment Funds
The Climate Investment Funds (CIF) are unique financing instruments designed to initiate transformational change towards low-carbon and climate-resilient development through scaled-up financing channeled through the multilateral development banks, including IFC. CIF funding for this project is provided through the Clean Technology Fund (CTF). CTF provides developing countries with positive incentives to scale up the demonstration, deployment, and transfer of low carbon technologies with significant potential for long-term greenhouse gas emissions savings. For more information, visit www.climateinvestmentfunds.org
[1] A Megawatt of alternate current power
[2] A Megawatt-Peak is a unit used to describe the rated power output of solar power systems in ideal conditions.
This press release is also available in Arabic and French
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