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Credit facility to support the debt funding of the largest solar power plant in Madagascar and Indian Ocean

Government agencies

Solar Photovoltaic

NEA, AXIAN group, GreenYellow, GuarantCo, African Guarantee Fund and Société Générale, closed a MGA 47.1 billion (c. EUR 10 million) credit facility to support the debt funding of the largest solar power plant in Madagascar and Indian Ocean

NEA (New Energy Africa), an operator of renewable and hybrid energy in Africa and part of AXIAN group, GreenYellow, the Indian Ocean leader in Photovoltaïc industry with more than 100MWp of installed capacity, GuarantCo, part of the Private Infrastructure Development Group (PIDG), African Guarantee Fund (AGF) and Societe Generale have provided the NEA Ambatolampy solar farm closed a MGA 47.1 billion (c. EUR 10 million) credit facility covered by a credit guarantee with a nine-year tenor to a syndicate of local banks to finance a 20 MW solar plant extension alongside a 5 MWh solar battery storage system. Societe Generale acted as the main lender. GuarantCo provided a guarantee of MGA 23.6 billion (c. EUR 5 million) and AGF a guarantee of MGA 9.4 billion (c. EUR 2 million).

This is the second phase of an existing 20 MW solar power plant operation that Societe Generale, GuarantCo and AGF helped refinance in 2020. AXIAN Group and GreenYellow now operate NEA Ambatolampy a solar power plant with a 40 MW capacity and a 5MWh battery-storage capacity, making it the largest solar power station in the Indian Ocean.

The project will provide improved electricity access to around 285,000 people supporting SDG 7 and reduce emissions by 34,000 tonnes of CO2 through the displacement of thermal power supporting SDG 13. Only 15 percent of the population have access to electricity with considerable disparity between urban (79 percent) and rural (8 percent) areas.

GuarantCo has been the first company to mobilise local currency from commercial banks for utility scale solar projects in Madagascar. Through demonstration and replication, this is expected to enhance the resilience of the power sector by diversifying away from thermal power, reducing the cost of generation and improving the sustainability of the state-owned electric utility and water company in Madagascar.

For the first transaction in October 2020, GuarantCo provided a MGA 36.9 billion (USD 9.3 million) guarantee and AGF a MGA 14.8 billion (c. USD 3.8 million) guarantee to refinance the operational 20 MW NEA Ambatolampy solar power plant, the first grid connected and largest solar plant in Madagascar. This 20 MW power / 5 MW battery extension is testimony to the replicability of such projects and the viability of local currency financing for solar plants in Madagascar.

GuarantCo has played an active role in shaping the transaction with its ability to mitigate risks and lower the cost of financing. This has led to additional local capital becoming available through Societe Generale Madagasikara and BNI Madagascar.

Benjamin Memmi, CEO of AXIAN Energy, said: “We are privileged to again work with Societe Generale, GuarantCo and AGF towards this utility-scale project that aligns with Sustainable-Development Goals and will improve hundreds of thousands of Malagasy people’s quality-of-life. This closing strongly embodies our shared values and commitment to energy inclusion in Madagascar.”

Pierre Marouby, CEO of GreenYellow Indian Ocean, said: "The completion of this transaction demonstrates the commitment of our financial partners and reaffirms their confidence in GreenYellow and our business model. With this new financial achievement, GreenYellow reinforces its strong presence in the Indian Ocean, where we are already the leading producer of photovoltaic energy.”

Layth Al-Falaki, CEO of GuarantCo, said: “We are delighted to have closed a second local currency transaction with NEA. Both transactions have helped to crowd in private sector banks to lend to solar power projects and played a major role in building the capacity of these banks to finance clean energy projects that are key for the sustainable development of Madagascar. Most importantly, our guarantees will help provide access to affordable clean energy for people and companies in Madagascar, create local jobs and stimulate wider economic development.”

Jules Ngankam, Group CEO of African Guarantee Fund, said: “Together with GuarantCo, our initial credit guarantee to NEA has provided access to clean, affordable and reliable energy to households and companies in Madagascar, whilst creating local jobs and stimulating wider economic development. As the largest solar power plant in Madagascar, NEA Ambatolampy will now have even more significant impact in accelerating the country’s green energy transition. Thanks to this second guarantee line which has helped double the capacity of the NEA Ambatolampy plant, AGF is delighted to support Madagascar’s sustainable economic development.”

Zdenek Metelak, CEO of Societe Generale Madagasikara, said: “Société Générale is very happy to have finalized the second phase of this landmark transaction. This emphasizes the very specific position the bank holds in Madagascar being able to structure complex operations and stand-by on the long run beside its clients. This innovative financing is part of the Grow With Africa initiative launched by Societe Generale Group 6 years ago and illustrates the major role we play to build a sustainable future in Africa.”