Taking advantage of the country’s hydropower potential
To address the electricity shortage which has been hanging over Cameroon for several years, the country has to resort to very costly emergency production contracts. Electricity demand increases by an average of 7% a year and is expected to continue to increase. The shortfall in generation contrasts with the country’s substantial hydropower potential, 5% of which is currently exploited.
The Sanaga Basin holds the country’s largest hydropower potential. The Nachtigal project is consequently located on the Sanaga River, 65 km to the north-east of Yaoundé. It comprises the design, construction, servicing, operation and maintenance of a run-of-river dam and the associated 420 MW hydropower plant for 35 years. The project also includes the transmission lines and transformer stations required to transfer electricity to the Nyom 2 transformer station in the north of Yaoundé.
This hydro project is a key milestone in the Electricity Sector Development Plan developed by the Government of Cameroon in 2014, with World Bank support. It is to date the least costly option to meet the strong growth in the country’s electricity needs and has the lowest environmental and social impacts.
The power generation at the Nachtigal power plant will be stable and reliable as it will benefit from the regulation of the flow of the Sanaga, assisted by the Mbakaou and Lom Pangar reservoirs upstream, cofinanced by AFD, which ensure there is a sufficient flow, even during the dry season.
At its commissioning in 2023, the power plant will produce over 2,900 GWh a year, i.e. almost 30% of the country’s power generation.
Strategic infrastructure for Cameroon
The Nachtigal power plant will improve and secure access to electricity for populations, while contributing to the country’s low-carbon transition.
The project will also reduce the average power generation cost in the country, without significantly adding to the borrowing of the State, thanks to a public-private partnership which will mobilize private capital.
Finally, the increase in the country’s power generation capacity will allow Cameroon to become an electricity exporter in the subregion in the medium/long term.
European donors coordinated by PROPARCO
The project has been developed by the Government of Cameroon, EDF International and IFC, via a dedicated SPV, Nachtigal Hydro Power Company S.A. (“NHPC”).
100% of the electricity produced will be purchased by ENEO, the national production and distribution company, a partner of PROPARCO since 2006.
The total project cost is estimated at EUR 1.26bn. 24% will be financed by equity and 76% by senior debt. 15% of this debt is provided by loans from local banks guaranteed by the World Bank and 61% by loans from development finance institutions, including AFD (EUR 90m) and PROPARCO (EUR 60m). PROPARCO conducted the negotiations for the operation on behalf of AFD, DEG (EUR 35m) and FMO (EUR 30m) in the context of their cofinancing facility.
In addition to the European bilateral institutions led by PROPARCO, the remainder of the debt from other development institutions is provided by AFC, AfDB, CDC, EAIF, EIB, IFC and OFID.
Proparco and @AFD_en sign a €150M loan for the construction of the Nachtigal hydropower plant, which will eventually supply almost 30% of #Cameroon's electricity production. @deginvest_int and @FMO_development also contributed to this essential project: https://t.co/evdHZ3fd3z pic.twitter.com/XU62nogUh3— Proparco (@Proparco) 9 novembre 2018