In the context of already close cooperation, FMO and PROPARCO have set up a new type of guarantee to reduce the risk exposure of the lead institution: risk subparticipation. In this case, PROPARCO’s client is consequently FMO, our Dutch counterpart. The advantage for the final beneficiary (NYAMAGASANI 2 HPP) is that it has a single lender at the funding round. The project is majority owned by Frontier Energy II Alpha + Beta K/S (DK), a Danish Private Equity Fund which is developing a portfolio of renewable projects in Sub-Saharan Africa and in which PROPARCO is a shareholder.
In the context of the Nyamagasani 2 project, the construction and operation of a 5 MW hydropower plant in Western Uganda are the purpose of the financing.
100% of the electricity generated by this project will be purchased by UETCL, Uganda’s electricity generator and distributor, at a price of 8.5 USDc/kWh, under a 20-year power purchasing agreement.
This project has been structured in the context of the Ugandan GetFit program. The total project cost stands at USD 19.3m, with 25% financed by equity and 75% by debt (totally provided by FMO, with a PROPARCO risk subparticipation covering 40% of this debt).
Nyamagasani 2 will raise the generation capacity of Uganda’s power system.
The power plant will generate an average of 28.2 GWh of low-carbon electricity a year throughout the project life cycle. As with Nyamagasani 1, the tariff of the electricity produced is more competitive than most of the other power generation projects in operation in the country. Nyamagasani 2 will theoretically provide access to electricity to some 310,000 people.
Furthermore, the power plant will create or maintain some 8,900 jobs in Uganda’s economy and will contribute EUR 25m to national GDP over the project life cycle.
The project will avoid the emission of 10,400 teq CO2 a year.