AGF and GuarantCo issue EUR 7.1 million guarantee to finance Madagascar’s largest solar plant extension

African Guarantee Fund and GuarantCo, part of the Private Infrastructure Development Group (PIDG), have provided GreenYellow, with a credit guarantee of MGA 33 billion (c. EUR 7.1 million) with a nine-year tenor to a syndicate of local banks to finance a 20 MW solar plant extension alongside a 5 MW solar battery storage system in Ambatolampy, Madagascar.  Societe Generale acted as the main lender. GuarantCo provided a guarantee of MGA 23.6 billion (c. EUR 5 million) and African Guarantee Fund provided 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 African Guarantee Fund, GuarantCo and Societe Generale helped refinance in 2020. For the first transaction in October 2020, GuarantCo provided a MGA 36.9 billion (USD 9.3 million) guarantee and African Guarantee Fund 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. Through demonstration and replication, this transaction 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.

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.

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. Through 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.

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.”

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.”

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.”