The IFC finalized financing for the construction of Zambia’s first large-scale solar power plant, the West Lunga project. The project is the first to be developed, tendered, awarded, and financed under the World Bank Group’s Scaling Solar program.
Financing agreements have been signed between Bangweulu Power Corporation Ltd., sponsored by Neoen/First Solar and Zambia’s Industrial Development Corporation (IDC), IFC, and the Overseas Private Investment Corporation (OPIC) in Lusaka, Zambia. Neoen and First Solar have now issued a “notice to proceed” for the construction of the new 47.5-MWac facility.
The equity for the project is provided by Neoen/First Solar and the IDC. The financing package includes senior loans of up to $13.3 million from IFC, up to $13.3 million from the IFC-Canada Climate Change Program, and up to $13.3 million from OPIC, along with an interest rate swap from IFC and a partial risk guarantee from the International Development Agency.
Neoen/First Solar were one of two winners in the inaugural Scaling Solar tender in Zambia, setting a new benchmark for solar tariffs in sub-Saharan Africa, with a ground-breaking 6.015 cents/kWh tariff, which will remain fixed for 25 years.
Zambia’s first Scaling Solar tender, which was designed and tendered based on the Scaling Solar approach under the guidance of IFC’s Advisory Services team, attracted significant international investor interest, receiving seven bids. The Neoen/First Solar plant will have a capacity of 47.5MWac and will be constructed in just nine and a half months using First Solar panels. The other winner of the first-round tender, Enel of Italy, is expected to reach financial close on its 28.2-MWac plant in the coming months.
“Once again we demonstrate our ability to gather support from major investors such as IFC and OPIC for a project with remarkable impact,” said Xavier Barbaro, CEO of Neoen. “We are proud to be giving Zambia its first high-power solar park in this initial stage of the Scaling Solar program and to be offering a competitive rate that constitutes a record for Sub-Saharan Africa.”
