World Bank member, the International Finance Corp. (IFC) and Reykjavik Energy Invest, have entered into a joint venture (JV) agreement that will lead to the launch of infrastructure projects in developing countries. The projects are aimed at providing reliable, secure, and low-cost energy supplies.
The first project to be funded by IFC InfraVentures, as the new JV has been named, is the exploration and development of geothermal energy in Djibouti. The project will help the country address its power shortages as well as addressing carbon emissions. IFC InfraVentures will provide 35% of the exploration costs, including full feasibility studies and exploration drilling for the geothermal plant.
While IFC InfraVentures’ contribution is capped at $4 million it will work with Reykjavik Energy Invest to implement environmental and social standards and mobilize financing from other investors. The two organizations are assembling a consortium of project participants to secure additional funds.
Hjorleifur Kvaran, Chief Executive Officer of Reykjavik Energy Invest, said, “There is a huge opportunity for geothermal power production in Djibouti. We are assembling a consortium of investors, and IFC is our first partner. We are very happy that, through IFC InfraVentures, the World Bank Group is dedicating funds for the project. This is an important step in securing financing and minimizing our financial risk.”
Reykjavik Energy Invest has an agreement with Djibouti’s government to help replace diesel-generated electricity with more environmentally friendly solutions.
Rashad Kaldany, IFC Vice President for the Middle East, North Africa, and Infrastructure, said, “This first transaction for IFC InfraVentures is moving an innovative approach forward. A successful feasibility study for REI Djibouti, one of the first large-scale geothermal projects in Africa, will show the viability of geothermal as a major contributor to the region’s growing energy needs. We look forward to a long-term partnership with REI.”