Project detail - JCM Salima UK Ltd.

Who is our customer

FMO invested in JCM Salima UK Ltd (“Salima”), a company incorporated in the U.K. and 75% owner of JCM Matswani Solar Corp Ltd, a Malawi Special Purpose Vehicle (the “Project Company”) established for the development of a 60 MWac solar PV plant located in the Salima district of Malawi (the “Project”). Infraco Africa Ltd owns the remaining 25% of the Project Company. The Project was developed by InfraCo Africa, JCM Power and Matswani Capital.

What is our funding objective?

FMO’s financing will be used to finance the construction of the Project which will be the first solar PV plant and Independent Power Producer in the country upon its completion. Malawi has abundant solar resource availability and the Project can assist Malawi in diversifying its electricity mix and reducing its reliance on import of fossil fuels.

Why do we fund this investment?

Malawi is one of the poorest countries in the world with a significant energy shortage. By funding this project, FMO can enable direct economic growth during the construction and operations of the Project and indirect growth by providing reliable electricity supply. The funding touches some of FMO’s key focus segments, Renewable Energy and Inclusive Development and allows FMO to build out renewable energy capacity in a market which is characterized by a power deficit. The Government of Malawi is supportive to renewable energy project development and consequently has created the enabling environment for potential investors and lenders to invest in the sector. The Project is expected to generate an average of 154 GWh of electricity annually.

What is the Environmental and Social categorization rationale?

The E&S risk of the transaction has been classified as cat B+. The main E&S impacts and risks relate to economic resettlement of current subsistence agricultural land-users and to labour conditions and safety during construction. The transaction triggers IFC Performance Standard 1,2,3,4 and 5 and Performance Standard 6 to a limited extent. Regarding the applicability of PS5, FMO concluded at the time of the initial investment that PS5 would formally not be triggered (as the project could not revoke land-use titles by expropriation or similar mechanisms) but that it would be applied, as the project would entail economic resettlement and trigger the need for livelihood restoration planning and execution. We can now confirm that PS5 has indeed been applied and continues to be applied to the project, and we now consider PS5 as being triggered by the project. A Livelihood Restoration Plan has been set up and implemented, and it will be subjected to independent monitoring. Performance 6 is triggered to a limited extent, as the Project affected area is modified habitat and impacts on priority ecosystem services are restricted to the agriculture by land-owners selling voluntarily. Performance Standard 7 is not triggered because the communities surrounding the Project are not indigenous peoples. Performance Standard 8 is not triggered beyond the standard chance find procedure requirement. An ESIA, a Stakeholder Engagement Plan and a Livelihood Restoration Plan in accordance with IFC Performance Standards have been completed by an international E&S consultant. Detailed environmental and social development plans are being developed, dedicated community liaison capacity is in place and to be extended with additional EHS management staffing. Outstanding follow-up actions plus newly identified actions related to strengthening gender-related development and risk management will be captured in an Environmental & Social Action Plan that will be part of the legal agreements.

More investments

Date	Total FMO financing
3/25/2019	USD 12.51 MLN