Project detail - Red Sea Power Limited

Who is our customer

Red Sea Power Limited SAS ('RSP') is the first grid connected Renewable Energy Independent Power Producer ('RE IPP') in Djibouti. The Project has been developed by FMO Private Equity, Climate Investor One, Africa Finance Corporation and Great Horn Investment Holdings. The Project involves the construction of a c.60MW Wind Farm in Ghoubet, Djibouti. The Project also involves construction and operation of interconnection facilities comprising of a 220 MVA substation and 5km overhead transmission line to connect to the nearest Electricité De Djibouti substation.

What is our funding objective?

FMO-A senior secured loan to RSP to refinance a 60MW wind power plant and associated transmission line ('Project'), which have been constructed fully with equity.

Why do we fund this investment?

The Project fits well with the Energy and FMO strategic focus: (i) The Project creates impact through deployment of the first renewable energy power generator in Djibouti; (ii) it increases the energy security of Djibouti, which is heavily reliant on expensive and carbon intensive Heavy Fuel Oil ('HFO') power generation facilities; (iii) wind contributes to the diversification of the country’s energy mix, dominated by HFO and Ethiopian Imports (iv) being the first RE IPP in Djibouti, it sets the trend for the development of the energy sector.

What is the Environmental and Social categorization rationale?

The Project concerns the refinancing of a newly operational wind project and is categorized as an E&S B+ investment. The potential E&S risks of this specific investment are related to labour rights, a unique security context, biodiversity challenges, and management of high community expectations. FMO’s E&S due diligence indicates that the investment will have impact which must be managed in a manner consistent with the following IFC Performance Standards: PS 1: Assessment and Management of Environmental and Social Risks and Impacts, PS 2: Labor and working conditions, PS 3: Resource Efficiency and Pollution Prevention, PS 4: Community Health, Safety and Security, PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, and PS 8: Cultural heritage. A robust investigation at development stage confirmed that there was no physical or economic displacement, and no impact on Indigenous Peoples groups. These findings were confirmed through due diligence as well. Therefore, IFC PS5 and PS7 are not considered applicable.