Project detail - Weza Power SU

Who is our prospective customer?

Weza Power is a special purpose company and private utility 100% owned by Anzana Electric Group Limited, established through a Public-Private Partnership (PPP) with the Government of Burundi to rapidly expand and modernize the electricity distribution network and significantly increase access to reliable energy in Burundi, one of Africa's most densely populated countries with very low electricity access.

What is our funding objective?

FMO will invest up to USD 10 million senior debt into Phase 1 of Weza Power. FMO’s funding will be invested into CAPEX and development costs to expand Burundi’s electricity grid, providing first-time connections for households in several pilot regions. Weza Power’s objectives for Phase 1 are to (i) launch utility operations and implement a 2-year pilot capex program across 4 distribution feeders, rehabilitating existing infrastructure and targeting at least 45,000 new connections, and (ii) continuing project development activities to achieve full financial close and to smoothly continue the roll-out across the full concession zone with a target of 1.2m new connections.

Why do we want to fund this investment?

Debt financing for Weza Power is highly aligned with FMO’s strategy to Pioneer, Develop, Scale. Weza Power’s objective to expand the distribution grid and energy access in Burundi is expected to have a transformational development impact, unlocking economic growth, improving public services and providing millions of people with first-time electricity access. Expanding Burundi’s distribution capacity will also allow further renewable energy generation capacity to be added. FMO’s investment aims to support activities that contribute to climate mitigation, contributing to SDG 13, in line with FMO’ s methodology to determine the green finance attribution. FMO’s investment aims to support activities that contribute to financial flows to LDCs contributing to SDG 10.

What is the Environmental and Social categorization rationale?

The investment has been classified as Environmental and Social category is B+ due to a) occupational health and safety risks associated with construction and operation, including work in remote locations where certain sites are only accessible on foot, b) fragile state context with land scarcity and climate risk (landslides); and, c) community health and safety impacts from transport of materials as well as risks associated with first-time household access to electricity. These potential adverse impacts will be mainly site specific and can be addressed through relevant mitigation measures. Applicable IFC Performance Standards (PS) are 1-7; no cultural heritage features have been identified so PS8 is not applicable, although as a precaution a chance find procedure will be in place. PS7 on Vulnerable and Indigenous Peoples is mainly triggered by power line routes possibly running through Batwa household plots. Impact on communities include restricted use of land under the distribution lines (to facilitate electricity connection to Batwa and other households), as is similar to impacts on households from other ethnic backgrounds as part of PS5 land acquisition). Free, Prior and Informed Consent is not required due to the limited impact only on specific households (not on Indigenous People communal lands), but Informed Consultation and Participation is being undertaken. One-on-one agreements will be entered into with affected households. Economic displacement is one of the main impacts of the project, which is partly mitigated through land use restrictions rather than formal Right of Way easements, where agricultural practices can continue under the distribution lines with certain safety thresholds. Physical displacement may be required, albeit limited. Focus will also be on PS2 to ensure proper labor and working conditions, as well as PS4 related to community health and safety. PS6 (biodiversity) impact is limited as the majority of lines are low voltage and insulated; for medium-voltage lines bird diverters may be required in higher risk areas (e.g. river/wetland areas). Management plans to mitigate these risks, as well as Resettlement Action Plans and/or Livelihood Restoration Plans and Vulnerable People Plans are/will be developed for each project area. All investments will be managed in accordance with the IFC PSs as well as World Bank Group Environmental, Health, and Safety Guidelines. An Environmental & Social Action Plan will be part of the agreement.