The pan-African trade insurance agency, The African Trade Investment and Development Insurance (ATIDI), has supported Songa Energy’s USD 7.7 million run-of-the-river hydro project on the Ruvyironza River in Burundi.
The 1.65 MW project is expected to be the first hydro Independent Power Producer (IPP) in the country, is set to benefit from ATIDI’s Political Risk Insurance, which will cover the risk of default by the Government of Burundi following an Arbitral Award under the Project Agreements. It is expected to increase the country’s electricity generation capacity, creation of employment and avoidance of greenhouse gas emissions according to the ATIDI.
The project has been developed by Songa Energy and is being financed by Virunga Power, which itself is a developer, investor, and operator of renewable power projects and rural distribution grids.
Commenting on the deal ATIDI Underwriter & Ag. RLSF Coordinator Obbie Banda said the company had been in close contact with Virunga Power over the last few years as they advanced their portfolio projects.
“It’s great to be in a position to celebrate this milestone as we continue to support electrification efforts, not only in Burundi but across the African continent. We look forward to working alongside the Government of Burundi and partners such as Songa Energy and Virunga Power, to support similar efforts as we all make our collective efforts towards the attainment of SDG 7 – access to energy for all,” Mr. Banda said.
Songa Energy project, the 2nd renewable energy IPP to connect to the national grid in Burundi, is located on the Ruvyironza River.
The Burundian electricity sector is characterized by a high potential for increasing production from hydroelectric power, which remains a largely underexploited renewable resource for the country.
Less than 15% of the population having access to electricity, Burundi needs to develop its electricity production and supply to facilitate economic development according to the ATIDI.
The project began construction in May 2023 and is expected to reach commercial operations by the end of 2024.
“We are excited by the partnership with ATIDI and see significant value in their support for our Songa Energy investment in Burundi. By bringing local knowledge and developing products that fit the needs of the country, ATIDI is unlocking capital in unique ways. We look forward to a long-term “win-win” partnership with the Government of Burundi to ensure reliable, clean energy is available for the population,” Virunga Power Founder & CEO Brian Kelly said.
The electricity generated by the project will be sold exclusively to the Burundian national power and water utility, la Régie de Production et de Distribution de l’Eau et de l’Electricité (REGIDESO) under the terms of a 25-year Power Purchase Agreement (PPA). The power from the project is expected to be delivered to the national grid via a new 2.4km transmission line that will be constructed as part of the project.
The Upper Ruvyironza project is one of two hydro power plants totaling 10.65 MW being developed jointly by Songa Energy and Virunga Power within Burundi. This will be the second renewable energy Independent Power Project (IPP) to connect to the national grid in Burundi, with the first being a 7.5 MW solar project that was also supported by ATIDI.
In December 2022, Gridworks – the UK government-backed investor in Africa’s electricity networks – announced an investment of USD 50 million, to fund new projects being advanced by Virunga Power.