Loan signed for €258m Sierra Leone renewables and agriculture project

Sierra Leone is forecast to become a “renewable energy hub” in Africa as seven organisations sign up to €133m of debt financing for an integrated renewable energy and agriculture project.

Addax Bioenergy, a subsidiary of Swiss-based energy group The Addax and Oryx Group (AOG), has announced the signing of a €133 million loan agreement with seven European and African development institutions for an integrated renewable energy and agriculture project near Makeni, a city in northern Sierra Leone.

The debt financing is being provided by: the African Development Bank; the Emerging Africa Infrastructure Fund; the Netherlands Development Finance Company (FMO); the German Development Finance Institution (DEG); the South African Industrial Development Corporation (IDC); the Belgian Development Bank (BIO); and the ICF Debt Pool, which is managed by Canada’s Cordiant Capital.

Equity for the project, for which the total financing is estimated to be worth €258 million, is being provided by the Swedish Development Fund (Swedfund) and AOG.

The investment will result in the development of a greenfield sugar cane plantation, and the construction of an ethanol refinery and a biomass-fuelled power plant. Sugar cane, thought to be the most efficient and sustainable crop for biofuel production, will be converted into bioethanol to meet demand in European and domestic markets.

The aim is to reduce dependence on fossil fuels and greenhouse gas emissions. The power plant will provide renewable electricity for the ethanol refinery and is expected to supply approxmately 20 percent of Sierra Leone’s national grid.

Construction of the ethanol refinery and power plant will begin later this year, with production becoming operational in 2013.

In a press release, Addax Bioenergy said the sugar cane ethanol project is the first of its kind in Africa and represents a “major step forward in Sierra Leone’s efforts to become a hub for renewable energy alternatives”.

Addax Bioenergy was formed in 2008 to develop a sustainable investment model for biofuels in Africa. Its parent, AOG, is a diversified group of energy companies operating principally in Africa.