Africa Growing Together Fund provides EUR 25 million loan for 2075MW Cahora Bassa Hydroelectric Rehabilitation and Modernization Project (Linked to Umbrella Record ID#36104)

Project narrative

On May 22, 2014, the African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (as captured via Umbrella Record ID#36104). The purpose of this $2 billion loan facility was to finance large development projects in Africa between 2014 and 2024. The AGTF is sponsored by the PBOC and the administered by AfDB. Then, on November 22, 2022, AGTF signed an EUR 25 million corporate loan (facility) agreement (ID#5050130000701) with Hidroeléctrica de Cahora Bassa SA (HCB) — special purpose vehicle and joint venture of Electricidade de Moçambique, E.P. (a state-owned energy company in Mozambique that deals with the generation, transmission, distribution and sale of electricity) [92.5% equity stake] and Redes Energéticas Nacionais (REN) [7.5% equity stake] — for the 2075MW Cahora Bassa Hydroelectric Rehabilitation and Modernization Project. On the same day, the African Development Bank (AfDB) issued an EUR 100 million loan (ID#2000130021930) to Hidroeléctrica de Cahora Bassa SA (HCB) for the same project. The borrowing terms of these loans are unknown. The purpose of the project is to modernize and rehabilitate the Cahora Bassa Hydroelectric Scheme (CBHS), with a total installed capacity of 2075MW, on the main stem of the Zambezi River. HCB is the largest power producer in Mozambique, accounting for more than 80% of Mozambique’s power output. It is the concessionaire responsible for operating the 2075MW Cahora Bassa hydropower plant in Tete province (exact locational coordinates: -15.5859, 32.7047). The project rationale is to enable the rehabilitation of CBHS with the following expected outcomes: (i) extend the life of the dam by an additional 25 years; (ii) increase the delivery of clean energy by an additional 110MW; iii) enhance the reliability of delivery of energy; (iii) reduce unplanned outages of CBHS enabling HCB to fulfill its contractual obligations to its off-takers; (iv) enhance regional integration of the electricity sector in SADC countries; (v) increase revenue for both HCB and Mozambique; and (vi) ensure the sustainability of energy security of South Africa, Mozambique and Zimbabwe.