CDC Group, the investment unit of the UK government’s development arm, will inject up to $9 million into Congolese hydropower business Virunga Energy.
The investment is to support the development of the existing grid and the construction of two new plants. The overall project is expected to generate a total 50MW of new power.
The project is being set up in North Kivu, a region of Eastern Congo that has seen intermittent conflict over the last two decades and that has not seen development finance capital since the mid-1980s, according to CDC.
The institution’s pledge follows policy changes by the Congolese government, which last year passed a new energy law allowing for new types of investments. Funding towards projects in the region, which has virtually no access to power, was had been in the form of donor grants. Overall these have amounted to $90 billion since 2000.
CDC’s initial $2.5 million investment will mainly go towards supporting the electricity network’s expansion around the recently opened 12.6MW Matebe hydropower plant. A further $6.5 million will then be allocated to building two new plants near Lubero and Butembo once certain conditions are met, CDC said in a statement.
“Our investment is driven by the impact that electrification will have on private sector development – such as in agro-industry – in one of the world’s poorest places,” said Daudi Lelijveld, CDC’s investment director.
Virunga Energy is backed by The Virunga Foundation, a UK charity created to help provide clean power to communities in and around North Kivu’s Virunga National Park.