Trade and development finance institution the African Export-Import Bank (Afreximbank) has signed a project preparation facility financing agreement for an up to 200 MW private-sector, reservoir-based hydropower project to be located along the Lufira river, in the Democratic Republic of Congo (DRC).

The bank has partnered with independent power producer Kipay Investments, which will develop, design, build, install, commission and operate, as well as manage, the hydroelectric power plant.

Afreximbank will finance the technical and bankability studies, legal, financial advisory and fundraising costs for the development of the project. It will also take the lead in structuring the project's debt financing.

The agreement marks a major step in expanding green infrastructure across the Central African region, the bank said.

The captive power project will provide clean, reliable and affordable power to mining companies, thereby enabling beneficiation of critical minerals, including copper and cobalt, within the DRC and fostering significant value retention.

The project will also expand electricity access to the nearby community enhancing access to education and healthcare facilities.

Once completed, the project is expected to result in the reduction of greenhouse-gas emissions by approximately 108 000 t/y of CO₂-equivalent, thereby helping the DRC to meet its climate targets under the Paris Agreement.

The project is Afreximbank’s first private-sector renewable energy initiative in the DRC.

“Afreximbank is committed to supporting renewable energy projects that spur industrialisation and export development activities while promoting a just energy transition. Afreximbank is committed to supporting DRC’s energy transition and enhancing the country’s energy security while leveraging its vast renewable energy potential to develop sustainable trade-enabling energy infrastructure,” said Afreximbank Intra African Trade and Export Development executive VP Kanayo Awani.

This financing also reinforces Afreximbank’s commitment to mobilising private capital to develop renewable energy projects and secure a sustainable future for the DRC and the region, she added.

“The innovative structure of the finance deployed also encompasses a captive market, which enhances the project’s bankability,” she said.

Further, the project has led to renewed optimism for socioeconomic development among the local population and across the country, said Kipay Investments Eric Monga.

“It is important that local communities reap the benefits of the project, including creation of new jobs and capacity building for the future renewable energy sector in the DRC,” he emphasised.

Upon completion, the initiative is expected to lead to the creation of more than 2 000 direct jobs and 952 potential indirect jobs, and the augmentation of fishing and other economic activities on the reservoir.

The DRC government will also realise tax revenues over the 30-year duration of the project while industrial clusters around the mining area will also develop, he said.