CAPACITY INCREASE With Phase 2 of the Bumbuna hydroelectric power project, Sierra Leone’s installed capacity will increase from 80 MW to nearly 300 MW
Independent power development and gene- ration company Endeavor Energy has entered into a joint development agree- ment (JDA) with international power developer Joule Africa to develop, finance and construct the $700-million Bumbuna Phase 2 hydro- electric power project, in Sierra Leone.
The project will add an additional 202 MW to the existing 50 MW at Bumbuna Phase 1, which will mean lower mining costs and a potential increase in mining capacity, says Endeavor Energy CEO Sean Long.
He adds that the lack of available power in the country is the result of under- investment in the energy sector, with the current national power generation capa- city sufficient to light one bulb a day for every person in Sierra Leone.
Endeavor, in partnership with Joule Africa and the Sierra Leone government, hopes to play a role in changing this by tripling the power generation capacity in the country and demonstrate to the global investment community, through its investment in Bumbuna Phase 2, that Sierra Leone is a great place to invest.
Further, microenterprises and small businesses, which provide the bulk of self-employment opportunities, will find it difficult to grow without reliable energy.
With Phase 2, the national installed capacity will increase from 80 MW to nearly 300 MW. The energy generated from Bumbuna Phase 2 is significantly lower than current thermal power generation alternatives.
Bumbuna Phase 2 is the first project for Endeavor Energy, since its formation in June, following an initial commitment from energy-focused global private-equity firm Denham Capital’s $3-billion fund.
As part of the JDA, Endeavor Energy has agreed to fund the remaining development costs for the project and expects to invest up to 75% of the project’s equity at financial close, which is estimated at $150-million.
The additional power supply is mostly aimed at meeting the current power demand, owing partially to mining activities and to residential and commercial demand.
“With the active support the Sierra Leone government is providing, we expect that the development of the project will be completed quickly and, once the project comes on line, it will enable growth in the mining and small business sectors of the country’s economy,” says Long.
He states that the greatest single source of unmet power demand in Sierra Leone is from the iron-ore mining firms that are located north of Sierra Leone, near the Bumbuna dam.
Long adds that the company expects Bumbuna Phase 2 to significantly reduce the cost of electricity to the mining industry and that iron-ore mining firms will benefit from the low-cost energy generated by the project.
Mining companies currently self-generate a significant portion of their power requirements using medium- and high-speed diesel generators, which is costly.
Power use agreements are being discussed by the Sierra Leone government and include a market structure that envisions a single power trader or bulk trader, owned by govern- ment, that will acquire power generated by independent power producers. The bulk trader will then on-sell power to bulk off- takers, mining companies and residential and commercial users.