Energy 4 Impact has helped to secure a landmark agreement between InfraCo Africa and Virunga Power to develop a 2.5MW mini-hydro power project, Lilondi, in Tanzania.
The Lilondi project will design and construct a run-of-river power plant at the Lingatunda falls on the Lilondi River in the Ruvuma region of south west Tanzania. It will also develop a mini-grid, connecting local villages and supplying electricity for the first time to over 2000 households and small businesses. Access to electricity will be a great asset to the community, not only improving the lives of individuals, but also stimulating economic development through productive use of energy. Construction on Lilondi is expected to begin in 2018 and the plant is due to be fully operational by 2020.
Lilondi is a joint venture between Virunga, a developer of rural utility projects in East Africa, and Ruvuma Hydro Electric Company Limited, a community development organisation. InfraCo is a donor-backed investor in the development of early stage infrastructure projects in Africa. In August 2017 InfraCo announced a Convertible Loan Agreement (CLA) with Virunga, committing US$0.4m to complete development activities for Lilondi. The CLA anticipates further support from InfraCo Africa to cover the construction costs of the project. InfraCo will also support the development of 5 additional project sites in Tanzania identified by Virunga, ranging in size from 2.5 MW to 16 MW and totalling 48 MW.
Lilondi will be run as a pilot project to demonstrate the viability of community partnership hydropower and mini-grid projects in Tanzania. Currently, only 26MW of Tanzania’s energy is produced by small hydro projects, compared with a potential of around 480 MW.
Energy 4 Impact made important interventions in two key stages of the development of Lilondi. In 2013, we advised the local community owners on the project feasibility and regulatory approval and, following a competition with private developers, introduced them to Virunga. In 2017, as manager of a mini-grid technical assistance programme in Tanzania, we arranged for Virunga to get legal advice on the transfer of land rights. This is an important consideration in the investment by InfraCo.
Commenting on the transaction, Brian Kelly, Managing Director of Virunga, said: