Madagascar’s Filatex seeks finance for African solar power expansion

 

Solar panels operated by Filatex. Photo supplied by the company.
Filatex of Madagascar aims to enter the solar power markets in Ghana, Guinea, Côte d’Ivoire and Mauritius in 2020, CEO Hasnaine Yavarhoussen and COO George Condé tell The Africa Report in an interview.
The family-owned real-estate company is in advanced talks to enter all four countries, where it plans up to a total of 150MW of solar capacity for an investment of $150m, the executives say. Technical analysis of possible sites has been carried out in the target countries, they add.

Bank talks

The planned investment would be 80% funded by bank debt, with 20% in equity. Filatex is in discussions with banks to secure the debt portion, the executives say. The operations in each country are planned to run on a project-finance basis, meaning that the individual project, rather than the company, would assume the debt.
Plans are most advanced in Ghana, where total capacity could rise to as much as 100MW. The company is considering a possible acquisition of 15MW in Mauritius, Condé says. Timelines for achieving profitability will be different for each project.

Unexplored potential

The company believes that solar development plans worth billions have left a wide choice of medium-sized solar projects in Africa underexplored. Filatex, which has “low” but undisclosed levels of debt, targets projects in the 5MW to 100MW range. On 18 December, the company announced a 50MW solar energy project in Madagascar in partnership with Canada’s DERA Energy.
  • The project will reduce electricity costs in mining and agriculture and will produce power at about $1m/MW, in line with industry norms, Condé says.
  • The project is fully funded with bank debt and equity financing of $50m.
  • It will bring electricity to nearly 1 million people in four cities, and the company expects all of the panels, supplied by Canadian Solar, to be in place by the end of 2020.

Electricity access

The company says that the partnership will benefit state-owned electric utility company Jirama, which will be able to cut costs by up to 40% and reduce reliance on fossil fuels.
  • Just 15% of Madagascar’s population has access to energy, falling to 4% in rural areas.
  • According to Lighting Africa, this is largely due to low population density outside urban zones.
  • The World Bank’s Doing Business report for 2018 ranked Madagascar 184th out of 190 countries for access to electricity.
Yet the resources exist for the country to close the gap with the sub-Saharan average. Madagascar has 2,800 hours of sunlight per year and potential annual capacity of 2,000 kWh/m². The country aims to extend access to energy to 70% of the population by 2030.
Filatex says it is still looking for new technical partners. “Madagascar can export its know-how,” Yavarhoussen explains. “If we can do it in Madagascar, we can do it abroad.”
The bottom line: If Filatex can develop its expertise in its partnership with DERA, it has the chance to become a major player in African solar power.

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