AfDB To Fund Geothermal Project In Djibouti

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African Development Bank (AfDB) has agreed a $7.5 million finance deal with Djibouti for the development of a geothermal exploration project in the region of Lake Assal.

According to the bank’s Regional Integration Director, Alex Rugamba – who stood in for the Vice-President, Infrastructure, Private Sector and Regional Integration – the project will provide the French speaking nation a more convenient and cost friendly source of energy.

“The exploitation of geothermal potential in the Lake Assal region will enable the Djiboutian population to access reliable, renewable and affordable source of energy,” said

The funds will come in two forms – a $5.3 million and $400,000 loans from AFDB soft loans arm, African Development Fund, and a $1.8 million grant from the Sustainable Energy Fund for Africa (SEFA), an official statement revealed.

Ali Yacoub Mahamoud, Djibouti’s Minister of Energy in charge of Natural Resources, commended the development bank for “breathing new life into this 20-year old project”.

The first phase of the project – which involves exploration and appraisal drilling – will be handled by the government, while the private sector will lead the production drilling, steam gathering system, electricity production and transfer to the national grid phase.

Djibouti relies mostly on fossil fuels and some hydropower imports from Ethiopia, with majority of it’s current generation capacity situated in Djibouti City. The existing power stations are old, polluting and expensive to operate. In addition, fuel imports are expensive and require important foreign-currency expenditure, hence the need for geothermal energy.

Fortunately, contributions from the AfDB and SEFA will provide greater financing, serving as a catalyst to rally independent geothermal electricity producers and improve electricity generation in the country.

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