IFC infrastructure fund to invest in African geothermal power
London, 3 July: The International Finance Corporation (IFC) has launched a $100 million fund to invest in infrastructure in the world’s poorest countries. The ‘InfraVentures’ fund will make its first investment in geothermal power in Djibouti.

The IFC, the World Bank’s private finance division, has signed a deal with Reykjavik Energy Invest (REI), the development and investment arm of Icelandic geothermal energy company Reykjavik Energy, to develop at least 50MW of geothermal power in the east African country.

For the Djibouti project, InfraVentures will provide 35% of the exploration costs, including full feasibility studies and exploration drilling for the geothermal plant, with its contribution capped at $4 million. The IFC and REI will implement environmental and social standards and mobilise financing from other investors, and are assembling a consortium of project participants to secure additional funds, the IFC said.

“A lack of a reliable, secure, and low-cost energy supply is a key barrier to Djibouti’s business development, and demand will continue growing rapidly,” the IFC said. The project will help reduce carbon emissions by using geothermal generation as an alternative to diesel power.

The Djibouti project is located in the geothermal area of Lake Assal, the lowest point in Africa at 157 metres below sea level. While the country has only 90MW of installed diesel electricity generation capacity, it is estimated to have up to 800MW of geothermal potential, REI said.

Rashad Kaldany, IFC vice president for the Middle East, North Africa, and infrastructure, said: “A successful feasibility study for REI Djibouti, one of the first large-scale geothermal projects in Africa, will show the viability of geothermal as a major contributor to the region’s growing energy needs.”

The IFC said the InfraVentures fund “addresses the lack of sufficient funds and experienced professionals dedicated to the development of infrastructure projects, one of the major constraints to private investment in infrastructure projects”. It will provide early stage risk capital, fund feasibility studies, and support on developing financial models and project structures that are commercially viable and able to more rapidly complete financing.