AFRICA / ENGLAND – The African Development Bank and the United Kingdom announced the selection of the Gas Insulated Switchgear Substations Project in Mauritius as a beneficiary project under the Room to Run Sovereign transaction (R2RS).
This means that up to 100 percent of the $110 million total project cost corresponding to the climate mitigation component of the loan was made possible through the additional capital that was unlocked by the UK government guarantee.
“This transaction is one of several projects constituting its lending programme through which the African Development Bank fulfils the call by stakeholders at COP27 for MDBs to innovate and scale up climate finance through the Multilateral Development Banks. The African Development Bank is proud to partner with the UK in this initiative and to be at the forefront of such developments,” noted African Development Bank vice president.
Approved in July 2023, this project will lay the ground for efficient and effective integration of variable renewable energy through the necessary network expansion investments, enhancing the reliability of the national grid and permitting the installation, interconnection, and absorption of renewable energy by the national power system. This will allow Mauritius to continue its path of energy transition and enable the integration of renewable energy and achieve the target of 60 percent renewable energy in the electricity generation mix by 2030.
As announced at COP26 in November 2021, R2RS is an innovative and highly scalable balance sheet optimization transaction that is helping the bank lend more funding to critical climate change projects. Under R2RS, a $2 billion guarantee is provided to the bank by the UK government ($1.6 billion in cover) and City of London insurers ($400 million). By assuming a portion of the credit exposure on a part of the bank’s sovereign portfolio, R2RS enables the Bank to provide up to an additional $2 billion of climate finance to Africa by 2027, split between adaptation and mitigation.
Charlotte Pierre, British High Commissioner for Mauritius said:
“Small Island Developing States (SIDS) like Mauritius suffer some of the most devastating effects of climate change. The UK government will not shy away from helping our SIDS partners respond. Working with AfDB through the UK’s guarantee will support Mauritius accelerate its global clean energy transition. Together, we can drive forward the Sustainable Development Goals (SDGs) agenda, ensuring a fair climate transition for everyone.”
In May last year, the UK and the bank announced the first two projects that were enabled by R2RS – an €80 million Egyptian wastewater project and a €37 million water sanitation project in Senegal. Both focus on water supply and sanitation and will benefit millions in their respective countries. This project in Mauritius is the sixth project to benefit from the unlocked lending capacity provided by R2RS since the agreement was signed in 2022. This announcement accompanies three other beneficiary projects in Tunisia, Benin and Kenya, bringing the total finance unlocked by the R2RS to over $400 million.
Kennedy K. Mbekeani, country manager and deputy director general for Southern Africa, added:
“This project will enable an estimated 133 MW of solar PV to be developed and connected to the new and refurbished GIS substations, helping Mauritius continue on a low carbon and climate resilient development pathway.”
