Standard Bank has announced the close of a R567-million deal to fund Eswatini’s 13.5 MW Lower Maguduza hydropower project.

The project was sponsored and developed by African Clean Energy Developments (ACED) with the African Infrastructure Investment Managers-managed IDEAS Fund and the Eswatini Public Service Pensions Fund as shareholders.

The ACED will continue to provide construction management services, with sister company Energy Infrastructure Management Services (EIMS Africa) being both the operations and maintenance contractor and the operations phase management services provider to the project.

Standard Bank acted as a mandated lead arranger for the transaction, noting that the project enables Eswatini to achieve its ambitions of energy security by generating the power internally from its natural resources rather than relying on imports.

In recent years, the government of Eswatini has embarked on the development of additional generation capacity and Eswatini’s energy sector has undergone reforms in a move to liberalise its energy market, enhance energy security and improve access to reliable and affordable electricity.

“As the leading banking partner for the renewables sector in Eswatini, the financing of this project reaffirms our commitment to driving the just energy transition across this continent we call home.

“It also tangibly demonstrates our determination to promote the responsible adaptation of renewable energy sources,” says Standard Bank head of corporate and investment banking for Eswatini Barry Schutzler.

Eswatini imports about 80% of its power primarily from South Africa and Mozambique, with 65% of its imported power specifically coming from South African State-owned utility Eskom.

The Lower Maguduza project is one of the first independent power producers to close in Eswatini and helps shift the country away from reliance on imported coal to renewable energy.

According to the International Hydropower Association (IHA), hydropower accounts for 40% of power in the sub-Saharan Africa region.

The IHA also notes that 90% of potential hydropower remains untapped on the continent, representing the biggest proportion of underutilised hydropower capacity in the world.

“This deal will unlock critical renewable energy development to support Eswatini’s energy security and access to affordable energy. It also assures the country’s steady journey towards reducing its reliance on traditional forms of energy and pivots it towards cleaner, sustainable sources of energy,” says Standard Bank energy and infrastructure executive VP Sherrill Byrne.

“We are immensely proud to have achieved financial close and construction commencement on our first hydroelectric project, and our first project in Eswatini, in partnership with our very supportive lenders, shareholders, contractors, the [Eswatini Electricity Company] and all of our Eswatini partners and regulators. In addition to energy security for Eswatini, this project will also create jobs and support development locally,” adds ACED CEO James Cummings.