[PARTNER INTERVIEW] Jean Marie Takouleu: As part of its Djoliba 2021-2025 Strategic Plan, the BOAD is going to finance the deployment of 380 MW of installed electrical capacity in the WAEMU (West African Economic and Monetary Union) zone, 40% of which will be renewable energy. Two years after the launch of the plan, what is your mid-term assessment?
Oumar Tembely: First of all, I would like to remind you that to promote the harmonious development of the States of the Union, the BOAD, the WAEMU’s development institution, adopted a 2021-2025 Strategic Plan in September 2020, known as the Djoliba Plan, in reference to the majestic River Niger, so characteristic of our sub-region. The total amount of commitments planned for the new Strategic Plan up to its completion in 2025 is 3,293 billion CFA francs, or around 5,020 million euros.
The Djoliba Strategic Plan (2021-2025) aims to bring about a change of scale, particularly in terms of activity levels, strengthening the BOAD’s action in favour of its member states and the WAEMU private sector, and improving the living conditions of the Union’s populations. The BOAD’s interventions are therefore focused on priority areas such as (i) transport and digitalisation, (ii) energy and natural resources, (iii) agriculture and food security, (iv) education and health, real estate and housing, and (v) financial institutions and shareholdings, thus targeting the majority of sustainable development goals (SDGs 1 to 13, and 15).
In the specific area of energy, the ambition is to install 380 MW of additional capacity, including around 40% of renewable energy, in order to improve the rate of electrification and energy supply in the region. The following cross-cutting impacts are expected: (i) 244,000 jobs created, including 16,700 in the entire economic fabric of SMEs/SMIs, with a particular focus on young people and women, (ii) a contribution of CFAF 3,710 billion to the gross domestic product (GDP) of the States (i.e. an estimated annual contribution of 0.8% of the annual GDP of the WAEMU), (iii) CFAF 580 billion in tax revenue and (iv) 18 million tonnes of CO2 avoided through the financing granted.
Two and a half (2) years after its implementation, the BOAD has financed the installation of 205.9 MW of additional power generation capacity, with renewable energy accounting for 85.9 MW, or 41.72% of the installed capacity, thereby contributing to the Plan’s objective.
Nearly a year ago, your institution launched the Programme for the Promotion of Private Investment in the Solar Energy Sector (PPIPS) with co-financing from the Green Climate Fund (GCF). What is the aim of this initiative? How will it contribute to electrification efforts in the WAEMU zone?
The programme targets the six (06) least developed countries in the WAEMU zone (Benin, Burkina Faso, Guinea Bissau, Mali, Niger and Togo), which have one of the lowest rates of access to modern energy services in the world, high electricity costs, excessive dependence on fossil fuels and the resulting energy security challenges. Based on nationally determined contributions (NDCs) and national energy plans, these countries plan to reach 1,192 MW of installed solar capacity by 2030.
The large-scale mobilisation of the private sector should enable the programme to achieve this objective, in particular through the promotion of a “blended finance” approach, which involves granting affordable, long-maturity resources to private promoters of solar power plant projects. Among other things, this will reduce the financial risks of projects and attract commercial and public banks to increase investment in solar energy in West Africa.
As part of its implementation, the Programme will also provide grants to build the capacity of local project developers to structure investments, particularly in terms of project preparation and management. It will also help to improve the regulatory framework by building the capacity of public institutions in the energy sector.
Finally, technical assistance will be provided to strengthen BOAD’s capacity to integrate climate change aspects into the project cycle.
At a total cost of 133.5 million dollars, the Programme should help to increase existing solar capacity by 215 MW and provide access to solar energy for 2.9 million people, with an estimated impact of 4.8 million tCO2 equivalent avoided.
In the face of the climate emergency, diversifying the energy mix is becoming a major challenge. What is the BOAD doing to support WAEMU member countries in diversifying their energy mix?
As mentioned above, the 205.9 MW already financed by the Bank for WAEMU countries and the private sector are partly made up of clean energy production sources, in particular solar and hydroelectric power, which account for 41.72% of investments. The BOAD is also resolutely committed to the development of sub-regional integration through the financing of electricity interconnection projects between countries, in order to pool the various energy sources and secure the sub-region’s electricity supply, while promoting a reduction in the cost of the kilowatt-hour to cover the energy needs of the Union’s populations and economy.
Also in connection with climate issues, the WADB has identified a number of areas of intervention as part of its CSR policy, including area 5, which is specifically aimed at “Combating climate change and developing renewable energies”. The aim is to increase the proportion of financial resources dedicated to financing renewable energies. By 2025, nearly 18 million tonnes of CO2 are expected to have been avoided through the financing granted.
All these actions testify to the Bank’s commitment to diversifying the energy mix in order to help combat climate change.
The issue of gas is being debated in West Africa and the rest of the world. Countries such as Senegal and Mauritania have discovered natural gas deposits on their coasts. But some civil society organisations are up in arms against the exploitation of this fossil fuel. And yet, at the Summit for a New Global Financial Pact held in June 2023, Senegalese President Macky Sall insisted on the need to consider gas as a transitional energy. What is BOAD’s position on this issue? Will the Bank continue to finance gas-fired power stations?
In the breakdown of the 380 MW of additional capacity targeted by 2025 under the Bank’s Djoliba plan, renewable energies are expected to account for around 40%. The remaining 60%, or 231.8 MW, will come from thermal energy production facilities, including gas-fired power stations. This clearly demonstrates that BOAD is committed to financing gas-fired power generation projects.
It goes without saying that all due diligence in terms of environmental and social safeguards will be carried out in order to avoid or mitigate any possible impacts and to promote acceptance by local populations.
To accelerate the energy transition in heavy industries and eventually replace gas, the world is turning to hydrogen. Mali is home to a natural hydrogen (or white hydrogen) deposit at Bourakébougou, around 60 kilometres north-west of the capital Bamako. How are you helping the country to exploit this natural resource?
As far as Mali’s natural hydrogen is concerned, BOAD remains ready to provide the technical and financial assistance needed to exploit it for electricity production, if the country and the private sector involved so request.
Discussions are already underway with the promoter and other stakeholders to prepare the necessary documents for the financing of feasibility studies for a pilot hydrogen electrification project, and to draw lessons on the possible use of this energy source to contribute to energy access in EU countries.
Is BOAD preparing a strategy for investment in the emerging hydrogen sector?
It should be noted that in line with the launch of the Djoliba plan and the establishment of the related organisation chart, the BOAD has begun to draw up and/or update the strategies of its five (05) sectoral departments. The hydrogen sector, as a source of energy in the same way as natural gas, for example, will be dealt with in the strategy of the natural resources sub-sector.
As a source of clean energy, we are confident that hydrogen (green or natural) will play an important role in BOAD’s financing of the energy transition in the years to come.
Interview by Jean Marie Takouleu