Washington, D.C., and Reykjavik, Iceland
,
July 1, 2008—
IFC, a member of the World Bank Group, and Reykjavik Energy Invest have signed an agreement for joint exploration and development of geothermal resources in Djibouti that will help address the country’s power shortage and reduce carbon emissions. This is the first project to be funded by IFC InfraVentures, a new $100 million fund that will help develop infrastructure in the world’s poorest countries.
IFC InfraVentures addresses major constraints to private investment in infrastructure projects, including a lack of funds and experienced professionals. It will provide early stage risk capital, feasibility studies, and support on developing financial models and project structures that are commercially viable and able to more rapidly complete financing.
For the Djibouti project, IFC InfraVentures will provide 35 percent of the exploration costs, including full feasibility studies and exploration drilling for the geothermal plant. IFC InfraVentures’ contribution is capped at $4 million. IFC InfraVentures will also work with Reykjavik Energy Invest to implement environmental and social standards and mobilize financing from other investors. The two organizations are assembling a consortium of project participants to secure additional funds.
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. IFC InfraVentures’ investment will help produce at least 50 megawatts of additional power to address demand. The project will help reduce carbon emissions by using geothermal generation as an alternative to diesel power.
Hjorleifur Kvaran, Chief Executive Officer of Reykjavik Energy Invest, said, “There is a huge opportunity for geothermal power production in Djibouti. We are assembling a consortium of investors, and IFC is our first partner. We are very happy that, through IFC InfraVentures, the World Bank Group is dedicating funds for the project. This is an important step in securing financing and minimizing our financial risk.”
Reykjavik Energy Invest has an agreement with Djibouti’s government to help replace diesel-generated electricity with more environmentally friendly solutions.
Rashad Kaldany, IFC Vice President for the Middle East, North Africa, and Infrastructure, said, “This first transaction for IFC InfraVentures is moving an innovative approach forward. 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. We look forward to a long-term partnership with REI.”
About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that poor people should have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit
www.ifc.org
.
About Reykjavik Energy Invest
Reykjavik Energy Invest is the international business development and investment arm of Reykjavik Energy. The company focuses on creating partnerships to develop geothermal areas. It invests in geothermal exploitation rights; develops, builds, and operates geothermal fields; and seeks to acquire operating geothermal plants.
Reykjavik Energy is the world’s leading authority in the utilization of geothermal energy. Over the past 60 years, the company has consolidated its leadership by supplying a large portion of the Icelandic population with geothermal water for domestic heating and by gradually developing new steam fields for power production. For more information, visit
www.rei.is
or
www.or.is
.
