Virunga Power launches new Burundian electric utility Weza Power

Weza Power, a new privately-owned and operated electricity distribution company, aims to bring grid power to almost 70% of the East African country’s population.

The new company was announced at the Africa Climate Summit in Nairobi and is the result of a multi-year development partnership between Virunga Power (a Gridworks investee company) and the Government of Burundi.

Over a seven-year period, Weza Power will aim to connect 9 million people and will provide electricity to residential and business customers across peri-urban and rural Burundi, which has one of Africa’s lowest electrification rates.

According to Gridworks, only 12% of the country’s 12 million people currently have access to electricity, with that number falling to 2% in rural areas.

Most new household customers burn kerosene and charcoal for energy, while businesses have to rely on expensive and polluting diesel generators.

Financing

Gridworks, which is owned by British International Investment, the UK government’s development finance institution, became a controlling shareholder of Virunga Power in March 2023 following a $50 million investment.

Virunga Power is developing the Weza Power project and will provide the initial equity investment.

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Other financing partners providing development and construction capital include the Global Energy Alliance for People and Planet (GEAPP) and the US government’s Power Africa initiative.

The project will be the first new private-sector electricity distribution company operating at a national level in sub-Saharan Africa for a decade.

Partners in the public-private partnership (PPP) for the company will embark on an interim agreement to mobilise an initial, two-year $60 million investment into the utility. This initial phase is expected to result in approximately 300,000 Burundians gaining access to grid electricity.

Infrastructure build out

The project will then aim to raise around $1.4 billion over seven years to build a distribution infrastructure network connecting two-thirds of the East African country.

It will do this without the Government of Burundi needing to raise additional loans from its own balance sheet, meaning it is able to focus on other national priorities.

The new utility company will be connected to Burundi’s existing transmission network operated by REGIDESO, the state-owned utility company that will continue to generate power from clean, run-of-river hydropower, and supply distribution-level power to the country’s main urban areas.

The financing for the grid expansion and the creation of a new utility operator in Burundi will come from a blend of private and public funding, including commercial equity and debt, climate-based and other concessional funding, multilateral donor support and private grants.

Commenting on the announcement was Virunga Power CEO Brian Kelly, who called the project “an important milestone for Burundi and a catalyst for accelerating electrification more broadly in sub-Saharan Africa.

“The expansion of power distribution networks to reach unconnected populations with affordable grid power can be achieved by blending public, multilateral, and private sources of capital when paired with efficient private-sector led operations.

“While this is a common approach in developing and developed markets globally, Africa has lacked a locally-based model to follow, and Burundi’s willingness to take leadership with this approach is impressive and commendable.”

Virunga Power is a developer, investor and operator of renewable power generation and distribution networks in East and Southern Africa with a distributed portfolio of assets spanning five countries, including hydropower plants in development, construction and operations, as well as electricity distribution networks.

In the distribution segment, other than Weza Power, the company is investing in the expansion of a licensed utility it owns and operates in the Northwestern Province of Zambia, seeking to replicate this model with its partners in Malawi.