Gridworks investee company, Virunga Power launches new Burundian electricity utility at Africa Climate Summit

The creation of a new privately-owned and operated electricity distribution company that will bring grid power to almost 70% of Burundi’s population was announced at the Africa Climate Summit in Nairobi today. The new company, Weza Power, 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. The new company will provide electricity to residential and business customers across peri-urban and rural Burundi, which has one of Africa’s lowest electrification rates. Only 12% of the country’s 12 million people currently have access to electricity, with that number falling to 2% in rural areas. Most of the new household customers currently burn kerosene and charcoal for energy, while businesses have to rely on expensive and polluting diesel generators.

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 US$50 million investment. Virunga Power is developing the Weza Power project and will provide the initial equity investment. Other committed 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. There has been growing interest in the role of the private sector in Africa’s electricity networks in recent years, but Weza Power marks a major step forward for the sector and will demonstrate a grid-connected model for delivering new electricity connections at scale.

This week’s announcement takes place at the Africa Climate Summit, under the theme, “Driving Green Growth & Climate Finance Solutions for Africa and the World”. It sees the partners in the public-private partnership (PPP) embark on a new interim agreement that will mobilise an initial, two-year US$60 million investment into the utility. This initial phase will result in approximately 300,000 Burundians gaining access to grid electricity.

The project will then aim to raise around US 1.4 billion over seven years to build a network of distribution infrastructure that connects 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. While the PPP is focused on Burundi, Gridworks and the partners believe its impact may be even greater as a model which can be repurposed for other national and subnational electricity grid expansion efforts across Africa.

Welcoming the announcement, Simon Hodson, CEO of Gridworks said: “Gridworks is proud to support our investee company, Virunga Power in bringing this vital project to life. We’re proud that this is the first new private-sector electricity distribution company in sub-Saharan Africa in a decade to be granted a national scale concession. The Government of Burundi should be applauded for their foresight in working with Virunga Power to develop an innovative model that can harness private sector capital and expertise for the benefit of the country’s people.

“By bringing clean, reliable electricity to communities across rural Burundi, Weza Power will enable local entrepreneurs to grow their businesses and create jobs, and help families access basic services.  Investment in electricity networks is vital to underpin economic development, as well as to support a transition to renewable energy.”

Brian Kelly, CEO of Virunga Power said: “This is 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.

“At Virunga Power, we are thrilled to be a driving force behind this new utility and are eager to continue to bring the benefits of electricity to the people of Burundi. This project is at the core of our mission and is at a scale that can bring meaningful livelihood improvement and economic development to millions of people.”

The Hon. Ibrahim Uwizeye, Minister of Energy, Hydraulics, and Mining for the Government of Burundi welcomed the partnership and said: “The Government of Burundi, through the Ministry of Energy, would like to see the energy distribution project implemented by the newly created Virunga Power project company, Weza Power (Amatara Twese) move forward quickly so that it will allow us to accelerate our promise of rural electrification to the Burundian people. We are confident that our partnership with the private sector, and in this case Weza Power, will allow us to achieve the objectives of economic growth and development in order to fulfill the vision of Burundi to become an emerging country in 2040 and a developed country in 2060.”

UK Minister for Development and Africa Andrew Mitchell, said: “The climate finance project we announced demonstrates the strength of our commitment to Africa’s green future. UK leadership is determined to unlock the funding needed internationally to drive forward the green agenda. Our ambitions can only be realised through partnership and cooperation, with Africa and the international community. We are stronger together – and we go far when we go together.”

Nick O’Donohoe, Chief Executive of British International Investment, said: “I am delighted that BII is supporting the delivery of clean, green and affordable electricity to the people in Burundi. The investment will have a transformative impact at a country-wide scale and deliver significant economic and social gains.”

Simon Harford, CEO of GEAPP, said: “GEAPP supports the government of Burundi as it works to accelerate renewable energy access for its citizens. The scale of the access challenge demands the innovation and commitment of a multitude of partners. The launch of Weza Power shows the power of public-private collaboration and underlines the potential of these partnerships to effect meaningful change where it’s needed the most.”