Financing packages for the Tina River Hydropower Development Project, estimated to reach US $240 million, have been finalised in Honiara. This major milestone for the 15-megawatt hydropower infrastructure project now clears the way for construction to commence late January 2020.
Six financing organisations have come together to make the vision for clean renewable energy and more affordable electricity, a reality for the government and its people. The project is being financed through a combination of loans and grants; with a final cost for building the hydropower dam and station estimated at US$184 million. The total project cost is expected to reach US$240 million over the next 5 years.
The Solomon Island Government has been dedicated to supporting the preparations of this complex nation-building project for more than 10 years and recognises this milestone as hugely important for the first large-scale infrastructure to be developed under a public-private partnership (PPP) in the Solomon Islands.
“This is an historic project for Solomon Islands,” said Prime Minister of Solomon Islands, Manasseh Sogavare. “It will deliver cheaper power to the people of Solomon Islands and signals to investors that Solomon Islands is ready for big projects and partnerships. This first public private partnership infrastructure project in Solomon Islands opens the door for more, which will support much needed development, offering our people a better standard of living and more opportunities.”
The project symbolises a positive step forward for the people of the Solomon Islands who are eagerly watching the largest development project in the history of the country unfold. Organisations and governments worldwide will also be closely watching, as it’s primed to deliver vital benefits to the developing country. The reduction in the cost of electricity for its people and an end to the country’s near-total reliance on diesel fuel for power ensuing a significant reduction in greenhouse gas emissions, are amongst the project’s most anticipated outcomes.
The World Bank Group has been supporting the government of Solomon Islands on the project for more than 10 years. IFC, a sister organization of the World Bank and member of the World Bank Group, helped put in place the public private partnership with project preparation, the investor selection process, negotiation of project agreements and the final financing agreement package.
“We are pleased to have supported the government of Solomon Islands by structuring a way to bring in the private sector to help the nation’s major shift from imported diesel to renewable energy,” said IFC’s Regional Director for East Asia and the Pacific, Vivek Pathak. “With the support of Australia, New Zealand and the multi-donor facility, DevCo, the agreement now in place shows how governments and the private sector can work together on key infrastructure projects to help nations wanting cleaner, cheaper and more reliable energy for their people.”
With equipment already arriving on the docks and construction on the immediate horizon, the Solomon Island Government has entrusted the project build to K Water, the Korean government’s water resources company who are experts in constructing and managing hydropower projects. Their first task is to commence the construction of the access road, worth US$26 million, in late January 2020.
When completed and operational in 2024, it will demonstrate the Solomon Islands are ready to execute big projects on a world stage. For a nation with a government eager to build a brighter future for its people, the financing of the development of Tina River Hydro will attract further investment opportunities and new jobs.
Supporting quotes from financing partners:
The World Bank
“The World Bank has been supporting the Solomon Islands bring Tina River Hydro to life since 2008, when the Solomon Islands Government first sought our help to look at potential options for to deliver safe, reliable and affordable renewable electricity to Solomon Islanders,” said World Bank Country Director for Papua New Guinea and the Pacific Islands, Michel Kerf. “Since then, we have been proud to support Solomon Islands to bring this project to where it is today: with funding secured, environmental and social safeguards in place, financing arrangements locked in, and soon – the start of construction on what will be a landmark development project for the country.”
Asian Development Bank
Director General of ADB’s Pacific Department, Carmela Locsin, stressed the path-breaking Tina River hydropower project’s contribution to ADB’s Strategy 2030 priorities. “This transformational project must be commended for its drive to address remaining poverty and reduce equalities, accelerate progress in gender equality, tackle climate change, build climate and disaster resilience, and enhance environmental sustainability, through a private sector investment in a small island developing state.”
The Green Climate Fund
“The Green Climate Fund is pleased to see the Tina River Hydropower Development Project kicking off, as it will help to transform the energy system in the Solomon Islands by providing clean and affordable power and cutting reliance on imported fossil-fuels”, said Jerry Velasquez, Director of GCF’s Mitigation and Adaptation Division. “An effective partnership between public and private sectors is critical to executing major climate infrastructure projects. We look forward to working with the World Bank and other partners to support climate action in the country.”