The Board of Directors of the African Development Fund (ADF), the concessional window of the African Development Bank (AfDB) Group, on Wednesday in Tunis approved a loan of 10.30 million Units of Account (UA*), approximately US$ 16 million, to finance the Bumbuna Hydroelectric Project in Sierra Leone.

The project is aimed at increasing the supply of reliable, cost-effective and environmentally sustainable electricity for industrial, commercial and domestic use in Freetown, Makeni, Lunsar and Bumbuna village. The overall goal of the energy sector is to improve the environment for job creation and poverty reduction.

The project, which has 11 components, will provide a 50 MW hydroelectric power station at Bumbuna and a 200 km transmission line and associated substations to distribute electricity from Bumbuna to Freetown, Bumbuna village, Makeni and Lunsar. The components comprise civil works, the provision of hydraulic steel structures, the provision of electromechanical equipment, the building of transmission line and substations, logistic support, tariff study, environment and resettlement program, engineering services, support to the project implementation unit, the electrification of Bumbuna Village, operator services, and audit.

The supplementary loan will enable the completion of the project which commenced in 1990 with the approval of a combined UA 34.64 million ADF loan and a technical assistant fund grant. It was suspended in 1997 following the outbreak of civil strife which ended in 2002. The project was reactivated in 2005 but stalled again in 2007, when the Bank Group, along with the Italian government and the UK Department for International Development (DFID) pledged funds to finance its completion.

When completed in 2009, the project is expected to impact positively on the macro-economic performance of the economy as it will reduce the fuel costs for thermal power generation. It is estimated that the annual fuel bill will be reduced by about US$ 11.5 million and this will, in turn, reduce the country's trade deficit by between 5% and 6%. The provision of adequate and reliable power, as well as the resulting improved energy services will have a positive impact on productivity and employment, thereby, helping to reduce poverty.

The project's completion cost is estimated at UA 35.61 million. In addition to the UA 10.30 million ADF loan, the Italian government is contributing UA 11.30 million, while DFID and Sierra Leone's government are contributing UA 6.43 million and UA 7.58 million to the project, respectively.

The Bank Group started operations in Sierra Leone in 1969. The Group's cumulative commitments net of cancellations in the country stand at US$ 426.75 million for 42 operations.

* 1 UA (Units of Account) = US$ 1.55722 = SLL (Leone) 4,816.13 as at 08/10/08

CONTACT: Felix Njoku - Tel.: +216 71 10 26 12 - E-mail: f.njoku@afdb.org