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Lawmakers Ratify 8 Million Euros Loan For Renewable Energy Project 

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Hon. Abdoulie Jobe, Minister Of Petroleum And Energy.

By Ramatoulie Jawo

Gambia’s lawmakers on Monday ratified the 8 million euros financing agreement between the Government of the Republic of The Gambia and the European Investment Bank on the Electricity Restoration and Modernisation Project (GERMP). 

GERMP, also called Gambia Renewable Energy Project (GREP), is a Finance Contract (Loan) for Component 4 of the Renewable Energy Project – amounting to 8 million Euros. 

The motion was tabled by the Minister of Petroleum and Energy, Hon. Abdoulie Jobe on behalf of the Minister of Finance and Economic Affairs, Hon. Seedy Keita, who is currently out of the Jurisdiction. 

While tabling the motion before the lawmakers, Hon. Jobe told the National Assembly Members that the overarching objective of Component 4 of the GERMP is the ‘Solarization’ of 1,000 Schools and 100 Health facilities across the country. 

“The Government of The Gambia launched the National Development Plan (NDP 2018 – 2022) in 2018 which aims to “deliver good governance and accountability, social cohesion, and national reconciliation and a revitalized and transformed economy for the wellbeing of all Gambians. One of the eight Strategic Priorities of the NDP is ‘building our infrastructures and restoring energy services to empower our economy. 

“The Gambia is experiencing an acute electricity crisis, which arises from the inability of the sector to meet domestic demand. Nevertheless, the government strives to attain universal access to electricity for all Gambians by 2025. This objective will be attained via sustained investments to improve our transmission and distribution networks, governance of the energy sector and investments in renewable energy,” Hon. Jobe told the NAMs. 

Hon. Jobe said By the aforesaid strategic priority of the NDP 2018-2022, the European Investment Bank (EIB) in collaboration with the International Development Association (IDA) committed to providing support to the Government of the Gambia through the GERMP primarily aimed at restoration and modernisation of the electricity sector. 

Hon. Jobe stated that financing for Component 4 of the GERMP is a tripartite funding package involving a Loan of EUR €8million coupled with a Grant of EUR€24.08million and Technical Assistance (TA) of EUR€3million. 

He said this makes the Facility highly concessional with a Grant Element result of more than 80%, according to the International Monetary Fund (IMF) Grant element calculator.   

“The overarching goal of the GERMP is to improve the electricity services of The Gambia.  Comp. 4 of the GERMP consists of on-grid and off-grid PV/Battery systems installation, operation and maintenance for up to 1,100 schools and health facilities, especially in remote areas of the country. This component includes a significant amount of Technical Assistance (TA) to prepare the grounds for implementation, create its promoter and support its implementation. 

“For Component 4, the agreement stipulated that a Special Purpose Vehicle (SPV) be created for its implementation, which led to the establishment of the Sustainable Energy Services Co. Ltd or SESCO. SESCO is a publicly held company with a shareholding ratio of 90:10 between the Ministry of Finance and Economic Affairs (MoFEA) and the Ministry of Petroleum and Energy (MoPE) respectively,” Hon. Jobe told the NAMs. 

Hon. Jobe further told the NAMs that the core beneficiaries are the Ministry of Basic and Secondary Education (MoBSE) and the Ministry of Health (MoH) with 1000 schools and 100 health facilities across the country to be ‘solarised’ by SESCO. 

He said Component 4 of the GERMP finances two main expenditures. 

The Energy Minister further highlighted the Capital Expenditure of the project. 

Hon. Jobe said it entails the acquisition and installation of the off-grid PV systems along with battery backup-up systems, remote monitoring equipment for the operation of the PV systems and operations and maintenance structure to enable off-grid facilities to utilize the electricity produced by the systems for their own use. 

“Operations and Maintenance (O&M) expenditure- This includes costs of operating excluding the Borrower’s or public authorities’ staff cost and maintaining the PV systems. This involves routine inspections and cleaning, day-to-day management of the facilities, as well as non-routine maintenance and periodic replacement of major components. The above-mentioned expenditures are to be financed mainly from the Grant funds,” Hon. Jobe told the NAMs. 

Hon. Jobe said the Electricity Restoration and Modernisation Project went through a series of stakeholder consultations including the stakeholders from the Office of the President, Ministry of Finance and Economic Affairs, Ministry of Foreign Affairs, International Cooperation & Gambians Abroad, Ministry of Petroleum and Energy, National Water and Electricity Company (NAWEC), Ministry of Basic and Secondary Education and the Ministry of Health.

“Component 4 of the GERMP comprises a tripartite financing package totalling EUR€35.08million, of which EUR€8million is a Loan, complemented by a Grant of EUR€24.08million and a TA component of EUR€3million.  The Loan under Component 4 has the following terms Tenure of 25 years Grace period of 5 years Interest rate of 1.25%. The above terms have a Grant element result of 37.97%, which is above the threshold of 35% for any new borrowing as per IMF guidelines. 

“Combining the loan and Grant, the overall financing package has a Grant Element result of 84.53%, which is highly concessional. The Government of The Gambia doesn’t have any monetary ‘counterpart contribution’ under Component 4 of the GERMP. Legislative implications, the European Investment Bank (EIB) envisages the Ratification of these Financing Agreements” he said 

Hon. Jobe said the National Assembly is informed of the signing of the aforementioned financing agreements and is kindly requested to support its implementation by providing overall oversight. 

He said the effective implementation of the project will contribute significantly to the attainment of the NDP objectives. 

Taking turns on the motion, Lawmakers who intervened showered their support to the ratification of the motion, noting that, among other things, the Bill will address the problems of energy across the country.

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