Weza Power – Phase A

Project Description 

This summary covers an application made by Virunga Power Holdings Limited (Mauritius) for their equity, quasi-equity and shareholder loans investment into Weza Power (Burundi) for the preliminary development activities - referred to as “Phase A” (“the Project”) in connection with the planned expansion, rehabilitation, maintenance, densification, marketing and operation of the low and medium voltage network in Burundi. The investor has applied for MIGA’s guarantee of up to USD 10.9 million against the risks of Breach of Contract for a period of up to 3 years. 

Phase A activities will be limited to feasibility studies and technical design of the distribution network, environmental and social related studies, application for authorizations and permits, establishment of the Project Enterprise (Weza Power), drafting and negotiating of pilot project agreements, fundraising for pilot project, early procurement of materials (poles, wires, transformers, meters, etc.) and any other development activity necessary to prepare and enable the commencement of construction. The results of the preliminary development activities will support the design of a bankable pilot project (“Phase B”) consistent with MIGA’s performance standards and international standards of best practice. The scope of the future pilot is to rehabilitate part of the existing grid (specifically outside of the main urban), and to extend the distribution network to an additional 45,000 households and businesses in four selected rural areas. Phase B is currently out of scope of this Project and will be separately underwritten. 

 Development Impact 

The Project is expected to contribute to advancing the Government of Burundi’s rural electrification strategy through knowledge development and policy advise. MIGA’s involvement also supports innovation in Burundi’s electricity distribution sector offerings and technology transfer. MIGA’s guarantee will unlock private venture capital for a pioneering and transformative initiative for rural electrification of Burundi. The Project is aligned with the Burundi Country Partnership Framework (FY19-23) objectives of increasing access to energy for poor families and seeking opportunities to crowd in private investment and PPP via a One WBG approach. 

 Environmental Categorization 

This project (development only, no construction work undertaken) is categorized as Category C under MIGA’s Policy on Environmental and Social Sustainability (2013). MIGA will support the development of the environmental and social studies as part of the preliminary development activities (including the Environmental and Social Management System, Environmental and Social Impact Assessments, Resettlement Action Plans and Livelihood Restoration Plans) in line with the requirements of the Performance Standards and World Bank Group Environmental, Health and Safety (EHS) (general and sector specific) guidelines.    

The main environmental and social (E&S) risks to be considered in the E&S studies to be developed include impacts on biodiversity (bird or primate electrocution), land acquisition (physical or economic displacement), community health and safety risks (during grid construction and operation) and indigenous people (Batwa community). The  studies will also assess Weza’s organizational structure and procedures related to (a) the company’s E&S management systems and staffing to manage construction and operations in line with MIGA’ PSs, (b) labor and working conditions, (c) contractor and sub-contractor management systems for construction and operation phase especially focusing on occupational, health and safety, (d) emergency preparedness and response, (e) community impacts due to construction, traffic, security and operations, (f) stakeholder engagement, and (g) gender based violence. The E&S studies will be led by the client, supported by MIGA, IFC and the World Bank.  

The MIGA guarantee for preliminary development activities will not cover any construction or refurbishment activities. Construction or refurbishment activities as part of the pilot will be considered a separate project requiring new E&S due diligence and categorization, and the management of E&S risks for construction and operations phase will be assessed at the time.