Djibouti - Geothermal Exploration Project in the Lake Assal Region - Supplementary Grant II

The proposed operation concerns a UA 2.36 million ADF grant to the Republic of Djibouti for the second supplementary financing of the Geothermal exploration project in the Lake Assal region. The geothermal exploration project in the Lake Assal region was approved by the Bank in 2013 in a context where access to electricity was relatively limited in Djibouti (50% access rate). It comprises the exploration of the Lake Assal geothermal steam field and confirmation of the characteristics of the geothermal resources. Ultimately, the project will contribute to: (i) building the first geothermal power plant in Djibouti; (ii) increasing clean energy generation capacity; (iii) increasing the people’s access to electricity through a more reliable and affordable source of energy; (iv) reducing oil imports by 214 000 barrels of oil annually; and (v) reducing greenhouse gas emissions by 250 000 tons of CO2 annually. Thus, it will facilitate the improvement of the quality of life for the people of Djibouti. A supplementary loan of UA 10.74 million from the African Development Fund was approved to the project on 02 May 2018 to cover: (i) the cost of drilling the third well, including the non-funded activities of the first two wells; and (ii) the cost of additional consultancy services and conduct of a feasibility study on the development of a geothermal power plant. The execution of the three wells, Fialé-1, Fialé2 and Fialé-3, has been completed. All the wells were tested except Fialé-3 due to over budget. The mobilisation of additional resources will enable the project to clean up Fialé-2 and conduct further tests for all the wells in order to collect sufficiently reliable data for the feasibility study with an acceptable risk profile to attract potential investors for the development of a geothermal power plant at a reasonable electricity selling price. This second supplementary financing will facilitate the acceleration of the second phase of the project, which is the development of the geothermal power plant.