First Stakeholders’ Meeting for the Geothermal Risk Mitigation Facility (GRMF) for Eastern Africa kicks off today

The meeting started today and was chaired by the African Union Commission (AUC).

The Department of Infrastructure and Energy in AUC took the initiative in the framework of the “Regional Geothermal Programme” initiated by AUC recently and the establishment of the GRMF.

The GRMF for Eastern Africa was established by the AUC, German Federal Ministry for Economic Cooperation and Development (BMZ) and the EU-Africa Infrastructure Trust Fund (the Trust Fund) via KfW Entwicklungsbank (KfW). The Facility, funded at 50 million EUR (20 million EUR from BMZ and 30 million EUR from the Trust Fund), is now in place and hosted and managed by the AUC.

The AUC was mandated by the ministers of energy of the East African Rift System (EARS) to develop and to coordinate a regional geothermal program to promote power generation especially Renewable Energy. The Mandate given to the AUC in the Addis Ababa Declaration on Geothermal Energy, June, 2009 includes inter alia establishment of:

• Regional road map;
• Policy guidelines including institutional and regulatory framework;
• Regional Geothermal Coordination Unit;
• GRMF Oversight Committee (OC).

The overall objective of GRMF is to encourage public and private sector developers by providing partial grants for surface studies leading to drilling and for reservoir confirmation drilling in order to mitigate the risk associated with geothermal resource exploration. As a result, reduced risks and costs of early sal tage geothermal development are expected to encourage the development of further geotherminvestments. It is expected to improve access to equity or other funding sources and thus play a catalytic role in establishing geothermal energy as a strategic option in power expansion planning of the participating countries of Eastern Africa.

Initially, GRMF will support geothermal activities in the pilot countries  Ethiopia, Kenya, Rwanda, Tanzania, and Uganda. Other countries may become eligible for GRMF funding in a later phase if additional funds become available.

GRMF will provide direct grants for surface studies and exploration drillings. Furthermore, required infrastructure improvements may be also eligible for grant funding. Additionally, a Continuation Premium is forseen for drilling and testing programmes in case the developers undertake subsequent development steps within a certain period of time. A regional geothermal database will be also created in order to reduce risks of future geothermal exploration.

Stakeholder’ Meeting opening addresses were held by the representatives of the AUC H.E. Rhoda Peace Tumusiime, Commissioner for Rural Economy and Agriculture, African Union Commission  on behalf of the Commissioner for Infrastructure and Energy H.E. Dr. Elham Mahmoud Ibrahim,  the European Union H.E. Gary Quince, the German Embassy Counsellor Hanno Spitzer and KfW Entwicklungsbank Mr. Klaus Gihr.

Programmes supporting GRMF activities were presented during the meeting, specifically from United States Agency for International Development (USAID), United Nations Environment Programme (UNEP), The Icelandic International Development Agency (ICEIDA), and the World Bank. Subsequently, GRMF Technical Consultant informed the participants about the geothermal financing and the needs for risk mitigation.

The meeting aimed to create a common understanding of benefits and requirements of GRMF and how creating and maintaining legal, institutional and regulatory framework will be critical to the ultimate success of geothermal development in Eastern Africa.