Volobe Upstream: Signing of 25-year purchase and concession contracts between CGHV and the Public Authority

The CGHV company and the Malagasy State ratified on May 26 the partnership agreement within the Volobe Upstream project. This step in the rural electrification project marks the deep determination of the AXIAN group to create an impact on the African continent and in the country, but also the commitment of Madagascar to its energy transition.

Located about 40 Km from the city of Toamasina is the Ivondro River. With an annual production capacity of 750 GWh, it was spotted by the team that would later become the Volobe General Hydroelectric Company (CGHV). The consortium of companies was then formed in 2016 by Axian Energy, SCATEC, and Africa 50.

After passing several preliminary stages, the project finally begins to take shape. On May 26, Remy Huber, Managing Director of CGHV, signed a power purchase and concession contract with the Malagasy government. This new phase brings CGHV closer to hydroelectric power production in 2028. Several impacts are in sight following the realization of this project. The press release from the Axian group mentions: the acceleration of energy inclusion by allowing affordable access to electricity for about 2 million people; the acceleration of the country’s energy transition: 750 GWh per year, equivalent to 40 % of the current annual national consumption in Madagascar; and the opening up of the project area and the creation of 1,500 direct and indirect jobs.

This contract signed between the two parties results from a long series of negotiations. Notably on the issue of the infrastructure concession, which was agreed to be 25 years; the participation of the Public Authority in the shareholding of CGHV up to 20 %; CGHV’s commitment to developing partnerships with local and national suppliers in compliance with procurement regulations during the construction phase; and CGHV’s commitment, through its CSR program, to produce electricity for JIRAMA’s local network once the plant is in service. The Malagasy State’s objective in this project is « to reduce the price of electricity up to four times cheaper than the current average price », i.e., 0.05 USD per kilowatt-hour, compared to 0.189 USD per kWh currently.

The CGHV project is so impactful that it will benefit the local population of Ivondro and the surrounding regions. Volobe Upstream will be connected to the cities of the Alaotra Mangoro region, the other large agglomerations of the Analamanga region, right up to the Vakinankaratra region, according to the Malagasy Minister of Energy and Hydrocarbons.

« Even if this signature allows us to lay the foundations, there will be many steps that will lead to the work, commissioning, and production in a few years », said Rémy Huber. Indeed, the next step will be more financial. It will involve signing contracts for works and financing, which will require five months to a year, according to the Minister of Energy. The goal of starting the machine in 2028 should be achieved at this rate.