Prime Energy Plc, a renewable energy independent power producer in Rwanda, has raised Rwf9.58billion capital through its inaugural green bond, the first such issuance on the domestic market.
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The seven-year tenor bond was fully subscribed by both institutional and retail investors. The firm first announced the issuance on March 13, which was later halted, before reopening on September 27.
A green bond is a debt instrument used to mobilise resources and whose proceeds are exclusively used to finance projects that have a positive environmental impact, such as renewable energy and green buildings.
The bond was issued in two tranches – the Rwandan Franc tranche has an interest rate of 13.75 percent per annum while the US Dollar tranche has an interest rate of 9.5 per cent per annum – both payable semi-annually.
The company said the funds raised will enable it to expand its energy production capacity.
It is expected that 75 per cent of the proceeds will be deployed to fund construction of a Rukarara VI –a renewable energy project located in Nyamagabe District – and the rest will be used to finance the maintenance of existing hydro power plants, including Rukarara II, Mukungwa II, Gisenyi, and Gashashi.
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Sandy Rusera, Chief Executive Officer of Prime Energy, said the green bond issuance underscores investor confidence in Prime Energy’s financial robustness and its sustainability credentials.
"The funds will be crucial in advancing our ambitious portfolio of renewable energy projects, further cementing our role as a key player in supporting an energy transition by increasing energy access in Rwanda,” he said in a press statement.
Under the firm’s Green Finance Framework, Joe Nsano, Chief Operating Officer of Prime Energy, said that the bond will lead to positive environmental impacts by supporting clean energy in Rwanda and advancing the UN Sustainable Development Goals, specifically SDGs 7, 9 and 13.
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The transaction was supported by the International Finance Corporation (IFC), the private sector arm of the World Bank Group, and financially arranged by BK Capital and AIS Capital Advisors.
It was verified as a green bond by IBIS ESG Consulting Africa that confirms alignment with the four core components of the updated International Capital Market Association (ICMA) Green, Social and Sustainability Bond Principles issued in June 2021 respectively.
Prime Energy currently operates four hydropower plants located in the Western, Southern and Northern Provinces of Rwanda with 25-year concession agreements with the Government and Power Purchase Agreements (PPAs) with Energy Utility Corporation Limited (EUCL).
The green bond follows two Rwf30 billion separate sustainability linked bonds that were issued by the Development Bank of Rwanda (BRD) in 2023 and subsequently in October 2024.
Prime Energy’s green bond is expected to not only provide an opportunity for investors to align with environmental, sustainability, and governance (ESG) principles, but also inspire other companies in the market to tap into alternative and innovative financing.