Electricity company EDF, the International Finance Corporation (IFC) and Republic of Cameroon have signed "final and binding" agreements for the construction of a 420-megawatt hydropower project on the Sanaga River.
The Nachtigal hydropower plant will be located close to the Nachtigal falls, 65 kilometers northeast of Cameroon's capital, Yaounde.
The expected cost of the development is 1.2 billion euros ($1.36 billion), EDF said in a statement Thursday.
A quarter of the project's cost will be funded by shareholder's equity, with the remainder funded by lenders. EDF said that the IFC, a member of the World Bank Group, had coordinated a lender group that included 11 development finance institutions and four local, commercial banks.
The International Energy Agency has described hydropower as the "largest source of renewable electricity in the world." It adds that hydropower generates roughly 16 percent of the planet's electricity from more than 1,200 gigawatts of installed capacity.
The project in Cameroon will involve the design, construction and operation of the facility for 35 years, EDF said. A 50-kilometer power transmission line will also be built. It will be owned and operated by the Nachtigal Hydro Power Company, which is 40 percent owned by EDF. The IFC and Republic of Cameroon own 30 percent each.
EDF added that Nachtigal's expected power generation would meet 30 percent of Cameroon's electricity demand and amount to an annual power output of almost 3 terawatt hours. Construction is to start by the end of 2018, with the dam set to be commissioned in 2023.