Hope and frustration in Madagascar's mission for megawatts

Just outside the city of Toliara in southern Madagascar, at the end of a heavily cratered dirt track used mostly by goat herders, the country’s energy future is slowly taking shape. Here, a heavy fuel oil power (HFO) plant, which is both highly polluting and extremely expensive to operate, provides the main source of power to the nearby city, one of the poorest in Madagascar. Since 2020, however, the HFO plant – operated by Enelec, a subsidiary of Madagascar-based conglomerate Groupe Filatex – has been supplemented by a 2.9 MW solar farm that the company built adjacent to the power station. When the sun is shining, as it almost always is during the day, Enelec can turn off one of the four HFO engines in the power station and achieve major savings in fuel costs. Filatex is Madagascar’s largest independent power producer. JIRAMA, the troubled state-owned utility, pays it more than twice as much per kilowatt hour of electricity generated from solar power than for that from the HFO plant. But JIRAMA still wins from the arrangement. It pays for the HFO used at the plant, and therefore when solar panels are delivering electricity instead reduces its costs. “It’s the oil company that loses,” says Tahina Ramaromandray, Filatex’s administrative director. The solar development at Toliara – which the company is now expanding by a further 1.1 MW – is a promising start. Yet it represents a drop in the ocean compared to what Madagascar needs finally to ramp up electricity access. Electric shock Madagascar remains one of the least electrified countries in the world. According to the African Development Bank just 36% of the population had access in 2025. But the country has ambitious plans to change course. Under the Mission 300 initiative spearheaded by the World Bank and the African Development Bank (AfDB), the government pledged in January 2025 to connect 80% of the population by 2030 – a figure that would require 2.2m people to gain access each year. How realistic this target is appears highly dubious. In fact, some of the most basic building blocks of a functioning electricity system are not in place. Madagascar still lacks a truly national energy grid. With the exception of areas around the capital Antananarivo, Madagascar’s cities are forced to rely on disparate local grids. From a power perspective, Madagascar is an island of islands – with none of its regional cities able to benefit from the economies of scale that come with access to a wider grid. This has left burning HFO as the default option for generating baseload power across most of the country. HFO is largely considered obsolete as a source of grid-scale electricity generation, for reasons of both cost and environmental safety. It remains common in settings such as small islands or isolated grids, however: unlike natural gas, HFO does not require extensive storage and distribution infrastructure. Reliance on HFO is a key factor in the financial malaise at JIRAMA. As of 2024 the utility sold electricity to businesses and households for an average of 17 cents per kilowatt hour, yet the cost of generating power stood at 24 cents, largely due to the high cost of fuel. The rise of solar provides a potential lifeline. Switching away from HFO and towards cheaper solar power represents the clearest route to lifting JIRAMA out of financial purgatory. And if Madagascar is one day to achieve universal electricity access, solar panels will need to do much of the heavy lifting. Filatex, for example, plans to deliver 160 MW of solar generating capacity by 2030 as part of its “hybridisation” strategy to combine HFO with solar. “If we have the 160 MW by 2030, we will deliver a saving of $40m of fuel to JIRAMA,” says Ramaromandray. Practical hurdles Madagascar has so far been slow to tap into its solar potential. The country’s largest operational solar farm, the Ambatolampy project developed by Axian, another Madagascar-based conglomerate, alongside a French company, has a capacity of 40 MW. For comparison, Egypt’s Benban solar park, the largest in Africa, can generate up to 1,800 MW. Political instability has not helped matters. President Andry Rajoelina was removed by the military last October following a wave of popular protests. Since then the coup leaders have struggled to maintain a consistent approach. Following the military takeover, 28-year-old Ny Ando Jurice Raliterawas was appointed as energy minister, despite a lack of relevant policy experience. The ill-fated official, whose appointment appeared to be a sop to the “Gen Z” protesters that drove Rajoelina’s removal, lasted just five months before being replaced. On a practical level, the government’s actions sometimes appear to be at odds with its stated ambition to rapidly increase generation. Near Moramanga, 75 km east of Antananarivo, a 15 MW solar farm will soon come online, with 10 megawatt-hours (MWh) of battery storage. The facility, operated by Afripower, a joint venture of Filatex and Cyprus-registered Chelsea Energie, should help ease power constraints in the capital and surrounding areas. But its completion has been slowed down by rows over customs clearances when equipment is imported into Madagascar. The process of clearing equipment at the Port of Toamasina is “very slow,” warns Jean Lindon Toto, project manager at the site, who notes that this compounds delays in importing goods from China via South Africa. Ramaromandray adds that Filatex has been “struggling” to get the government to understand that VAT and customs duty exemptions need to apply not only to photovoltaic panels themselves, but also to other vital equipment, including cabling and mounted structures. “Let’s have a full list,” he says, “and if you want to push fast, have an exemption on all of this. Otherwise, it’s not going to work out.” Incentivising investment There is also the not inconsiderable problem of JIRAMA’s failure to pay its bills to independent power producers (IPPs) on time: the utility strapped for cash because it is forced to sell power at a loss given the expense of importing fuel. Its arrears to the private sector represented a remarkable 2.7% of Madagascar’s GDP at the end of 2023, according to the IMF. Companies with long experience of operating in Madagascar claim to be relaxed about the problem, insisting that debts owed to them are always paid eventually. “The only people that have developed projects in Madagascar are the people from Madagascar,” says Loïc Hoinville, CEO of NEA Madagascar, an energy subsidiary of Axian. He is confident that JIRAMA will never be allowed to go bankrupt. But foreign investors may see things differently, he acknowledges. The situation appears “more risky when you don’t know the country and it’s not your country, and you don’t know anyone”. Clearing JIRAMA’s debts “is a key point for private investors,” says Daniela Rakotomamonjy, a senior energy specialist with the World Bank in Madagascar. She notes that the government hopes to attract 60% of the investment needed for its electrification target from the private sector, but warns this will be “very challenging” unless JIRAMA can restore confidence in its reliability as a customer. The World Bank announced a way forward in May, with a $250m “programme for results” to support electricity access and stabilise JIRAMA. The government will be able to access the funding only once it achieves verified results in various areas, including through improved corporate governance and financial performance at JIRAMA. In other words, the prospect of being able to access World Bank funding is intended to incentivise the government and JIRAMA to meet their commitments on reducing arrears. Gridlock Another critical priority for Madagascar is to strengthen its grid. There is no way that the country’s power problems can be overcome without making the existing electricity transmission infrastructure more reliable, while also extending transmission lines to link isolated cities and create a nationwide power network. Rakotomamonjy points out that the newest substation in the country’s electricity network dates from 2004, while the oldest are relics from the colonial era. The result of this ageing infrastructure is “huge” losses of electricity – in fact, she says, Madagascar loses 28% of the power generated in the country through the ageing grid. Hoinville says that Axian is currently planning a 15 MW extension to the Ambatolampy solar project – but would be aiming higher if the grid had capacity. “We wanted to make a bigger project in our plant,” he says. “Instead of 15 MW, we wanted to go to 50 MW – but we cannot do it because of the line limitation and the substation as well.” Meanwhile, connecting the country’s fragmented grids is a major long-term goal. Creating a truly national grid is key to enabling investment in generation; without connections to a larger power grid, demand will be insufficient to justify investment in major new thermal, solar or hydro schemes. For example, the proposed 120 MW Volobe hydropower project near Toamasina – which would boost Madagascar’s installed capacity by around 20% – will not be viable without a new high-voltage transmission line that will link the Antananarivo and Toamasina grids. The African Development Bank and European Investment Bank are helping to finance the line, although the project has been beset by delays. Originally set for completion in 2023, construction is now scheduled to begin only later this year. Madagascar mini-grids Upgrading the grid, while vital, is not the only way to bridge Madagascar’s power gap. In fact, perhaps because of the weakness of power transmission and distribution, Madagascar is relatively advanced in the deployment of mini-grids. Mini-grids operate in a similar way to a standard electricity grid. However, as the name suggests, they provide power only to a small area such as a village, and typically draw power from solar panels combined with batteries or back-up diesel generators. WeLight, Madagascar’s leading mini-grid developer, was founded in 2018 with Axian Group, French company Sagemcom and Norwegian development fund Norfund as shareholders. It now operates mini-grids in 172 sites across the island, providing power to 60,000 people. But the company has had to be highly selective in where it deploys mini-grids. “We need to ensure that there is a sustainable economic model,” says Romain de Villeneuve, the company’s CEO. It has prioritised connecting larger villages where demand is greater, and also where economic activity is more significant. In practice, this means that most of WeLight’s mini-grids are currently in the somewhat more prosperous parts of Madagascar, especially in the north, where industries such as vanilla cultivation provide a source of income. It has been less active in the poorer southern regions that remain dominated by subsistence farming and herding. Access to a mini-grid is a “no brainer” for small businesses in rural areas, de Villeneuve argues, pointing out that many of WeLight’s customers previously relied on generators that they could afford to run only for short periods. With round-the-clock power from a mini-grid, he says, small and medium enterprises (SMEs) can increase production and expand their revenues. De Villeneuve tells African Business that, having overcome multiple challenges in establishing its model, WeLight has been profitable for the past 18 months and is poised for further expansion. The International Finance Corporation came on board as a shareholder in June with a €26m ($30m) investment, in a move that de Villeneuve describes as a “beautiful sign in the market”. He reports that WeLight is now adding 3,000 connections each month and predicts that it could bring mini-grids to around 500 sites in Madagascar where conditions are suitable. The company has already expanded into Mali and is preparing to deploy in Nigeria and DR Congo. There is of course still a mountain to climb if Madagascar is to achieve the rapid growth in electrification that it needs to tackle poverty and drive growth in job-creating industries. Achieving the goal of extending electricity access to 80% of the population by the official target date of 2030 appears implausible. Yet the progress with mini-grids and the small successes with large-scale solar show there is a way forward. The challenge now is for the country to break the bad habits that have delayed electrification for so long, and to finally win the struggle for power.