Project detail - TOBENE POWER SA

Who is our customer

Tobene Power SA is an independent power producer (IPP) incorporated in Senegal that will develop, construct and operate a 19 MW expansion to a 96 MW heavy fuel oil (HFO) combined cycle power plant in Senegal, located 90km from Dakar in Taiba Ndiaye. The engines are capable of running on HFO and diesel, with the option of being converted to gas at a later stage, when gas becomes available. The expanded plant will sell its energy to national utility SENELEC. Tobene has signed a PPA Amendment to include this expansion in the existing PPA. Start of operations was in December January 2016. The sponsor, Matelec, is financially strong and experienced.

What is our funding objective?

FMO is providing a EUR 6.6 mln loan in addition to its existing loan of EUR 25 mln, together with IFC and EAIF in a much-needed energy expansion project in a lower-middle income country. The increased size of the power plant is important to the energy sector of Senegal. SENELEC will have a local bank issue a standby letter of credit, which in turn will be backed by a Partial Risk Guarantee from the International Development Association of the World Bank Group. In addition, the obligations of SENELEC are backed by a government guarantee. On the environmental and social impacts side, the project adheres to the international IFC Performance Standards.

Why do we fund this investment?

Regular power shortages have significantly impacted economic growth in Senegal and the cost and reliability of the electricity supply is the most significant risk to growth and stability. This expansion project is a significant addition to the current installed capacity of less than 864 MW, for a population of 15 million, and the project has positive impact on the availability and reliability of power in Senegal.

What is the Environmental and Social categorization rationale?

This project is considered to be a Category B+ project according to FMO’s Sustainability Policy. The rationale for the B+ is that the E&S impacts associated with the project and its footprint are considered limited, generally site specific and can be readily addressed through the implementation of and adherence to the performance standards guidelines and good international industry practices. The original facility was categorized as an A which is typical for greenfield thermal power projects. The difference in categorization can be explained by the difference in incremental E&S impacts associated with a greenfield thermal power plant vs. a within-footprint expansion such as this expansion project. While all Performance Standards are applicable to this investment, FMO’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: PS1: Assessment and Management of Environmental and Social Risks and Impacts PS2: Labor and Working Conditions PS3: Resource Efficiency and Pollution Prevention PS4: Community Health, Safety and Security Based on the due diligence, PS5: Land Acquisition and Involuntary Resettlement is not applicable as the project expansion will be located within the permitted footprint of 4.5 hectares, requiring no additional land. The process and issues related to the land acquisition done by Senelec for the Tobene power plant are addressed under the previous Tobene project. PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources is not applicable to this Project as it is located in a modified habitat which has previously been utilized for agricultural activities and surrounded by other agricultural land, residential properties, and a SENELEC substation. In addition, the project site is not considered to be of high biodiversity value albeit three partially protected plant species will require specific authorization prior to land clearance activities and two protected bird species have been identified on the site noting that they are proportionately found within a 10km area. In order to limit potential impacts, land clearance activity will be avoided during the nesting period of July through September. PS7: Indigenous People (IP) is not applicable as there are no IPs identified in area. PS8: Cultural Heritage is not applicable as the area is not identified as archeologically sensitive.

More investments

Date	Total FMO financing
8/6/2014	EUR 25.00 MLN