On Thursday 2 October, the finance documentation for the 340MW gas-fired power station in Ghana has been signed with Cenpower Generation Company Limited (Cenpower). Cenpower is a Special Purpose Vehicle created to develop the Kpone Independent Power Plant (‘KIPP’) in the Tema industrial zone, close to Ghana’s capital, Accra, is pleased to announce the financial close of the required US$ 900 million of project finance. The project represents the first major Independent Power Project (IPP) to be funded by a joint effort of commercial banks and DFI’s ,in the country and one of the longest tenors for the region.
When it comes on stream in 2017, the KIPP project will be the largest private IPP in the country, accounting for approximately 10% of Ghana’s total installed capacity and approximately 20% of its available thermal generation capacity. As a Combined Cycle Gas Turbine (‘CCGT’) plant, it will be amongst Ghana’s most fuel-efficient thermal power stations. Once in production, KIPP will be become a critical base-load component in meeting Ghana’s growing electricity demand.
The project finance comprises two components: a US$ 650 million debt tranche and a US$ 250 million equity tranche. The debt is being funded under export credit cover by a consortium of South African commercial banks and international Development Finance Institutions (DFIs). Rand Merchant Bank (‘RMB’) acted as the Global Lead Bank and Mandated Lead Arranger for the commercial banking tranche. Other South African banks involved in the transaction as Mandated Lead Arrangers were Nedbank and Standard Bank. FMO acted as the Mandated Arranger for the DFI tranche, comprising of FMO, DEG, OFID, EAIF from Europe and DBSA and IDC from S. Africa.
Via the equity raising, three leading investment groups will be joining the equity consortium, whilst InfraCo, the principal project co-developer since inception, will be exiting. The new investors are Sumitomo Corporation of Japan, African Infrastructure Investment Fund II and its co-investors (via an investment vehicle called Mercury Power) and FMO. Post-financial close, the equity holders in Cenpower now are AFC Equity Investments Limited (a wholly-owned subsidiary of the Africa Finance Corporation (‘AFC’) (31.85%), Cenpower Holdings Limited (21%), a consortium of Ghanaian investors, (21%), Sumitomo Corporation (28%), Mercury Power (15%) and FMO (4.15%).
“This is a major step towards setting a clear framework for future IPP delivery in a region that desperately needs more power to underpin its economic growth,” says Ato Gyasi from RMB’s Infrastructure Finance team in Lagos. “This landmark project which, to my knowledge, has mobilized the largest ever commercial debt facility for a greenfields IPP in the region, represents the start of what promises to be a successful partnershoip between the private sector and the government, in delivering power infrastructure to the people of Ghana.”
Oliver Andrews, AFC’s Executive Director and Chief Investment Officer and Cenpower Project Director, commented: “This is a shining example of what can be achieved when Africa’s public and private sectors combine in innovative and sustainable partnership to create the bankable energy infrastructure projects so critical to the continent’s economic growth. Moreover, the fact that a near US$1 billion transaction has been largely financed by African institutions reflects the growing capacity of indigenous lenders and equity investors to begin to address Africa’s ongoing infrastructure deficit.”
Wada Tomoyuki, Senior Project Manager, Sumitomo Corporation, observed: “Sub-Saharan Africa is growing in strategic importance for us. In backing the Cenpower project, we look forward not only to providing our technological know-how and experience, but also to contributing to Ghana’s development.”
Ebbe Hamilton, Partner at eleQtra, said: “In exiting this groundbreaking project, Infraco and eleQtra are delighted to be able to facilitate the entry of such blue-chip investors as Sumitomo, AIIM and FMO. We are very proud to have been a key member of the development team of this truly African project.”
“FMO is delighted to become the leading DFI financier, along its minority equity stake in Cenpower,” added Janos Bonta, the Dutch Development Bank’s Senior Investment Officer. The total FMO DFI finance arranged amount is USD 207 million. “The KIPP project will provide Ghana with reliable and affordable power going forward, thereby improving the levels of electrification across the country, and, as such, is very much in line with our strategicmission. The innovative part of the finance includes a USD 93 million long term groundbreaking DFI tranche securing reliable uninterrupted fuel supply releasing the Government of Ghana burden to supply fuel for this project, contrary to other tolling arrangements in the region.”
Samuel Brew-Butler, Chairman of Cenpower, concluded: “I should like take this opportunity to thank the entire Project Development Team at eleQtra/InfraCo and AFC for their invaluable contribution in bringing Kpone to financial close. Recognising the crucial role that Cenpower will play in meeting Ghana’s future electricity needs, we and all our financial stakeholders are now galvanised to bring Kpone into production on time and on budget.”
About FMO
FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With an investment portfolio of EUR 6.6 billion, FMO is one of the largest European bilateral private sector development banks. www.fmo.nl
Press contact: Paul Hartogsveld
Senior Communications Officer (PR)
T: +31 70 314 9928
M: +31 6 11589127 E: p.hartogsveld@fmo.nl
