In 2014, the Cenpower deal won the London-based Thomson Reuters’ Project Finance International (PFI) Magazine Awards as the African Power Deal of the Year. The partnership included parties from South Africa, the Netherlands and Japan as well as public and private entities. The Cenpower deal presents an innovative blueprint for future power deals in Africa and shows the potential for collaboration and implementation of deals in the energy sector, which is most vital for the continent’s economic development and growth. Cenpower will provide 340 MW of power at the Tema Heavy Industrial Area, which will drive industrialisation in Ghana and ultimately contribute to regional integration in West Africa.
Ghana has an installed electricity capacity of just over 2 500 MW, generated 12 billion kWh of power in 2012, of which 67% was from hydroelectricity and the remainder from fossil fuels. The Kpone Independent Power Plant (KIPP) project will be the largest independent power producer in Ghana, contributing approximately 10% of Ghana’s total installed capacity and approximately 20% of its available thermal general 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 a critical base-load component in meeting Ghana’s growing electricity demand.
Ghana plans to add 2 500 MW to its grid by 2030 thereby increasing its citizens’ access to electricity even further. In fact, most rural district capitals and villages have access to the national electricity grid. The additional power in Ghana could offset some of the energy backlog in West Africa where only 43% of the population has access to a decent energy supply. Projects such as Cenpower will go a long way towards reducing that backlog.
Financial close of the requiredUS$900 million of project finance to develop the KIPP in the Tema industrial zone, close to Ghana’s capital, Accra, came in the month of October 2014. The DBSA committed US$53 million of the total project cost to the deal. By being a co-financier of Cenpower, and other power projects across Africa, the DBSA cements its commitment to financing infrastructure that matters to ordinary people on the continent.
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 DFIs. Rand Merchant Bank (RMB) actedas 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. Nederlandse Financierings- Maatschappij voor Ontwikkelings Landen N.V. (FMO), the Dutch Development Bank, acted as the mandated arranger for the DFI tranche.
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%), Sumitomo Corporation (28%), Mercury Power (15%) and FMO (4.15%).