Cenpower Generation Company is a Ghanaian company established to develop, construct and operate a 350 MW combined cycle power generation plant, capable of operating on both liquid fuel and natural gas. Project sponsors were the AFC (46%), Cenpower Holding Company Limited (14%), InfraCo Sub-Saharan Infrastructure Fund Ltd (10%) and Sumitomo Corporation (Sumitomo) (30%). The EPC contractor was Group Five, a South African company – a good demonstration of a SA Inc. partnership on the continent.
The total project value was USD891.3 million and the DBSA provided debt finance of up to USD53 million split into USD29 million for capex (USD28.816 million exposure) and USD24 million for the fuel facility (USD7.907 million exposure). The total debt requirement was USD654.4 million. The DBSA’s proposed country limit for Ghana was at R8 870 million with an annual limit of R3 548 million. At the time, the DBSA had no exposure in Ghana. Therefore, the approval of the proposed country limit and annual limit provided sufficient headroom to accommodate the Cenpower Kpone IPP project value of ZAR666 million (USD60 million). The sponsors conducted an open international tender for the EPC contractor. Expressions of interest were received from 25 companies. Only seven of these contractors were invited to provide detailed bids. Group Five of South Africa was finally selected in October 2012 as the EPC contractor.
The project was important for the DBSA for the following reasons:
- The project was part of the strategic plan of the Ghanaian government to grow the economy.
- The project provides reliable low cost energy to the economic hub of the country.
- There was significant South African content in the project.
- Electricity is one of the key components for economic growth.
- Infrastructure projects of this nature create new employment opportunities.
In respect to development impact and project bankability, the Cenpower project has many and varied benefits for the country, local communities, and the region. These include, inter alia:
- Unleashing of natural resources of the country;
- Long term economic growth of the country;
- Through the project, increased access to energy related services;
- Infrastructure development in and around the project site, for example, in the case of this project, an access road is to be constructed; and
- Employment creation – mainly during the construction phase of the project (1000) in the case of Kpone, and sustained employment during the operation phase (40–50).
The project was technically viable using proven technology with multi-fuel turbines providing various options for fuel supply. Contingencies of 5% of the EPC price had been built into the project, which the lenders’ technical advisor (LTA)
considered suitable. The LTA benchmarked the total operating and maintenance costs against similar projects on a ‘per kW’ of capacity and a ‘percentage of EPC cost’ basis. These suggested that the costs were generally in line with other projects with typical costs in the region of 3% of construction costs or USD40 per kW.
Due to the significant contribution that the Cenpower Kpone IPP project would make to the economy of Ghana and the positive development spin-offs that would be realised both during the construction and operational life of the power plant, it was recommended that the Investment Committee approve the DBSA debt finance of up to USD60 million to the Cenpower Kpone IPP.