US$450m power project underway

The Kpone Independent Power Project, a 340 megawatt power plant project under development by Cenpower Generation Company Limited (Cenpower), is expected to reach financial close this year and commence commercial operation in 2014.

Africa Finance Corporation (AFC) is the lead investor in Cenpower, in partnership with the local founders comprising a group of Ghanaian enterprenuers with experience in the energy sector, and InfraCo - an international infrastructure development company.

Cenpower is implementing the US$450million Kpone IPP project. Initiated in 2003 by the local founders led by the current Chairman of Cenpower, Nana Brew-Butler, the project has taken a long time in reaching this stage and is an example of true local and international collaboration in the difficult field of infrastructure development.

“Currently, we’re selecting the company for the commencement of the construction - and so far Asian and European companies are dominating the bids for contracts,” said Henry Morris, Senior Vice President & Head, Structured & Project Finance, AFC in an interview with the Business and Financial Times in Accra.

The Project located at Kpone forms part of the least-cost power generation expansion plan for Ghana, through which the country is promoting increased use of indigenous resources for electricity supply and private sector investment in the development of new generation capacity.

The government expects to increase power supply from the current 2,000 to 5,000 megawatts by 2015.

“AFC, Infraco and Cenpower have so far funded all the project development activities and will contribute additional equity at financial close, together with other strategic investors, to construct the project,” said Morris. AFC will also arrange debt finance to be provided by a consortium of private sector, local and international commercial banks, development finance institutions, and export credit agencies.

AFC is an African-led international financial institution established in 2007, whose mission is to improve African economies by proactively developing and financing infrastructure, industrial and financial assets. The institution focuses on five core infrastructure sectors: power and renewable energy, transport infrastructure - roads, rail, aviation and maritime, manufacturing and heavy industry, telecom and oil and gas exploration and production.

AFC is involved as an investor, developer and financier of various infrastructure projects, and is gaining recognition as the benchmark institution for financing the development of power projects in Africa. AFC is the Technical Adviser to the Central Bank of Nigeria (CBN) on the CBN’s US$2.0bn Power and Aviation Intervention Fund (PAIF), AFC recently provided financing to a leading Independent Power Producer (IPP) in Nigeria. In Cape Verde, AFC has underscored its commitment to pioneering renewable energy investments on the continent with a lead investor role in a US$90m, 26 megawatt wind-farm IPP under development.

Additionally, AFC is the lead investor in the Main One fibre-optic cable project, enhancing West Africa’s connection to Europe and the rest of the world through faster and more technologically advanced broadband capacity. Underscoring its expertise in investing in PPPs/PFIs in its focal sectors across the African continent, AFC is also an investor in the Bakwena toll-road project in South Africa.

AFC was the only African institution among the syndicate of international lenders that participated in a seven-year US$750million syndicated reserve base lending facility to develop phase-1 of the landmark Ghanaian Jubilee Oil Field. The oil field, which is currently West Africa’s largest offshore deep water find in over a decade with proven reserves in excess of 300 million barrels of recoverable oil, has Anadarko Petroleum Corporation, USA, Tullow Oil plc UK, and the flagship Ghana National Petroleum Corporation as other development partners.

On a more important note, Morris said: “The project held significant importance given Ghana’s pivotal role in accelerating and deepening cross-border, economic growth and development in the West African region.

Whilst AFC is at the genesis of its mission, it has committed millions of dollars to transport, trade, energy and infrastructure projects across the continent, in Cape Verde, Ghana, Nigeria and South Africa.

“Ghana’s addition as a member of the Corporation is a landmark proves that initiatives by Africans are beginning to gain results that were desired many decades ago,” he said.