The Africa Finance Corporation (AFC) has finalised a bridging loan worth €149.6m for the construction of the 44MW Singrobo-Ahouaty hydropower project. Although the transaction closed this month, a first disbursement was made in December for the project, in which the AFC has also invested €24.4m equity.
AFC president and chief executive Samaila Zubairu said: “As our first equity investment in a hydro independent power producer (IPP) and our first power equity investment in a Francophone country, Singrobo-Ahouaty is an optimal step in diversifying AFC’s power portfolio, building our balance sheet and expanding our reach across French-speaking Africa”.
The use of the bridging loan to speed up development is seen as an important step by the AFC, which hopes to replicate the strategy in future. The loan is intended to fast-track construction while long-term lenders secure final credit approvals.
Developers have long sought for a way to get around the lengthy approval processes employed by most development financiers. A different strategy was used to achieve a similar goal last month in Ghana, where GuarantCo – part of the Private Infrastructure Development Group – stepped in to the 202MW Bridge Power thermal power project to provide a $50m payment guarantee to engineering, procurement and construction contractor Greece’s Metka while long-term financing is finalised (AE 383/8).
The AFC said that its approach could halve development times from around ten years for comparable projects to less than five. “AFC’s objective is to expedite the continent’s growth”, said AFC executive director and chief investment officer Oliver Andrews. “Seeing as Singrobo-Ahouaty would not be able to continue with development and construction because it was awaiting finalisation of its long-term lenders’ credit approval processes, we decided it was an ideal opening for AFC to get further involved with the project and continue participating in Africa’s IPP market”.
Singrobo-Ahouaty is located on the Bandama River near the villages of Singrobo and Ahouaty. The plant will comprise a 23.5 metre-high and 1,250-metre-long dam, with 25-metre-long and five-metre-wide penstocks and a 1,400-metre tailrace channel. The powerhouse will use two 22MW vertical Kaplan turbines which are expected to generate 213GWh/yr electricity. Power will be evacuated from a 11/225kV switchyard to the 225kV Taabo-Abidjan transmission line via a 4km 225kV line.
The project is owned by the AFC, developer Themis, and the original developer Ivoire Hydro Energy Holding, which is majority owned by local entrepreneur and engineer Ekolan Alain Etty. The plant will be built by France’s Eiffage, who announced a turnkey design and construction contract worth nearly €110m in October 2018, having been selected through a tender in 2016.
Themis became involved in Singrobo-Ahouaty in 2013 when the project was still carrying out feasibility studies. AFC came onboard in 2015, signing a joint development agreement with project company Ivoire Hydro Energy (IHE) in May of that year. Alongside Dutch development bank FMO, AFC provided development funding which helped pave the way for the African Development Bank (AfDB) to commit a $59m loan in December 2017. The AfDB is arranging long-term debt, most of which has secured approvals.
The deal comes hot on the heels of a €192m debt facility agreed by AFC as part of a €577m financing for the Société Ivoirienne de Raffinage. AFC was the sole mandated lead arranger for the transaction, which will help repay arrears to crude oil suppliers (AE 384/17).
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