Standard, ICBC commit funds for Nairobi fuel plant
17 October 2013, 11:21
Nairobi - The Standard Bank Group and the
Industrial and Commercial Bank of China (ICBC) have concluded a US$108 million
debt financing package with Triumph Kenya for the construction of a heavy fuel
oil plant in the country.
As mandated co-lead arrangers, CfC Stanbic Bank, a member
of Standard Bank Group, provided $28 million of debt funding while ICBC
supplied the remaining $80 million for the key 83MW plant, which is being built 25km outside Nairobi.
Kenya Power has signed a 20-year agreement with Triumph
to purchase power from the plant, which will be a crucial supplier to the
utility during times of drought when the country’s hydroelectric generating
capacity becomes constrained.
The World Bank’s Multilateral Investment Guarantee Agency
(MIGA) will provide $102.5 million in breach of contract insurance should Kenya
Power fail to honour its 20-year power purchase agreement with Triumph.
MIGA’s insurance will also cover the Government’s
obligations under the Government of Kenya Letter of Support.
“The highlight of this transaction is that it marks the
first time that a Chinese commercial bank has used MIGA cover for a
non-recourse transaction,” said Kwame Parker, East Africa Head of Debt
Solutions & Infrastructure Finance at CfC Stanbic Bank.
“It is also likely the first time a Chinese financial
institution is directly lending to a project company for a transaction in
Sub-Saharan Africa that is not related to resource extraction, with no explicit
Parker said the ability of CfC Stanbic to leverage its
on-the-ground presence and knowledge of the Kenyan financial market underscores
ICBC’s decision to partner with an African banking institution in this
The deal, he said, also demonstrated the effectiveness of
the relationship between ICBC and CfC Stanbic Bank’s parent, Standard Bank
Group, in which the Chinese lender has a 20 percent stake.
Kenya has historically relied on hydropower for most of
its electricity needs and has a current installed generating capacity of 1,672
MW, compared with peak power demand of 1,330 MW.
– CAJ News