The Africa Finance Corporation (AFC), the leading infrastructure development finance institution in Africa, will invest €174 million ($196.72 million) in Cote d’Ivore for the construction of a 44-mega-watt (MW) hydroelectric power project and associated infrastructure.
Dubbed the Singrobo-Ahouaty Hydro Power (SAHP) project, the initiative is an example of AFC’s objective of supporting Africa in unlocking its economic potential while also attaining attractive returns for shareholders.
The loan for the project was contracted by power company, Ivoire Hydro Energy (IHE). AFC’s commitment towards IHE amounts to a total of €174 million, comprising a majority equity investment of €24.4 million, and a bridge loan facility of €149.6 million.
IHE’s other shareholders include Themis, a project development company, and IHE Holding, a company incorporated by Ekolan Alain Etty, a local entrepreneur. The SAHP will be built by Eiffage, a leading French contractor that was selected following an international competitive bidding.
SAHP’s financing structure was designed to shorten the development phase for projects of this type from an estimated 10 years to less than 5 years. It is expected that this approach will speed up the process of developing projects in Africa and enable more power projects to come on stream.
AFC arranged the bridge loan facility to kick-start construction while awaiting long-term lenders to secure their final credit approvals. African Development Bank is arranging the long-term debt financing, most of which has already secured approvals.
Cote d’Ivoire currently generates 2,200 MW of electricity, making it one of the leading generators of power in West Africa with approximately 70% through thermal generation with the remainder being renewables, mainly hydroelectric.
The SAHP will increase the country’s overall power capacity as well as reduce generation costs due to the low operating cost of hydroelectric power. SAHP will also further Côte d’Ivoire’s goal of becoming a forerunner in the field of renewable energy.
“Since 2015, when AFC began working with SAHP as a financier and co-developer, we have achieved many development milestones,” AFC President and CEO, Samaila Zubairu commented.
“We are proud to be a major investor and facilitator in the Singrobo-Ahouaty Hydropower Project because this new source of renewable power will be integral to Côte d’Ivoire’s economic growth and social development,” he added.
“As our first equity investment in a hydro Independent Power Producer (IPP) and our first power equity investment in a Francophone country, SAHP is an optimal step in diversifying AFC’s power portfolio, building our balance sheet and expanding our reach across French-speaking Africa,” Zubairu continued.
Oliver Andrews, Executive Director and Chief Investment Officer of AFC said the Corporation’s objective is to accelerate the continent’s growth.
“Seeing as SAHP 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,” he explained.
“I am very pleased to see SAHP taking another stride towards development. Since I began working as an engineer in 1981, I have seen first-hand the opportunities electrification brings to a country,” concluded Ekolan Alain Etty, the majority shareholder of IHE Holdings.