World Bank will provide $45 million Partial Risk Guarantee to an independent power producer
NAIROBI, December, 2012—Agreements for the Triumph Power Generation Company, a new independent power producer, were signed between the Government of Kenya, Kenya Power, JP Morgan Bank, and the World Bank for a $45 million Partial Risk Guarantee (PRG). The PRG will mobilize $140 million in private investments for the 83 megawatt Triumph Power Generation Project located in Kitengela, near Athi River, approximately 25 km from Nairobi.
“The financing for Triumph Power Generation Company marks an important milestone, which contributes to Kenya’s Vision 2030 strategy of expanding electricity access and sets new standards for attracting local private investments to Kenya’s power sector,” says Johannes Zutt, World Bank Country Director for Kenya.
The Project has been developed by a group of local investors, namely Broad Holding, Southern Intertrade Ltd, Tecaflex Ltd, and Interpel Investments, making it the first locally-sponsored project to benefit from a World Bank PRG. The debt portion consists of $103 million in long-term commercial financing provided by Industrial and Commercial Bank of China (ICBC) and CfC Stanbic Bank of South Africa. JP Morgan Bank of London will provide a letter of credit in support of the project that is backed by the PRG.
“The Triumph project is a public-private partnership needed for unlocking Africa’s energy potential and achieving energy security,” says Jamal Saghir, World Bank Director for Sustainable Development in the Africa Region. “Projects such as these hold tremendous potential for tackling energy deficits, boosting economic growth for jobs and improving people’s lives.”
Triumph Power Generation is the second in a series of four PRGs totaling $166 million approved by the World Bank in February 2012. Thika Power Ltd was the first in this series to reach financial closure in August 2012. The other two independent power producers expected to benefit from this series of PRGs are Gulf Power Ltd and OrPower 4.
“This innovative PRG establishes a track record for supporting local investors in Kenya’s power sector and sets a benchmark for long-term commercial financing from international financiers in Kenya,” says Pankaj Gupta, World Bank Manager of the Financial Solutions Unit.
In addition to the PRG, the Multilateral Investment Guarantee Agency (MIGA) will provide a guarantee for termination payments of around $130 million for the commercial debt financing provided by ICBC and CfC Stanbic.
The Government of Kenya plans to increase private sector participation and utilize low carbon resources such as wind and geothermal to increase electricity generation capacity by an additional 2,000 MW in the medium term.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing loans (called “credits”) and grants for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 81 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since 1960, IDA has supported development work in 108 countries. Annual commitments have increased steadily and averaged about $15 billion over the last three years, with about 50 percent of commitments going to Africa.