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CfC Stanbic Bank Kenya in Sh13b deal to build wind power project

By By WINSLEY MASESE | October 3rd 2013


CfC Stanbic Bank has signed a deal with independent power producer Aeolus Kenya, to build a Sh12.9 billion ($150 million) wind power plant in Kenya.

Aeolus Kenya (AKL) is a member of the Power Africa initiative led by the United States President Barack Obama which is developing 1 gigawatt of wind, geothermal and gas fired power projects in the East African region.

Richard Herbert, chief executive and director and Jenny Fletcher managing director share in their joint statement, “The development of this large scale wind park has been a challenging and rewarding process and we look forward to continuing our strong relationships with the Kenyan Government.”

Kinangop Wind Park will add a further 60MW to Kenya’s 1,672MW national power grid. The plant will provide electricity to 150,000 Kenyan households. The wind power plant, which will be built in Kinangop, will be the largest wind power generation project to be built in sub-Saharan Africa to date outside of South Africa.

According to Kwame Parker, CfC Stanbic Bank’s East Africa Head of Debt Solutions and Infrastructure Finance, the transaction will be fully funded through a combination of debt and equity.

Standard Bank, CfC Stanbic Bank’s parent bank, is the lead arranger and will underwrite Sh7.74 billion ($90 million) of the debt, while Norway’s Norfund and a large Africa-focused international infrastructure investor will provide Sh5.16 billion ($60million) in equity. Financial close is expected in the next three weeks and syndication of the debt is now underway.

Main buyer

“With the rising demand for electricity in Kenya, this project will go a long way in providing cost-effective power to the economy.  It is a good example of how to successfully bring private players into the renewable energy sector and serves as a good vote of investor confidence in the Kenyan economy,” Parker said.

Kenya, East Africa’s largest economy, relies heavily on hydro-electric dams for power, which is often challenged in times of recurring drought.

“The project is designed to provide a clean source of electricity to Kenya. It will not only contribute to the social and economic development of Kenya, but will also significantly help ease the energy supply deficit that the country is grappling with,” he said.

He said this provides a perfect opportunity for Kenya to increase the production of clean energy and reduce heavy reliance on other sources of power

The plant is expected to come on line in mid-2015. The Kenyan Government will be the main buyer of the power produced. Aeolus Kenya has already signed a power purchase agreement with state utility Kenya Power, according to Mr Parker.  “What makes this deal significant is that it is a collaboration of players in various sectors combining their skills in order to meet Kenya’s growing demand for electricity,” he said.

“It’s been a complex deal, but we are delighted that all our efforts have yielded a positive outcome for Kenya and its ongoing efforts to improve energy security.”

He adds that although this is the first deal that Standard Bank has concluded in the renewable energy sector in East Africa, it has opened the way for similar deals in the region as investors are increasingly looking at renewable sources to help boost power supply.

“On the back of the success of this deal, Standard Bank has signed mandates to develop other wind farms in Kenya some of which are going to be larger in size. There are also significant opportunities to finance renewable projects in the hydro and geothermal energy sectors in East Africa,” he said. The wind project has also been registered under the United Nations’ Clean Development Mechanism.

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