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AFC Leads in USD 170 million Nigerian Power Privatisation

Acquisition Financing for Kainji Hydroelectric Generation Plant
The Africa Finance Corporation (AFC) today provided a USD 170 million debt financing facility in conjunction with Guaranty Trust Bank Plc, to the Mainstream Energy Solutions Limited consortium(MESL), for the acquisition of the Kainji Power Plc in the first round of the Federal Government of Nigeria’s privatisation of power generation assets formerly owned by the Power Holding Company of Nigeria (PHCN).

Nigeria commenced restructuring and reform of its electricity sector in 2000 with the issuance of the National Electric Power Policy (NEPP) to unbundle the sector and establish a regulator, with a mandate to create and develop a competitive electricity market. The provisions of the NEPP were subsequently enacted in the Electric Power Sector Reform Act 2005(EPSR Act), thus providing the key legal and regulatory framework for the reform, including the establishment of the Nigeria Electricity Regulatory Commission, paving the way for private sector participation in the power sector. Kainji Plc is one of six power generation limited liability companies established under the provisions of the EPSR Act for the concessioning of hydroelectric power plants, following the unbundling of the vertically integrated PHCN. Kainji Plc consists of two hydroelectric power plants – Kainji Hydroelectric power plant (Kainji HEP) and Jebba Hydroelectric power plant (Jebba HEP) located in the Kainji and Jebba regions of Northern Nigeria, within the confluence of the River Niger, and with a combined installed capacity of 1,338MW. Kainji Plc currently generates approximately 25% of total electricity supplied to the Nigerian national grid.

AMNI Petroleum International Limited (AMNI), established in 1993, is the lead sponsor of the MESL consortium and an independent (indigenous) oil & gas exploration and production company in joint ownership, with Afren Plc, of the flagship Okoro/Setu oil and gas fields. RusHydro International AG, a subsidiary of JSC RusHydro, the world’s second-largest hydropower generating company in terms of installed capacity of 36GW, is the technical partner.

AFC, a multilateral finance institution, was established in 2007 with a capital base of USD1 billion, to be the catalyst for private sector infrastructure investment across Africa. AFC fills a critical void in providing project structuring expertise and risk capital to address Africa’s infrastructure development needs, and is increasingly being seen as the benchmark institution for private sector investment in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications. AFC together with Guaranty Trust Bank Plc, is a mandated co-arranger of the acquisition facility, providing an aggregate commitment of USD 68 million to the MESL consortium.

Dr. Adesegun Akin-Olugbade, Executive Director & General Counsel speaking on behalf of Andrew Alli, President & Chief Executive Officer of the Africa Finance Corporation remarked “AFC’s long term vision is to help address Africa’s infrastructure deficit and ensure sustainable economic growth for the continent. Growth of the Nigerian economy cannot be fully realised without an efficient and functioning power sector. Power is one of AFC’s high priority sectors for investment, and arguably Africa’s most significant need.
To this end AFC has partnered with the US Government through USAID in the USD7 billion US Presidential “Power Africa Initiative” to accelerate to accelerate investment in Africa’s power sector over the next five years and increase access to clean, geothermal, hydro, wind and solar energy. AFC’s investment in Kanji power will contribute towards reducing Nigeria’s chronic power deficit, foster economic growth and create employment.

AFC was created to address the infrastructure investment deficit and is privileged to be providing an African private sector investment solution, to drive economic growth and industrial development in Nigeria”.

<em><strong>About AFC -</strong></em>

AFC is an African-led international financial institution, established in 2007 whose mission is to improve African economies by proactively developing and financing infrastructure, industrial and financial assets. AFC is involved as an investor, developer and financier of various infrastructure projects, and is gaining recognition as the benchmark institution for financing the development of infrastructure projects in Africa. AFC is the lead investor in the award winning Cabeolica project, a USD90 million, 26MW landmark renewable energy wind power project in Cape Verde. AFC is the Technical Adviser to the Central Bank of Nigeria (CBN) on the CBN’s USD2 billion Power and Aviation Intervention Fund (PAIF). AFC is a partner with Vigeo Holdings Limited and Tata Power Delhi Distribution Limited for the acquisition of power distribution assets in the current Nigerian Government power sector privatisation round. Additionally in Nigeria, AFC made investments to support marginal field operators in the up and mid-stream oil and gas sector companies such as Neconde, FHN and Seven Energy. AFC is also the lead investor in Cenpower Generation Company Limited (Cenpower), which is implementing the Kpone IPP project – a 340 megawatt combined cycle gas turbine power plant in Tema, Ghana. AFC is the lead investor in the Main One fibre optic cable project, enhancing West Africa’s connection to Europe and the rest of the world through faster and more technologically advanced broadband capacity. AFC provided a USD50 million convertible debt investment in ARM Cement Limited (ARM), the second largest cement operator in Kenya to support expansion initiatives across Eastern and Southern Africa including; development and construction of a lime plant in Tanzania and expansion of ARM’s cement capacity in Kenya. The transaction marked AFC’s first bilateral investment in Kenya. AFC provided financing for Ethiopian airlines fleet expansion in the acquisition of Africa’s first Boeing 777 airline. AFC also invested in the Bakwena toll road project in South Africa and the EURO 270 million Konan Bedie Toll bridge in Côte d’Ivoire, the landmark transport Public-Private Partnership (PPP) project in Francophone Africa, underscoring its interest in investing in PPPs/PFIs in its focal sectors across the African continent. AFC has launched a landmark USD15 million project development facility with the Dutch Development Bank FMO, to fund early-stage equity investments in projects under development pre-financial close, in the infrastructure sector across sub-Saharan Africa.

To execute its mandate, AFC has established partnerships regionally, with other institutions such as the African Development Bank, African Export-Import Bank PTA Bank, Islamic Development Bank, Banque Ouest Africaine de Développement (BOAD), the Nigerian Sovereign Investment Authority (NSIA); and Internationally with the China Africa Fund, the Infrastructure Development Finance Company of India (IDFC), FMO, The Dutch Development Bank, and the US Government through USAID in the USD7 billion US Presidential “Power Africa Initiative”.