03 Dec 2019

Kékéli Efficient Power Project, Togo, west Africa

GuarantCo provides XOF 14.2 billion Liquidity Extension Guarantee to finance the construction of a 65MW natural gas-fired thermal plant providing electricity to nearly 20% of the population in Togo and supporting the Government of Togo to address the country’s power deficit.

GuarantCo, a Private Infrastructure Development Group (PIDG) company, has provided a XOF 14.2 billion (USD 23.8 million) Liquidity Extension Guarantee (LEG) to enable local commercial banks in Togo, including Orabank, to provide a 14 year tenor loan to Eranove.  The LEG will finance the construction of a 65MW natural gas-fired thermal plant and related infrastructure in the port area of Lomé (Kékéli Efficient Power Project), the capital of Togo, providing electricity to nearly 20 percent (1.5 million people) of the population in the country.

This transaction is GuarantCo’s first guarantee in Togo and the first LEG to extend the maturity of a transaction with a 7-year tenor for local commercial banks to 14 years. It is also the first infrastructure transaction to be financed mainly in local currency, which in combination with the extended tenor enabled by the LEG, helps to provide a competitive electricity tariff for the local population.

Togo currently has a generation capacity of 145.5MW which the government is planning to significantly upscale with the support of private sector investors to address the major power deficit being experienced by the country. The Kékéli Efficient Power Project will make an important contribution to support the Government of Togo to meet its targets to rapidly scale-up the country’s energy production capacity.

The project is split into two phases: the first phase, expected to be operational in the third quarter of 2020, is to construct a thermal plant using a SGT 800 gas turbine with a first phase open cycle capacity of 47MW and the second phase, expected to be operational in the third quarter of 2021, will include a steam turbine, adding 18MW with an estimated annual production of 526 GWh, turning the plant into a combined cycle plant.

A 1 kilometre transmission line, which will have to be developed to connect the power plant to the Lomé Port sub-station, will be operated and maintained by the Togo Electricity Company (CEET).  CEET will also supply the natural gas through the West African Gas Pipeline Company Limited (WAPCo), as the main fuel, to the Kékéli Efficient Power plant.

Sani Yaya, Minister of Finance of the Government of Togo, said: “The Togolese Government welcomes the completion of this important transaction. It once again testifies to the attractiveness of the Togolese economy resulting from the reforms undertaken in a determined manner by the government and materialised by the ranking of the West African sub-region’s best Doing Business ranking. The innovative financing structure, which relies mainly on local currency resources with tenor extension provided by GuarantCo, is proof that it is possible to carry out major infrastructure projects in local currency and without sovereign guarantees, thus proving once again the good performance of the Togolese economy and public finances. Finally, Togo welcomes the partnership with GuarantCo and all the PIDG group and intends to deepen it in the coming months and years as part of the implementation of the 2018-2022 National Development Plan.”

Philippe Valahu, CEO at PIDG, said: “The PIDG group recently visited Togo and we are proud to be collaborating with the government and the private sector. This is an important project which we hope is one of many infrastructure initiatives PIDG will invest in over the coming years.”

Lasitha Perera, CEO at GuarantCo, said: “We are delighted to have closed our first transaction in Togo and make a contribution to support the government’s targets to improve the country’s much needed power deficits by providing energy to 1.5 million people in one of the lowest income countries in the world “We are hoping to extend our partnerships with banks and institutional investors in Togo and finance other infrastructure transactions from which the local people and the economy will benefit whilst supporting Togo’s power deficit so that the country can become more self-sufficient.”

 Marc Albérola, CEO at the Eranove Group, said: “The signing of the financing documentation marks a milestone in the implementation of the Kékéli project. We are very happy to contribute to the strategy and implementation of the National Development Plan with the implementation of this new power generation unit alongside the Togolese Republic. We thank the country’s authorities and our partners Siemens and Grupo TSK, as well as the West African Development Bank, the Pan-African Oragroup and all the lenders for their trust and constant commitment.”

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