Mozambique’s project-financed IPP is a first

Standard Bank provided US170-million dollars in debt financing to help build a 118MW gas-fired power plant in Ressano Garcia, Mozambique. The transaction, funded with 75% senior debt and 5% sub-ordinated debt with a door-to-door tenure of 12 years, is the first project-financed independent power producer (IPP) initiative to reach financial close in Mozambique.

The government awarded Gigawatt a gas power generation concession which is expected to supply power to the capital city of Maputo. On completion, the project will supply about 12% of Mozambique’s total power demand. Gigawatt has also signed a long-term power purchase agreement with state power company, Electricidade de Moçambique. The company plans to use all the power generated by the project domestically.

The plant will be built over 18 months, through a joint venture between WBHO Construction and Parsons Brinkerhoff. Engines for the gas plant will be supplied by Rolls Royce and will be run by TSK.

The buck stops with African governments on Power Production

Nations in sub-Saharan Africa need to boost efforts to create more conducive climates for investment from independent power producers (IPPs) if they are to remedy their severe shortfall in power generating capacity.

According to the Standard Bank Group’s David Humphrey, global head of power and infrastructure at the bank, “Africa’s deficit in power generating capacity is well documented. What is not always realised is that unless this is addressed timeously, other crucial investment cannot take place.”

He believes that to facilitate greater investment from the private sector, African governments need an integrated power policy to create an investment-friendly environment and need to implement a bankable IPP programme. Humphrey says governments also need to invest in strong regulators and develop a reliable regional distribution network.