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EAIF lends €28 million to Azito Energie’s power plant expansion in Cote D’Ivoire

PIDG company Emerging Africa Infrastructure Fund lends €28 million to Azito Energie’s power plant expansion in Cote D’Ivoire.

  • Benefiting up to 4.9 million people
  • Providing low-cost base load power
  • Displacing older less efficient equipment
  • Competitive tariff pricing moving the region towards OECD norms

The Emerging Africa Infrastructure Fund (EAIF), a member of the Private Infrastructure Development Group (PIDG), is lending €28 million to a €330 million expansion of the Azito Energie gas-fired power station in Cote D’Ivoire. Known as Azito 4, the additional 253MW of capacity being installed at the plant. Its output will rise to 710MW. It will produce electricity at low-cost, with only local hydro-electric facilities providing cheaper power. The transaction was signed on 19th July. Financial close is expected in September.

This is the second loan EAIF has made to Azito. In 2012, it loaned the company US$30 million towards the construction of the first plant. The new financing, which has a term of 15.5 years, met a funding gap that EAIF was comfortable filling because of the management’s successful operation of the existing plant and its resilient cash flows. In addition, the demand for energy in Cote D’Ivoire, and regionally, continues to grow.

The enlarged power station will produce 2,170 GHh of electricity annually. Using an OECD formula for measuring the impact of new generating capacity, Azito 4 has the potential to provide cheaper and cleaner power to up to 4.9 million people.

The new equipment will generate 181MW from a new gas turbine and 72MW from a new steam turbine.

EAIF Executive Director, Emilio Cattaneo says,

“Azito Energie is a proven business with a management team that has operated  a successful plant for a number of years. Expanding Cote D’Ivoire’s base load electricity capacity will improve the resilience of the economy, which is of fundamental importance in fragile states. It will help stimulate business activity and improve domestic life. Public services such as health and education will also benefit from the greater availability of power at affordable prices.”

Construction of the new plant is expected to take around 18 months. 2,000 people will be employed in the construction and fitting out of the plant. Ten new permanent jobs will be created when the new plant is commissioned. All the power produced at the plant is bought by Compagnie Ivoirienne d’Electricité, (CIE) which is a private utility, listed on the Abidjan Stock Exchange and majority-owned by Eranove, a leading provider of electricity and drinking water production and public service management in West Africa. CIE supplies the locally sourced gas to fuel the power plant.

Azito is owned 77% by Globeleq Africa Holding Limited and 23% by Industrial Promotion Service (West Africa).  Globeleq is a leading IPP player in emerging markets that has focused its operations in Africa since 2002. The company operates 8 power plants in Africa with a total capacity of over 1.2GW across different technologies, with another 2.0GW under development.

The International Finance Corporation (IFC) is the Mandated Lead Arranger of the debt finance for Azito4, alongside the French development finance institution, Société de Promotion et de Participation Pour la Coopération Economique (PROPARCO), as the European Developmental Financial Institutes lead arranger and Western African Development Bank (“BOAD”), as the Local Tranche arranger. The other lenders involved in the transaction, in addition to the Emerging Africa Infrastructure Fund, are the African Development Bank (AfDB), OPEC Fund for International Development (OFID), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), Deutsche Investitions- und Entwicklungsgesellschaft (DEG) and the Belgian Investment Company for Developing Countries (BIO).

BOAD is providing financing in XOF, the local currency, while other banks are financing in EUR.

Azito 4 is being financed 80% by debt and 20% by equity.

Alastair Herbertson, Director, Investec Asset Management, said,

‘Projects like this are a demonstration of how investors can produce both financial returns, and generate tangible impact through their investments. The EAIF portfolio, managed by the team at Investec Asset Management, ensures that each project contributes directly, demonstrably and quantifiably to furthering sustainable development across the continent.’

Beyond the project, PIDG company the Emerging Africa Infrastructure Fund, the AFD Group, IFC, BIO, FMO, DEG and are strongly supporting the Republic of Côte d’Ivoire in its transition to a low carbon, resilient economy. Development finance institution support is already engaged through strong policy dialogue aiming at further development of renewable energy solutions and investments that will benefit from their financing support.