CDC, the UK’s development finance institution, has today announced a US$39 million loan investment in Tè Power Company S.A.S.U., to construct a 50MW thermal power plant in Conakry, the capital city of Guinea. The investment will provide much needed baseload power to a country which experiences regular power cuts and where only 28% of the population have access to electricity.
The Tè Power project is Guinea’s first independent power project meeting international standards and the first individual investment in the country by CDC. The electricity generated by Tè Power will be sold to the Government of Guinea under a five-year Power Purchase Agreement. The project, which is expected to be fully operational in mid-2019, offers the Guinean people power in the medium-term, whilst they wait for large hydropower resources to comes online in around 5 years’ time.
CDC’s six-year support for the project comes alongside additional loan capital of US$50m from the American DFI, the Overseas Private Investment Corporation (OPIC), and a US$32 million equity investment from the project’s sponsor, Endeavour Energy, a leading Africa-focused independent power company owned by the investment firm Denham Capital. The support of CDC and OPIC has helped the project reach financial close, and will ensure international best practice in environmental and social standards.
Despite impressive recent economic growth, Guinea is one of the poorest countries in Africa with average annual per capita GDP of ~US$500, placing it at 193rd/203 in the World Bank list. It has vast and under-developed hydropower resources but currently only around 400MW of installed grid capacity, dropping to as low as 150MW of reliable power. Just over a quarter of the population of 12.4 million have access to electricity. According to the World Enterprise Surveys, 84% of business in Guinea experience electrical outages, suffering four electrical outages a month, resulting in an aggregate loss of 5% of annual sales.
The sponsor, Endeavor Energy is well known to CDC as the main sponsor in the Amandi Energy project, a 200 MW gas-fired project in southern Ghana in which CDC invested US$83 million in 2016.
Welcoming the investment, CDC’s Head of Project Finance, Iain Macaulay said:
“We are proud to be financing this ground-breaking project, which will provide reliable power, local jobs and support broader economic development. Having a privately funded power project designed to deliver international environmental and social standards sends a strong signal that Guinea is open to the international investing community. CDC played a valuable role in the project by providing the debt finance that commercial banks were unwilling to offer.
Endeavor Energy and the sponsor group have done excellent work with the government to get the regulations and procedures governing power projects to the required standard. By providing Guinea with essential baseload power whilst large hydro power capacity is being built, we believe the project aligns perfectly with the government’s long-term power strategy.”
Sean T. Long, Chief Executive Officer, Endeavor Energy said:
“Guinea has made great strides over recent years to strengthen its power sector whilst at the same time creating an environment for international investing. Project Tè will be the second project in Africa that Endeavor has invested with CDC. Alongside Endeavor’s equity investment, CDC worked seamlessly with OPIC to provide the debt financing for the project.
I owe special thanks to the CDC team who worked tirelessly to help make this happen. I appreciate their leadership and look forward to continuing to work together on other energy projects in the region.”