Ethiopia’s first ever export finance deal was signed in May last year, and involved a financing agreement between the state power utility – the Ethiopian Electric Power Corporation (EEPCo), BNP Paribas and Agence Francaise de Développement (AFD).

The transaction saw EEPCo secure a loan of €210mn for the construction of its much-awaited Ashegoda wind power project, which is set to become Sub-Saharan Africa’s biggest wind farm.

More specifically, the financing secures an engineering procurement construction (EPC) contract, involving the sale and installation of 120 1-megawatt (MW) GEV HP wind turbines over a period of three years. The first 30 units will be delivered in 2010.

The financing of the deal breaks down into three tranches. The first is a €130mn buyer credit covered by Coface with a door-to-door maturity of 11.5 years (3 +8.5 years).

The second tranche is a €33.6mn, tied commercial loan, with a total tenor of 5 years (1.5 +3.5). BNP Paribas holds a 58% share of these first two tranches, with Société Générale holding 25% and CIC with 17%.

The third tranche of €45mn is extended by the AFD for a door-to-door maturity of 15 years (4 +11 years).
French wind turbine manufacturer the Vergnet Group will supply and install the wind turbines.

The bid process for the contract included stiff competition from Chinese and Spanish firms, but with BNP Paribas’ support (the bank had been lobbying for the French contractor in its bid process), the Vergnet Group signed the contract with EEPCo. Shortly thereafter, EEPCo mandated BNP Paribas as MLA.

Myriam Ouazzani, vice-president, export finance – Middle East & Africa at BNP Paribas in Paris, comments: “This contract is in line with the government of Ethiopia’s energy policy; in response to the fast-paced growth of domestic demand, its intention is to potentially export electricity to neighbouring countries.

“It is not only the largest contract signed by Vergnet, but also the largest contract ever signed between France and Ethiopia.”
Ouazzani adds that the transaction is of great importance for BNP Paribas’ relationship with French industrials and with EEPCo in particular, as it paves the way for future and ongoing deals. It is also the bank’s first transaction in Ethiopia.

The Ashegoda wind farm project is currently in its initial stages of construction at a site located 20km south west of Mekele in the Tigray State.

Deal information:

Borrower: Ethiopian Electric Power Corporation (EEPCo)
Amount: €210mn
Mandated lead arranger: BNP Paribas
Additional lending participants: Société Générale, CIC
ECA: Coface
Law firms: Gide Loyrette Nouel (lender’s legal and financial advisers)
Tenor: Coface buyer credit – 11.5 years; tied commercial loan – 5 years; AFD loan
– 15 years
Date signed: May 7, 2009