A group of banks and development agencies have funded a power plant in Kenya, marking the first guarantee the World Bank has made to a Chinese firm.
The Triumph power generation project, to be completed in 2014, has received US$102.5mn in loans from Standard Bank and the Industrial and Commercial Bank of China. Stanbic Bank has provided a US$11.1mn hedging facility. All of the commercial finance is covered by the Multilateral Investment Guarantee Agency (Miga), the political risk insurance arm of the World Bank.
The finance will pay for the construction of an 83MW heavy fuel oil plant and is part of Kenya’s least cost power development plan, which aims to add 600MW to the national grid. The World Bank Group is hoping to support US$1bn of finance in total and is already involved in Olkaria III, Kenya’s first geothermal project.
Miga’s involvement protects the lenders against breach of contract. Alan Narayadu, the senior underwriter for this project tells GTR of the significance of the World Bank’s maiden insurance for a Chinese firm: “Traditionally Miga has supported investments and lending into China. However, in recent years we increased our outreach to Asian investors and lenders and this has included Chinese investors and lenders. We are well aware of their interest and activity in sub-Saharan Africa. We are pleased that we can engage and support these investors and lenders and hope to be able to continue to do so.”