23 February 2017
Clifford Chance advises Hakan, Quantum Power and Themis Energy on 80-120MW peat fired power plant in Rwanda
Clifford Chance has advised the developers (Hakan, Quantum Power and Themis Energy) on the development and financing of an 80-120MW (gross) peat fired power plant in Rwanda, which reached financial close for its first 80MW phase on 31 January 2017.
When the first 80MW phase is commissioned in 2019, the plant will be the largest peat fired power plant in Africa. It will provide base load generation for Rwanda, increasing its generation capacity by approximately 40% on a tariff c.30% cheaper than those prevailing today. The project will reduce Rwanda's reliance on energy importation, in particular its current heavy usage of HFO and diesel power generation, by making use of one of Rwanda's two indigenous fuel sources (peat and lake-bed methane).
The project is only the second large scale project-financed IPP in Rwanda and follows the market-first KivuWatt IPP on which Clifford Chance advised the lenders.
The first phase of the project has a total deal value of c.USD 350,000,000, of which c.USD 281,000,000 represents project finance debt facilities to be made available by a range of predominantly African development financial institutions, multilateral finance agencies and export credit agencies, including Africa Finance Corporation, African Export-Import Bank, Development Bank of Rwanda, Eastern and Southern African Trade and Development Bank, Export-Import Bank of India and Finnfund.
A predominantly African debt solution was key to the project successfully reaching financial close. Jeremy Connick, Clifford Chance's lead partner on the project, said: "In order to improve debt and equity pricing and so drive down energy costs, local funding that does not price for political risk and currency risk is a vital element. This deal is a huge step forward in that respect."
The project highlights Clifford Chance's ability to leverage its wide experience of power markets across Africa, with its approach to supporting negotiations with the project's counterparties closely informed by its market-leading experience of KivuWatt and its knowledge of cutting edge developments in IPP structures being developed in partnership with Clifford Chance in other market-leading IPPs in Africa, such as the Azura-Edo IPP in Nigeria and the Bridge Power IPP in Ghana.
The Clifford Chance team was led by Jeremy Connick with support from James Pay, Ashvin Seetulsingh, James Harrison and Serra Tar from the firm's Energy & Infrastructure team. Tim Steadman and Edward Bretherton were responsible for negotiating the construction arrangements.