In December 2011, a diverse group of development finance institutions led by IFC financed Cameroon’s biggest Independent Power Project (IPP), which will enhance the supply of reliable electricity and improve energy security in Cameroon.
“Kribi is one of the few IPPs that has achieved financial close in Africa in recent years. It’s an excellent example of a successful public private partnership for the region that was made possible by several factors, including a sustained effort by the World Bank Group over several years,” said Alain Ebobisse, Chief Investment Officer in IFC’s Global Infrastructure Department.
The project comprises a 216 megawatt natural gas-fired power plant and a 100 kilometer 22 kilovolt double circuit transmission line. It is the third public private partnership between the government of Cameroon and the AES Corporation: AES is the sponsor for the other two privately-operated power projects in the country, the Sonel distribution company and the Dibamba Independent Power Project.
The successful financing of this deal demonstrates the viability of the independent power producer model in Sub-Saharan Africa that could be readily replicated across Cameroon and the rest of the region. The project highlights the effort made by Cameroonians to develop a fundamentally healthy electricity sector, which is expected to generated further Public Private Partnership investment opportunities in the near future.
IFC provided a loan of €60 million to the project, and was also a lead coordinator for €138 million from development finance institutions. The project benefitted from close collaboration with the World Bank: the International Development Association provided a Partial Risk Guarantee to Cameroon’s first long-term, local currency loan for infrastructure. As a direct result of this support, a local bank syndicate led by Standard Chartered Bank was able to lend the equivalent of €60 million to Kribi.
“This innovative local currency guarantee structure from IDA is generating interest from local banks in financing other infrastructure deals and helping to deepen the domestic financial sector,” said Greg Binkert, World Bank Country Director for Cameroon.
Increasing power generation capacity, efficiency and sustainability is at the heart of Cameroon’s Vision 2035, which aims to transform the country into an industrialized emerging economy. Over a 12 year period, and supported by IFC, the Government of Cameroon enacted wide-ranging reforms to the power sector. The country has attracted more private investment to its profitable power sector than most other sub-Saharan African countries.