Cenpower Generation, a special-purpose vehicle created to develop the Kpone independent power plant (KIPP), in the Tema industrial zone, in Ghana, has announced the financial close of the required $900-million in project finance.

Once it came on stream in 2017, the KIPP project would be the largest independent power producer in the country, accounting for some 10% of Ghana’s total installed capacity and around 20% of its available thermal-generation capacity.

As a combined-cycle gas turbine plant, it would be among Ghana’s most fuel-efficient thermal power stations, becoming a critical baseload component in meeting Ghana’s growing electricity demand.

The plant would take just under three years to build by South African contractor Group Five and would sell all its output to State utility Electricity Company of Ghana under a 20-year offtake agreement.

Comprising two components – a $650-million debt tranche and a $250-million equity tranche – Cenpower said on Friday that the finance deal would be funded under export credit cover by a consortium of South African commercial banks and international development finance institutions (DFIs).

Rand Merchant Bank had acted as the global lead bank and mandated lead arranger for the commercial banking tranche, while South African banks Nedbank and Standard Bank were involved as mandated lead arrangers.

The Nederlandse Financierings-Maatschappij voor Ontwikkelings Landen (FMO), or the Dutch Development Bank, had acted as the mandated arranger for the DFI tranche.

Through the equity raising, investment groups Sumitomo Corporation, African Infrastructure Investment Fund II and FMO would enter the equity consortium, while InfraCo, the principal project codeveloper since inception, would be exiting.

Post-financial close, the equity holders in Cenpower were Africa Finance Corporation subsidiary AFC Equity Investments, Cenpower Holdings, a consortium of Ghanaian investors, the Sumitomo Corporation, Mercury Power and FMO.

AFC executive director and chief investment officer and Cenpower project director Oliver Andrews described the deal as a “shining example” of what could be achieved when Africa’s public and private sectors combined to enable the development of bankable energy infrastructure projects that were critical to the continent’s economic growth.

“Moreover, the fact that a near $1-billion transaction has been largely financed by African institutions reflects the growing capacity of indigenous lenders and equity investors to begin to address Africa’s ongoing infrastructure deficit,” he commented.

Sumitomo Corporation senior project manager Wada Tomoyuki added that sub-Saharan Africa was growing in strategic importance for the group.

“In backing the Cenpower project, we look forward not only to providing our technological know-how and experience but also to contributing to Ghana’s development,” he noted.