East African Power Industry Convention

Transcription

1 DEG Deutsche Investitions- und Entwicklungsgesellschaft mbh East African Power Industry Convention Pre-Conference workshop on Infrastructure Finance What Financiers need to know about Lenders Eric Kaleja Regional Director, East Africa Nairobi, August 31 st 2010 Our business is developing.

2 Table of contents 1. DEG at a Glance 2. DEG in East Africa 3. Lender s View: Important elements in assessment of IPP opportunities 4. DEG s Experience in the Kenyan Energy Sector DEG/ Case Study Olkaria 2

3 DEG at a glance Corporate data Founded: 1962 Employees: 418 DEG Head office: Cologne Shareholder: KfW, Frankfurt Equity capital 2009: Balance sheet total 2009: EUR 1.3 billion EUR 3.7 billion New business 2009: Portfolio 2009: EUR 1.0 billion EUR 4.7 billion 3

4 DEG the private sector financing arm of KfW Banking Group for emerging markets Promotion of SMEs, business founders and start-ups Promotion of housing, environmental and climate protection, education, infrastructure and the social sector Export and project financing, large scale investment and corporate financing Promotion of and investment in emerging markets: DEG: Private Sector KFW: Public Sector Investment Finance in Germany and Europe Export and Project Finance Financial Cooperation, Promotion of Private Enterprise 4

5 Portfolio as per Africa DEG Portfolio: EUR 891 Mio. Countries 29 Companies 121 Infrastructure 214 Mio. EUR Equity / Mezzanine 81 Mio. EUR Financial sector 238 Mio. EUR Thereof supra-regional: EUR 160 Mio. Agricultural sector 150 Mio. EUR Manufacturing and Services 209 Mio. EUR Commitments in 2009: EUR 266 Mio. 5

6 DEG tailor-made finance solutions the full range from guaranteed loans to direct equity participations Loans with local security Loans Subordinated loans Loans with partial guarantees Hedged equity participation Partially hedged equity participation Equity participations Guaranteed loans Risk participation Risk continuum assumed by DEG 6

7 Project finance DEG s services along the project cycle of renewable power projects Investment Contracting Financing and financial services provided by DEG as lead arranger CDM Expertise Provided by DEG together with KCC* (e.g. CDM pre-check) Development Technical advice DEG can participate in the funding of studies CER procurement by KfW Carbon fund Feasibility study Operation * KCC = Kyoto Coaching Cologne (JV between DEG and TÜV) 7

8 DEG in East Africa DEG s East Africa portfolio in terms of total commitments at the end of 2009 stood at EUR 151 million in 29 project companies DEG has financed 3 of 5 independent power producers (IPPs) in Kenya and 2 IPPs in Uganda DEG energy investments in East Africa cover a variety of generation including geothermal, thermal and hydropower. DEG currently assessing wind and bagasse co-generation. DEG sees enormous potential in renewable energy projects and will continue to support the sector (currently 3 projects are being assessed) 8

9 Lender s View: Important elements in assessment of IPP opportunities Macroeconomic Environment Favorable Investment Climate Clear Policy Framework Clear, Consistent and Fair Regulatory Oversight Coherent Power Sector Planning Competitive Bidding Practices 9

10 Lender s View: Important elements in assessment of IPP opportunities Sponsor/Project Company - Essentials Strategic investors/financial investors Track record Financials Parent and bank guarantees Share retention and sponsor support agreements 10

11 Lender s View: Important elements in assessment of IPP opportunities Sponsor/Project Company - Construction Turnkey contracts (fixed price, certain date) vs. several contracts Penalty payments/bonds Cost overrun and completion guarantees by sponsors Construction supervision and determination of completion by independent engineer 11

12 Lender s View: Important elements in assessment of IPP opportunities Off-taker/Market Creditworthiness and track record of off-takers Renewable energy laws Market forecasts (demand, tariffs) conservative assumptions, sensitivities, consultants 12

13 Lender s View: Important elements in assessment of IPP opportunities PPA Structure of tariffs in PPAs (capacity and energy charges, inflation and foreign exchange indexation) Balance between investment and development outcomes Requirements of lenders and equity providers should be communicated early in the negotiation process Develop model of standard PPA s for small projects or those with specific technologies Larger projects would need tailored PPAs More transparency around PPAs 13

14 Olkaria Geothermal Project Kenya Key characteristics Olkaria = first and only geothermal IPP on the continent Phase I: 13 MW (2000) Phase II: +35 MW Tender process under World Bank supervision BOO (Build own operate structure) World class sponsor Ormat with 40 yrs. Experience and projects in over 60 countries 20 year PPA with KPLC 150 million USD construction cost including drilling 105 million USD long-term debt financing arranged by DEG Involvement of European DFIs, including FMO, Proparco, EAIF, EIB under EFP as well as KfW Development Bank 14

15 Olkaria Geothermal Project Kenya Strong points meets high environmental standards low operating cost; no fuel cost included in Kenyan Least Cost Development plan high suitability of geothermal resources for power generation high reliability of technology utilized completion risk fully taken by sponsor contribution to Kenyan budget through royalty payments Largest single private sector investment in the power sector of Kenya EMEA Finance s Best EMEA Sustainability Deal in

16 Olkaria Geothermal Project Kenya Project Structure DEG / KfW Senior Debt Sponsor Ormat IPP Olkaria III - wellfield development - Technology - O&M - Equity European DFIs senior debt GOK KPLC = offtaker 16

17 Olkaria Geothermal Project Kenya V 17

18 Olkaria Geothermal Project Kenya VI 18

19 Olkaria Geothermal Project Kenya 19

20 Credentials in renewable power long-standing track record Derivados de Caña S.A. Hydroeléctrica Rio Lajas S.A. Bhote Koshi Power Company Private Ltd. Hydroeléctrica Dona Julia S.R.L. Enercon 25 MW Bagasse 10 MW Hydro 36 MW Hydro Senior + B-Loan (syndicated) 18 MW Hydro 15 MW Wind Guatemala Costa Rica Nepal Costa Rica Brazil EUR 10.8 million 1995 EUR 4.0 million 1996 EUR 10.7 million 1997 USD million 1998 EUR 6.4 million 1999 Bozcaada Sinersa QHW IHDC MIAOLI Senior + Sub-Loan (syndicated) 10 MW Wind 15 MW Hydro 16 MW Wind Hydro 49.8 MW Wind Turkey Peru China India China USD million 2000 USD 6.0 million 2002 USD 10.2 million 2002 EUR 8.6 million 2005 EUR 7.5 million

21 Credentials in renewable power cont. long-standing track record Sinersa (A) ECOSA ZHONGDA PCC ERSA Equity Equity 10 MW Hydro 27.5 MW Biomass 78 MW Hydro 40 MW 30 small Hydro Project Development Renewables Peru Ecuador China supra regional CEE Brazil USD 9.0 million 2006 USD 8.0 million 2006 EUR 10.2 million 2006 EUR 9.0 million 2007 USD 25.0 million 2007 Bujagali BioEner Olkaria Xacbal Corporate Credit Facility 250 MW Hydro 12 MW Biomass 58 MW Geothermal 94 MW Hydro Uganda Uruguay Kenia Guatemala USD 30.0 million 2007 USD 9.9 million 2008 EUR 28.7 million 2008 EUR 23.4 million

22 Get in touch! Eric Kaleja Regional Director East Africa DEG Deutsche Investitions- und Entwicklungsgesellschaft mbh (German Investment and Development Company) KfW / DEG Office Nairobi Riverside Westlane, off Riverside Drive P.O. Box Nairobi Kenya Phone: /2 kaleja.deg@kfw.co.ke Fax: Internet: 22