CFC Stanbic invests $150m in wind power project deal

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A select group of aggressive and ambitious business people pioneered the mass banking concept in the mid-80s. But things went horribly wrong. PHOTO/FILE 

By STEVE MBOGO Special Correspondent

In Summary

• Standard Bank, CfC Stanbic Bank’s parent bank, is the lead arranger and will underwrite $90 million of the debt to The Kinangop Wind Park.
• The project will add a further 60MW to Kenya’s 1,672MW generation capacity.
• The project is also the first in the country to secure a financing deal — a major challenge facing many planned wind power project

Wind energy developer Aeolus Kenya has signed a $150 million financing deal with CfC Stanbic Bank to fund the 60MW wind power project in Kinangop, Central Kenya.

The Kinangop Wind Park will add a further 60MW to Kenya’s 1,672MW generation capacity. The 60MW wind power plant will provide electricity to 150,000 households. The plant is expected to come on line in mid-2015 and has the potential to the country’s first large scale wind power farm project.

KenGen generates 5.1MW of wind from its Ngong Hill turbines. General Electric is planning a 100MW wind project near Ngong while the Lake Turkana 300MW Wind Power Project is still in the planning stage.

READ: Spain gives giant Turkana Wind Power Project $150m funding

The project is also the first in the country to secure a financing deal — a major challenge facing many planned wind power projects.

The new project will come in handy for Kenya as it seeks to upscale its power generation using cheaper renewable resources in a bid to cut the consumer cost of electricity from the current US cents 18 to below US cents 9. The country also plans to generate 5,000MW of power in the next four years.

The transaction will be fully funded through a combination of debt and equity, said Kwame Parker, CfC Stanbic Bank’s East Africa head of Debt Solutions and Infrastructure Finance.

Standard Bank, CfC Stanbic Bank’s parent bank, is the lead arranger and will underwrite $90 million of the debt, while Norway’s Norfund and a large Africa-focused international infrastructure investor will provide $60 million in equity. 

Financial close is expected in the next three weeks, and syndication of the debt is now underway.

“This project is a good example of how to successfully bring private players into the renewable energy sector and serves as a vote of investor confidence in the Kenyan economy,” said Mr Parker.

Richard Herbert, CEO and director of Aeolus Kenya said the wind project has been registered under the United Nations’ Clean Development Mechanism. It is estimated that the project will generate 121,036 tonnes of carbon dioxide emission reductions every year.

The Aeolus Kenya project is aligned to the Power Africa initiative led by the United States’ President Barack Obama, which seeks to develop new renewable power projects in six African countries including Kenya and Tanzania.