WASHINGTON, November 10, 2011 – The World Bank and the International Finance Corporation (IFC) Boards of Directors today approved an US$86 million loan and US$82 million Partial Risk Guarantee to support the Kribi Gas Power Project that is expected to supply reliable electricity to over 160,000 households in Cameroon. The US$86 million IFC loan and US$86 million International Development Association (IDA) guarantee will enable Cameroon’s first long-term project finance from local banks to the electricity sector.
The Kribi power project --the first power plant to run on natural gas in Cameroon -- has two main components: The first consists of the development, construction and operation of a new 216MW natural gas-fired power plant located near the Mpolongwe village, nine kilometers north of the coastal city of Kribi in South Province of Cameroon. The second consists of the development and construction of a new 100-kilometer 225-kilovolt double-circuit transmission line between the Kribi power plant and the existing Mangombe 225/90-kV substation at Edéa in Littoral Province, including substations and transformers.
“The project targets 163,000 households or approximately 815,000 people, 50 percent of whom are women. Combined with the 50 MW of capacity the project will indirectly supply to Alucam, the country's aluminum smelter, we expect very positive benefits for the economy”, said Gregor Binkert, Country Director for Cameroon.
The project was conceived against the background that Cameroon’s 1,021 megawatt capacity is insufficient to meet its electricity demand and the development of low-cost hydropower including the Lom Pangar dam on the Sanaga River is not expected before 2015. Cameroon has the potential to generate up to 6,000 MW of reliable all-season hydropower on the Sanaga River in the medium term. The Kribi Gas Power Project provides a low-cost gas power supply option that is necessary to come on-line by the latter part of the dry season 2012/2013 and that increases reliability in a mainly hydropower-based system.
The Government of Cameroon and the AES Corporation, the private sponsor, have created the Kribi Power Development Company (KPDC) to implement the Kribi gas project as a public private partnership. The total cost of the project is estimated at US$350 million.
“The Kribi gas power project will increase the capacity and reliability of power supply in Cameroon through the mobilization of private financing, including local currency financing. The Project utilizes the IDA guarantee instrument in an innovative way to allow Cameroon’s local commercial banks to support investments in the power sector for the first time. This will build capacity of local banks to provide long-term finance for infrastructure projects, raise local currency revenues for the project and reduce exposure to foreign exchange risk for end-consumers”, explained Astrid Manroth, Senior Energy Specialist and Task Team Leader for the Project.
In addition to providing direct financing, IFC is also coordinating the Development Finance Institutions including the African Development Bank (AfDB), European Investment Bank (EIB), Netherlands Development Finance Company (FMO), the French Promotion and Investment Company for Economic Cooperation (PROPARCO), and the Central African Development Bank (BDEAC) that will provide about 61 percent of project debt through parallel loans amounting to approximately US$181.7 million equivalent.
The power plant will run on natural gas using diesel as backup fuel. Natural gas will be supplied from the offshore Sanaga South gas field in Cameroon -- the first gas field being developed for commercial use by Perenco Cameroun. AES Sonel, Cameroon’s national utility will be the sole off-taker for the power produced by KPDC.
“IFC is pleased to partner with one of our key clients, the AES Corporation, to deliver the Kribi gas power project, which will have a significant impact for Cameroon. The project is aligned with IFC’s long-term strategy for Africa which aims to overcome structural constraints to private sector development and to support improvement to power infrastructure,” said Yolande B. Duhem, IFC’s Regional Director.
As of end October 2011, the Cameroon portfolio comprises 12 national IDA-financed operations with total net commitments of US$477.7 million, excluding the Kribi Gas Power Project. Cameroon also benefits from an additional 5 regional projects with commitments totaling US$496.4 million. About 6.7 percent of the World Bank Group’s financing is in energy.