Standard Bank finances Ghana’s $126m desalination plant
February 20, 2013- Standard Bank had arranged an international financing package for the development of a $126 million desalination plant in Accra, Ghana, it was announced yesterday. Africa’s biggest bank by assets said the plant would have a water production capacity of 60.000 m3 a day.It is said the provision of clean water has far-reaching socio-economic benefits and raising health standards.
It is also understood that investors in the project are Spanish infrastructure company Abengoa S.A. and Sojitz Corporation of Japan.Both companies are contributing equity funding covering 30 percent of project costs. The 70 percent balance of the project’s funding is provided by Standard Bank in the form of senior debt.
Senior debt is payment of which takes priority over other (junior) debts and which must be paid first from proceeds of a liquidation sale in case of a default.
George Kotsovos, the Head of Power & Infrastructure Finance at Standard Bank, said that the sea water desalination project company, Befesa Ghana, will provide potable water for around 400 000 Accra residents who had previously had very limited access to clean water.
Standard Bank was chosen as the lead financier because of its on the ground expertise, strong brand presence in Ghana and its competitive financing offer.
The Standard Bank Group, with representation in 18 countries on the continent, and through its subsidiary Stanbic Bank Ghana, also has the ability to continue to service the project’s local financing and banking needs.
Kotsovos said relationships formed through Standard Bank’s on-the-ground presence were key to the success of the deal structure, as a large number of parties needed to collaborate to make it sustainable.
Because of the 12-year term of the project’s debt funding and lack of mature funding mechanisms in Ghana, the World Bank had stepped in to perform project feasibility studies and to provide credit enhancement to underpin the long-term nature of the funding.
“The deal looks at the entire project’s sustainability, from the pipeline carrying water to the residents and long-term agreements between the project, water authority and the relevant local authorities for the sale of water, thereby ensuring the project is bankable,” said Kotsovos.
According to Kwamina Asomaning, Director of Corporate and Investment Banking in Ghana, the project has the support of the Government of Ghana. This government also guaranteed the obligations of the Ghana Water Company.
Image Source: www.commons.wikipedia.org
Source: Ventures Africa