INVESTOR BRIEF INDEPENDENT HYDRO POWER PROJECT FINANCING
Sector Energy
Geography Democratic Republic of Congo (“DRC”)
Desired Funding US$15 million in Equity or Mezzanine funding and US$42 million in Senior debt.
Project Overview The total Project cost is estimated at US$60 million, of which US$42 million balance will be Senior Debt. The Senior Debt has been secured subject to equity.
Guarantee GuarantCo will provide a 50% guarantee of the debt. GuarantCo is rated AA- by Fitch and A1 by Moody’s. For more information on GuarantCo, see: www.guarantco.com.
Project Background The Project consists of the development, financing, construction, operation and maintenance of a hydropower production with installed capacity of 11.9MW through two hydro power plants to be located in the Eastern DRC, and the subsequent transmission, distribution and sales of the generated power. The Project sites were selected based on a study of hydrology and topographical survey data with due regard to the sites’ Hydro Power potential and the suitability for a facility of the scope and scale of the proposed Project.
Project Sponsor The Project’s Sponsor is a DRC registered company that has specialized in the power sector for the past 25 years. The Sponsor conducts a wide range of activities in the Energy Sector and is specialized in the following four areas: Power Distribution and Transport, Electrical Installations, Industrial Automation and Environmental Research Consultancy.
Power Purchase Agreements The Sponsor has received Expressions of Interest from a number of industrial and semi-industrial consumers — such as the breweries, mobile operators and banks. These parties have in aggregate expressed their intention to secure at least 2.5MW of the power to be produced by the Project. The letters of intention from these power consumers will be made available to interested parties. The PPA’s will be finalized before Financial Close.
Market Analysis

The Project targets two separate markets. The first market is the local market in the DRC, and the second market is the regional market through the future Nile Basin Initiative (“NBI”) and Economic Community of Great Lakes Countries (“EGL”) interconnections with Bunia, Uganda, Rwanda, Burundi and the East African Power Pool (the “EAPP”).

Despite the enormous hydro potential of the DRC, the country’s electrification rate is currently approximately 9.1%, i.e., less than 7 million of the country’s total population of 75 million. With a third of the population living in urban areas versus two third in the rural areas, electrical energy is unfortunately still an inaccessible commodity for most DRC citizens.

The local market analysis has determined that the actual local demand for electricity in the targeted region is very consistent and is expected to reach 13.3MW by 2017, which is more than the installed capacity of the Project. This estimate has been confirmed by the independent report prepared by international engineering firm AECOM on behalf of NBI. The Financial Model assumes that local demand for electricity in the targeted reach will reach 45 078MWh by 2025 and 52 605MWh by 2040. These estimates are very conservative compared to the AECOM study, which estimates that demand in this area will reach 98 189MWh by 2025 and 269 969MWh by 2040.

The regional market will enable the Project to be interconnected to the international grid and to import/export energy from Uganda, Burundi, Rwanda and the EAPP. These countries are also currently facing a lack of energy supply and their energy needs are projected to grow at a rate of approximately 6-8.6%/year.

Financial Analysis

The Base Case Scenario Analysis is as follows:

  • Projected Earnings over 25 year in excess of US$214 million;
  • The Project IRR is 25.2%;
  • The minimum Senior Debt Service Cover Ratio is 1.58x;
  • The average Senior Debt Service Cover Ratio is 2.66x.
More Information Information Memorandum, Financial Model and further documentation available for review upon execution of NDA
Contact For more information, please contact: Mansur Nuruddin at mansur@mncapital-africa.com