Windhoek-Standard Bank, as mandated lead arranger, has finalised a US$120 million debt package with Zimbabwe Power Company (ZPC), for the rehabilitation of existing power infrastructure at Kariba South Hydro Power Station and Hwange Thermal Power Station.
As lead arranger for the facility, Standard Bank has partnered The Eastern and Southern African Trade and Development Bank (PTA Bank) to deliver the financing. The transaction was a continuation of a previous funding arrangement with ZPC, which went towards their contribution into the 300MW expansion at Kariba South Hydro Power Station.
Access to energy remains critical to the future growth potential of sub-Saharan Africa, yet power supply remains extremely limited across large parts of the region. Inadequate energy supply constrains economic growth and development on the continent.
“This funding will assist in improving access to power for Zimbabwe and Namibia, and in the medium to long-term, benefits of improved power supply and reliability will also extend to other Southern African Power Pool (SAPP) members. The proceeds will be applied to significant capital expenditure which will increase capacity and improve efficiency of the power stations,” said Tandiwe Njobe, regional head of investment banking at Standard Bank.
“Without reliable access to power, industry and economic growth are negatively impacted,” she said. While raising finance remains a challenge in sub-Saharan Africa, the deal speaks to Standard Bank’s ongoing commitment to use its on-the-ground presence and expert capabilities across Africa to finance the development of power and infrastructure projects throughout the continent.
Standard Bank’s local presence and its strong relationships with key stakeholders in the region were crucial to ensuring the positive outcome.
“This is a landmark transaction in which we could leverage our sector and technical expertise in both markets, as well as our understanding of the regional power dynamics and local regulatory environments, to deliver value to ZPC and Namibia Power Corporation, (NamPower). To make this transaction work we engaged with four regulatory bodies and key policy makers in four ministries in Namibia and Zimbabwe,” said Njobe.
The facility is cross-border, placing reliance for repayment on a long-term Power Purchase Agreement (PPA) between ZPC and NamPower. ZPC has a long track record of delivering power to NamPower. The PPA provides a long term and sustainable cash flow stream to ZPC, enabling the entity to raise further funding for new projects and now for the rehabilitation of existing infrastructure.
Standard Bank has a longstanding relationship with ZPC, as their primary banker, and with NamPower, which ultimately benefited all parties to the transaction.
“It was important for us to support the regional power sector through this loan facility. The facility is significant in its contribution to increasing power generation in a region which has an ongoing deficit and a clear need for dependable and sustainable power supply,” said Njobe.