CEC AFRICA SL GENERATION
CEC Africa SL Generation Limited (CECASL) is a recent joint venture setup in Sierra Leone. This joint venture is co-owned by CEC Africa Investments Limited and TCQ Power (the Sponsors). Recognising the advances that Sierra Leone has made to facilitate investment in the country and, given that Sierra Leone had one of the highest levels of GDP growth in the world before the Ebola outbreak, the country naturally presented attractive opportunities for the Sponsors.
The power purchase agreement governing CECASL’s US$220 million investment in the country was originally signed in the spring of 2014. The original power purchase agreement has since been terminated, and a new power purchase agreed was signed on 23 January 2017. The project, which consists of the construction and operation of a 128 MW HFO power plant to provide electricity to Freetown, has not yet commenced development and remains conditional, among other things, on financial close being achieved and parliamentary ratification of the power purchase agreement and associated documentation.
The Sponsors have secured the debt required for the project from 5 development banks: the IFC, the FMO, EAIF, AfDB and CDC. The project is also being supported by a partial risk guarantee provided by the World Bank Group’s International Development Association. The successful implementation of the project remains subject to financial close for the project being achieved.
In the Sponsor’s view, Sierra Leone presents a compelling case for investment. The Government is “business-friendly” and recent reforms to the power sector are promising. Despite increased challenges in the short term, the business case for growth remains. Sierra Leone has much potential as a country with massive mineral reserves (particularly in bauxite, iron ore and diamonds). With the country’s large water reserves and its proximity to Europe we see large-scale agricultural investments as an opportunity.
The development of a robust and effective healthcare system is largely dependent on access to electricity and CECASL’s project will therefore play a critical role in the GoSL’s plans to bolster Sierra Leone’s healthcare infrastructure. The project will also support growth by improving the reliability of power supply and reducing the need for expensive diesel generators in Freetown. With the availability of stable power, we expect an increase in industrial activity especially in the area of smelting.
CECASL is a consortium comprising CEC Africa Investments Limited and TCQ Power. CEC is developing a US$220 million project for the construction and operation of a 128 MW HFO power plant (as well as associated distribution infrastructure) to provide electricity to Freetown. This project represents one of the largest private sector power investments in Sierra Leone to date and its first IPP.
The Sponsors have since entered into a conditional agreement to divest from the project upon it reaching financial close. Upon completion of the divestment CECA SL will be co-owned by TCQ Power as to 36.5% and the Commonwealth Development Corporation (CDC), through Globaleq, as to 63.5%. Globaleq, a leading independent power producer across the African continent, is jointly owned by CDC (70%) and Norfund (30%) (Norway’s development institution).