Nachtigal financial close before year-end
Following signing of the DFI-backed financing for the EDF-led €1.26 billion ($1.42 billion) 420MW Nachtigal dam and hydro project in Cameroon on 8 November (as announced in TXF the previous day), financial close is expected to follow by the end of the year when construction will begin.
EDF owns 40% of Nachtigal Hydro Power Company (NHPC) and is complemented in the sponsor line-up by the World Bank and the Cameroon government with 30% each. The run-of-the-river project, which also includes a 50 km transmission line, will be built on the Sanaga river 65 km from Yaounde (the first IPP to be built on the Sanaga river) under a 35-year concession agreement with the Cameroon government.
Besix is lead EPC contractor for the civil works and is partnered by NGE and Societe Generale des Travaux du Maroc (SGTM). Electromechanical works are being provided by GE Hydro France (a subsidiary of GE Renewable Energy, and one of the Alstom power business acquired by GE Power in 2015) and Elecnor. Bouygues has the EPC for the transmission line.
Actis-owned Eneo will be sole offtaker under a 35-year take-or-pay PPA with a levelized tariff estimated at 40 FCFA/kWh or 6.1 EURct/kWh. But given the project is the number one priority identified under Cameroon’s National Electricity Least Cost Development Plan (NEDP) – prepared in 2014 by the Ministry of Energy with the support of the World Bank – there is also a mechanism in place for government support for the offtake payments.
The €916 million project debt for the scheme is being provided by a combination of commercial banks and DFIs. IFC – which was involved as a partner at an early stage to help develop the project through IFC InfraVentures and is global coordinator of the financing – will be providing an A loan of up to €130 million as part of an 18-year €745 million development bank tranche which comprises debt from the EIB (€50 million), AfDB (€118 million), Africa Finance Corporation, AFD (€90 million), CDC, DEG (€35 million), PIDG/EAIF ($56.34 million), FMO (€30 million), OFID and Proparco (€60 million).
In addition to the DFI tranche, the deal includes a €171 million tranche of commercial bank debt from Standard Chartered, Societe Generale (also financial adviser to the sponsors), BICEC and Attijariwafa SCB Cameroon. The commercial debt has a tenor of seven years, with an option to extend twice to 21 years, and is covered by a 21-year IBRD partial risk guarantee. IBRD is also providing a stand-by letter of credit for the sponsors and MIGA an equity guarantee. Clifford Chance provided lender counsel; Herbert Smith Freehills advised the sponsors; Eversheds advised the government and Allen & Overy advised IBRD. Mott MacDonald was technical adviser.
