Project detail - Africa50 IPT WIP

Who is our prospective customer?

The client is a Special Purpose Vehicle (the "Project Company"), jointly owned by Africa 50 - Project Development ("Africa 50") and Power Grid Corporation of India Limited ("PGCIL"), to construct, operate and maintain two transmission lines: i) the 400kV Loosuk - Lessos line (179 km) and related substations; and ii) the 220kV, Kisumu - Musaga line (72 km) and associated substations, (the "Project”). Africa50 is an experienced pan-African project developer and an investment vehicle backed by African Development Bank, 33 African governments and 3 other African financial institutions. PGCIL is India's largest transmission utility and also among the largest transmission utilities in the world.

What is our funding objective?

FMO will seek to provide a senior [secured] loan of up to USD 138 million, with a tenor of up to 20 years, as part of a club of senior lenders financing the estimated total project costs of c. USD 320-350 million. The Project will be carried out under a build-own-operate-transfer model for a duration of 30 years, with Kenya Electricity Transmission Company Limited (KETRACO), Kenya’s national transmission operator, as the contracting authority.

Why do we want to fund this investment?

This Project is a landmark public-private partnership (PPP) project in the energy sector in Kenya and Africa. It is the first large scale private transmission project in the country, paving the way for private capital infusion in transmission across Kenya and the African continent to unlock expansion in generation capacity, cross-border energy flows and sustain Kenya's growing energy demand. The Project will also improve quality of electricity supply in the Western part of the country and enable further grid capacity in one of the largest and most populated regions in Kenya. Unlocking private capital in electricity transmission and distribution is at the core of FMO's mission, and part of its strategy in energy, creating thus a very good fit between the Project and FMO's mission and strategy. FMO’s investment aims to support activities that contribute to climate mitigation, contributing to SDG 13, in line with FMO’s methodology to determine green finance attribution.

What is the Environmental and Social categorization rationale?

Due to the potential significant and adverse environmental and social risks, the Project has been classified as Category A. IFC Performance Standards 1 through 8 are considered applicable to the Project, including the requirement for Free, Prior and Informed Consent (‘FPIC’), which is associated with the impacts on Indigenous Communities specifically on the Lessos-Loosuk line. Environmental and social due diligence undertaken identified material risks associated with land acquisition and involuntary resettlement (both physical and economic displacement), (IFC PS5), biodiversity conservation and ecosystem services (IFC PS6), Indigenous Peoples (IFC PS7), stakeholder engagement (IFC PS1), labor and occupational health and safety (IFC PS2), and community health, safety and security (IFC PS4). The Project shall comply with applicable national laws and also align with Good International Industry Practice (GIIP) and will be managed by a number of project-specific environmental and social management plans. Any gaps identified in the due diligence process will be addressed through an Environmental and Social Action Plan (ESAP) which will be integrated into the financing agreement.