|Signing Date||June 16th, 2011|
|Total Project Cost||€268M|
|ICF Debt Pool Exposure||€21M|
Addax Bioenergy, the bio-energy division of the international energy corporation, Addax & Oryx Group (AOG), is developing a green-field integrated agricultural and renewable energy project at Makeni in central Sierra Leone, which will produce anhydrous fuel ethanol from sugarcane (ethanol or bio-ethanol) and electric power. The project will be the country‘s first Independent Power Producer ("IPP"), the largest commercial agriculture project and the single largest private sector investment that the country has seen since the civil war. The €21M loan to Addax will be used to finance (1) the development of a ~10,000 hectare sugarcane plantation, (2) an ethanol distillery factory producing ~82,000 m3 of ethanol per annum to be sold under an off-take agreement for export to the European Union and for the domestic market, and (3) a 32MW cogeneration power plant, of which at least 15MW will be sold into the domestic power grid under a power purchase agreement with the government of Sierra Leone.
The Project will be funded by (a) €107.10M in equity, (b) €19.76M from net operating cash flow projected to be generated following the plant commissioning pre-Technical Completion, and (c) a €141.55M term loan facility. The current Lender group consists of FMO 25€, BIO 10€, EAIF 20€, AFDB 25€, ICF 21€, DEG 20€, and IDC 22 (equiv). BIO, the Belgian Investment Company for Developing Countries is investing underneath FMO in this transaction.
Addax will export at least 15 MW per annum of excess power to the Sierra Leone grid. In addition, the power plant will also help stabilize the seasonal supply of power from the Bambuna dam. The Project will contribute to the economic recovery of Sierra Leone through rural infrastructure development and the spill-over effects associated with large-scale agricultural operations, including the development of small businesses around the project.
Employment: During construction an estimated 2,300 people will be employed and during operation (running at full capacity) ~2,000. According to Addax the minimum wage in Sierra Leone is US$ 1.20 per day and Addax is paying daily labourers more than double this amount.
Government Revenues: After the tax free period of 10 years, the Project will contribute ~€200M to the country‘s budget (through to 2022) plus foreign exchange export earnings from the first day of operations.
Added Value by Lenders: This is the single largest investment in Sierra Leone since the civil war. Investment by AOG and also the Lenders will encourage other investments in the country and will create a precedent for the government’s argument that "Sierra Leone is open to business".
Social Impact: The co-operative arrangements with International IITA and FAO should increase the productivity of local farmers and optimise their involvement as potential out growers of sugar cane and/or other crops. The Project is also aligned with Sierra Leone’s macro-economic targets; it not only adds power to the country, but by diversifying the industrial base, it adds value to raw materials and helps attract foreign direct investment.
Funds: Commercial financing was available to a few selected projects in Sierra Leone before the crisis. Today, it is unlikely that the few banks who ventured in Sierra Leone before the crisis would do so again, particularly for a 12 year maturity. This ensures ICF-DP additionality.
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