Takoradi

120904R TAQA Logo Pres4


Country Ghana
Sector Energy
Signing Date July 12th, 2012
Total Project Cost USD 440M
ICF Debt Pool Exposure USD 30M
IFI Exposure USD 330M

Project Description

The project is located near the town of Aboadze, just east of Takoradi in Western Ghana. It comprises the expansion of Takoradi2, which since September 2000 has operated a 220MW simple cycle power plant, with a 122MW turbine powered by steam heated by the exhaust heat of the Takoradi2 gas turbines.  The expansion will result in a 342MW combined cycle thermal plant. The conversion to tri-fuel (gas, Light Crude Oil and diesel for start-up) has been finalized. The project will provide additional electrical energy without needing any additional fuel/gas.  The plant’s output will increase by almost 50% without consuming any additional fuel benefiting in lower average variable production costs per kWh and lower green house gas emissions per kWh.

Financing Structure

FMO acted as Mandated Lead Arranger and arranged a syndicate providing USD 212.1M in debt financing consisting of FMO (USD 80M including funding from the Interact Climate Change Facility), PROPARCO (USD 40M), ICF Debt Pool (USD 30M), DEG (USD 24.9M), Emerging Africa Infrastructure Fund (USD 15M) and another development bank (USD 22.2M). The remainder of the financing is USD 117.5M provided by IFC (and the Canadian Climate Change Program), USD 95M, and the OPEC Fund for International Development, USD 22.5M.

Infrastructure Component

The project will contribute vital electrical power infrastructure and will significantly support the development of the Ghanaian economy and stimulate industrialization in Ghana and the West African sub region.

Investment Rationale

Strong Contractual Structure: The Project has been structured following international best practice.  Key agreements all follow commonly accepted templates.

Strong Need: Ghana has faced repeated shortages of electric generating capacity in the recent past.  55% of the generation capacity is hydro-electric, and its output is thus subject to rainfall volatility.  The project is part of the government of Ghana’s program to increase access to electricity in the country as well as to improve energy use efficiency.

Strong Sponsors: Sponsor has the required technical and operational know-how to monitor construction and operate the plant.

Development Impact

The project is part of a plan by the government to improve its power sector infrastructure and reduce the risk of economic disruption resulting from power rationing caused by low rainfall.  Due to unreliable power supply by the national grid, many Ghanaian businesses and households run back-up diesel generators to have uninterrupted power.  The development of T2 will lower electricity costs for these users (as it provides a substitute for more expensive energy sources such as diesel generators) and improve quality/reliability of power supply.  Further increasing electricity output will help the government in its electrification of rural areas. 

By generating steam from waste heat of the existing gas turbines to drive a steam turbine, the Project will increase its electric generating capacity by 50% without increasing fuel consumption, and thereby reducing greenhouse gas emissions per kWh by about 1/3. 

The project will provide direct employment for nearly 800 people at its peak during the construction and 80 direct employees during operation.  The operators of the plant will provide training in modern power generation plant management practices to the Ghanaian counterpart staff at the Plant. The company will utilize proven technology, which is already in operation in other locations in target markets. Technological expertise is transferred by experienced expatriates to local engineers. 

Impact on society through taxes is good, with some USD 166M in corporate taxes to be paid to the government over 25 years.

Additionality

The project requires long-term finance which is not available in Ghana.