Kenya’s Kaptis hydropower project to reach financial close in 2020

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A joint development agreement, to bring the Kaptis hydropower project in Kenya through to financial close and construction in 2020, has been signed between the project owner and an equity fund manager.

The 14.7 MW Kaptis run of river hydropower project developer, Tembo Power, has signed a Joint Development Agreement (JDA) with Metier, an independently owned private equity fund manager, together with its partner WK Construction, a leading contractor in the field of hydropower in sub-Saharan Africa.

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This agreement now allows the partners to appoint lenders and prepare for financial closing, expected this year, and to start construction.

The company had started the development of Kaptis, in Western Kenya, in 2013 after its Kenyan partner Humphrey Mulindi identified the site and conducted preliminary investigations to assess its actual potential.

Run of river hydropower is one of the most environmentally friendly energy technologies globally, stated the company. Projects between 10 MW and 50 MW offer inexpensive and reliable electricity in areas where the national electrical utilities need it most.

Since then, Tembo Power has expanded its Kenyan portfolio with additional 17 MW and 24 MW hydropower projects that are currently in development.

These projects are aimed at delivering sustainable hydropower to Western Kenya, currently fed by power imports from Uganda, and diesel power generation. The project has been developed jointly by Tembo Power and WK Power, the investment arm of WK Construction, a leading pipeline and waterworks contractor in South Africa.

Metier has demonstrated success in private equity, alternative assets and related advisory services, with specific experience in the renewable power and infrastructure sectors in sub-Saharan Africa.

The project will form part of the Metier Sustainable Capital International Fund II, which recently achieved a first close of 113m. Metier has committed to provide financial support prior to actual financial closing of the project as well as to subscribe to a 40 per cent stake in the project. WK Power will hold 20 per cent, while Tembo Power shall retain 40 per cent.

Equity has been fully secured and development finance institutions are being appointed for senior debt. WK Construction will be the preferred EPC contractor for the Kaptis project. Tembo Power will benefit from the already existing relationship between Metier and WK Construction, which successfully constructed and commissioned the 5.25 MW Sindila hydropower project in Uganda last year.

Michael Goldblatt, Principal, Metier Sustainable Capital International Fund II, stated: “The signature of the JDA marks the next positive step in our relationship with Tembo Power. We are excited about the prospects of the Kaptis hydropower project as well as the broader Tembo Power portfolio, which fits in well with the fund’s strategic focus on small to medium-scale renewable energy projects across the continent and we are looking forward to making an investment into the Kenyan energy sector and delivering clean energy in support of the Kenya Power and Lighting Company’s power supply objectives.”

Tembo Power’s objective is to develop, finance and operate power generation assets in sub-Saharan Africa, and is currently raising $100m for its first batch of projects totalling 187 MW across Kenya, Burundi and the Democratic Republic of Congo.à‚ 

Raphael Khalifa, the founder of Tembo Power, said: “Tembo Power is delighted to partner with Metier, a reputable and experienced infrastructure fund manager in Sub-Saharan Africa, supported by the main development finance institutions active in the renewable energy field. Such agreement demonstrates the thoroughness of Tembo Power’s development approach, its compliance with the most stringent international standards, and paves the way for extended collaboration with Metier and other key players in the industry.”

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