Perspectives on Financing & Delivering Hydropower Schemes in Ethiopia

Transcription

1 Perspectives on Financing & Delivering Hydropower Schemes in Ethiopia Huang Baodong Group Vice President, Sinohydro Group Limited Chairman, Sinohydro Corporation Limited Fax:

2 Perspectives on Financing & Delivering Hydropower Schemes in Ethiopia Contents 1. Understanding the Structure of Power Potential and Supply in Ethiopia 2. Financing and Delivery Methods for Hydropower Schemes in Ethiopia 3. Innovative Financing and Delivery Methods in Power Projects - Sinohydro s Experiences

3 1. Understanding of Structure of Power Potential and Supply in Ethiopia 1.1 Structure of Power Potential in Ethiopia Ethiopia is featured with an extremely unbalanced structure of power potential According to EEPCO, hydropower accounts for 75% of its total 60,000MW power potential Geothermal 8% (5000MW) 0% Wind Power 17% (10000MW) Hydropower 75% (45000MW)

4 1. Understanding of Structure of Power Potential and Supply in Ethiopia 1.2 Power Supply Structure of Ethiopia According to EEPCo, Ethiopia has a total installed capacity of 2,022.2MW with 91% from hydropower Untapped Hydropower Potential: 43,154MW

5 1. Understanding of Structure of Power Potential and Supply in Ethiopia 1.3 Hydropower is the Future of Ethiopian Power Supply There remains 43,130MW hydropower potential untapped in Ethiopia Hydropower is nearly the only economical, feasible and reliable source of power supply for Ethiopia in the foreseeable future The economic progress of the country largely depends on the efficient and effective development of its hydropower potential Development and utilization of hydropower resource is the legitimate right of the country and the people, any refusal to such right tantamount to denying the economic development and social progress of the country

6 2. Financing and Delivery Methods for Hydropower Schemes in Ethiopia 2.1 Financing Hydropower Schemes in Ethiopia Hydropower development is capital intensive with high up-front cost (delivery cost), Per MW cost ranges from $1.5 3 million Source and availability of finance is the crucial factor for delivery of hydropower schemes Source of financing: public, private and PPPs Public funding: Govt. revenues, loans borrowed from capital markets, ODAs and Multi-lateral financial institutes loans and credits, G2G bilateral cooperation, grants, etc. Private funding: IPPS, equity investment, borrows from private capital markets on the basis of private entity s credit-worthiness and/or project financing, other instruments such as ABS PPPS: a combination of public funding and private funding, equity + project financing Sourcing of fund for hydropower development can be more innovative going far beyond the traditional public, private and PPPS modes: Sino-Foreign bilateral economic cooperation presents new opportunities for financing hydropower development in Ethiopia

7 2. Financing and Delivery Methods for Hydropower Schemes in Ethiopia 2.2 Delivering Hydropower Schemes in Ethiopia Delivery of hydropower scheme includes four key components (phases): Design, financing, construction and operation & maintenance Design: planning, feasibility study, basic design Construction: engineering, procurement and construction, commissioning Delivery methods: segmented and combined Segmented: DBB, O&M( self, contract), public finance Combined (variants of PPP): DB, DBOM, DBFOM (BOT, BOO, BOOT, etc.) Selection of delivery methods depends on the legal frameworks, source of finance (level of private participation) and technical capacity of public utilities, etc..

8 2. Financing and Delivery Methods for Hydropower Schemes in Ethiopia 2.3 Public-Private Partnerships-Allocation of Responsibilities DBB Complete Public Design and Build PPP (Joint Venture) Contract License (Operate & Maintain) Build, Operate & Transfer (BOT) Lease Agreements Build, Own & Operate (BOO) Build, Own, Operate & Transfer (BOOT) IPP Complete Private Increasing Investment Responsibility of the Private Sector Risk vs Rewards Type of PPP Model Design and Build Contract License PPP Lease Agreement BOT BOOT BOO Degree of Risk X X X X X X X X X X X X X X X X X Degree of Reward

9 Security Trust Deed 2.4 TYPICAL PPP CONTRACTUAL FRAMEWORK SECURITY TRUSTEE Sponsor Support ECA/MLA ECA/MLA LENDERS COMMERCIAL BANKS Inter creditor Agreement ECA Guarantee Insurance Security ECA Loans Commercial Loans Bond Sale and Purchase Agreements Local Government Or Host Government Land Lease and Water Right SPV( Project Company) EPC Contract OFFTAKER PPA Operation and Maintenance Agreement SPONSORS Shareholder Agreement (Equity Contribution Agreement)) Concession Agreement Awarding Authority/ Host Country PROJECT BONDS CONTRACTOR OPERATOR

10 2.5 PPPs Stakeholders and Agreements Stakeholders Government Shareholders SPV Lenders Contractor Operator Insurer Off-taker Local Government Third Parties Agreements Awarding Authority, Approving Authority, Shareholder Shareholders Agreement Association of Articles, Feasibility Study, EIA ECA, Commercial Banks EPC Contract O& M Contract Insurances Policies PPA Land Lease Agreement and Water Rights Financial, Law Advisors, etc.

11 2.6 Rationale for PPPs Value Propositions Access to private finance Faster delivery of capital projects Project management skills Entrepreneurship and innovation Reduced operational risk for the public sector Improved service delivery to citizens Optimum utilization of government resources Coverage of Service Delivery

12 3. Innovative Financing and Delivery Method in Power Projects - Sinohydro s Experiences Sinohydro is the dominant leader in delivering hydropower schemes in Africa, bringing in added values through combining Chinese finance, advanced and practical technology and accumulated experience of more than 60- year continuous and high-speed hydropower development Chinese Financing facilities: grants, concessional loans, preferential buyer s credit, export credit, resource-backed package loans (economic growth + resources + loans)

13 3. Innovative Financing and Delivery Method in Power Projects - Sinohydro s Experiences Representative Overseas Projects in Africa, Latin-America & Asia: Bui Hydropower Scheme (400MW), Ghana 621 M US$ Djiploho Hydropower (120MW), Equatorial Guinea 257 M US$ Bata Power Grid Scheme, Equatorial Guinea 323 M US$ Poubara Hydropower Scheme (160MW), Gabon 398 M US$ Libreville Transmission Line Scheme, Gabon 130 M US$ Memvelle Hydropower Scheme(201.2MW), Cameroon 637 M US$ Kariba North Extension Hydropower (360 MW), Zambia 279 M US$ Merowe Dam & HPP, Sudan (1250MW) Hydraulic Works 87 M US$ Angola Projects (hospital, schools, stadium), Angola 3,000 M US$ Busangja Hydropower Scheme (240MW, BOT), DRC 660 M US$ Zonga-II Hydropower Scheme (150MW ), DRC 397 M US$ CCS Hydropower Scheme (1500MW), Ecuador 1,970 M US$ New Certral Gas Power (1200MW), Venezuela 1,640 M US$ Nadarivalu Hydropower Scheme (22MW), Fiji 125 M US$ Taleghan Hydropower (17.6MW) & Water Scheme, Iran 165 M US$ Jatigede Dam & HPP Scheme, Indonesia 245 M US$ Aceh Thermal Power Scheme (2x110 MW), Indonesia 256 M US$ Kamchay Hydropower (193MW, BOT), Cambodia 280 M US$ Nam Nan 5 Hydropower Scheme(120MW, BOT), Laos 199 M US$ Nam Ou River Basin Hydropower (1175MW BOT), Laos 2,000 M US$

14 3.1 Bui Hydropower Project, Ghana Financing Structure: 10% from Ghana Government, 90% provided by China. In loan structure: 50% concessional loan + 50% buyer s credit Guarantee Structure: Sovereign Guarantee for Concessional Loan Sovereign Guarantee + export insurance for Buyer s credit EPC Contract Period: 56.5months. Main Dam : 114m high RCC Dam Total Installed Capacity: 400MW. Contract Value: $621 M Contract type: EPC + F

15 3.2 Poubara Hydropower Project, Gabon Financing Structure: 5% from Gabon Government, 90% provided by China, of which $300 million preferential buyer s credit +$70 million concessional loan Guarantee Structure: Sovereign Guarantee EPC Contract Period: 48 months Total Installed Capacity: 160MW Contract Value: $398 M Contract Type: EPC + F

16 3.4 Kariba North Bank Power Station Extension Project, Zambia Financing Structure: Project Financing: 85% of EPC Contract Value financing from China Exim Bank in terms of buyer s credit, Premium & DIC capitalized. Repayment Guarantee: Sinosure Political Risk Insurance Mortgage of PPA & New Power Station Assets EPC Contract Period: 48 months Total Installed Capacity: 360MW Contract Value: $279 M Contract Type: EPC + F

17 Financing Structure: 3.7 Djiploho Hydropower Project, Equatorial Guinea Export Buyer s Credit: 85% of EPC Contract Guarantee: Oil trade backed financing from China Exim Bank, with an escrow account with China Exim Bank which receives oil trade revenue. Without Sinosure Insurance EPC Contract Period: 48months Installed Capacity: 120MW. Contract Value: $257 M Contract Type: EPC + F

18 3.10 Chamchay BOT Hydropower Project, Cambodia Name of Project: Chamchay BOT Hydropower Project, Cambodia Main Structure: 112m RCC Dam, Intake Structure, Power Tunnel Switch yard and Powerhouses Total Installed Capacity: 194.1MW Average Annual Energy: 498GWh Total Project Cost: $280,500,000 Concession Period: 44 Years(4+40) Mode of Financing: Project Financing Financing Structure: 28%+72%

19 IA Signing on Feb 2006

20 Symbolic Ground-breaking Ceremony on April 2006

21 River Closure on Nov 2008

22 Operation Village

23 Ceremony for Launching the 1 st Unit of Kamchay Hydropower Project in December, 2009

24 Thank You for Your Kind Attention