South Africa’s Standard Bank has signed a deal to finance a $2 billion (Sh200 billion) Centum Investment-backed coal plant in Lamu.
The Johannesburg-based lender says it has teamed up with its parent firm, Industrial & Commercial Bank of China Ltd (ICBC), to fund the project which is backed by a consortium of local firms under the investment vehicle Amu Power Company.
“Standard Bank and ICBC have concluded debt financing agreements with a consortium of Kenyan investors for the building of the 1,000-megawatt Amu coal-fired power plant,” Standard Bank said in its latest annual report.
Amu’s executives confirmed that the two institutions are funding the project but declined to reveal the loan size.
The company had, however, previously said it was seeking to raise a total of $1.5 billion (Sh150 billion) in debt.
It had already secured $1.2 billion (Sh120 billion) from ICBC, indicating that the Chinese multinational and its South African subsidiary have agreed to provide a further $300 million (Sh30 billion) jointly.
Amu’s shareholders are to provide the remaining $500 million (Sh50 billion) as equity financing.
Nairobi Securities Exchange-listed Centum has a 25 per cent equity in Amu in which it says it has committed to invest at least $100 million (Sh10 billion).
The investment firm said it would raise the Sh10 billion through debt and from internally generated funds, saying that it expects an internal rate of return of 20 per cent from the project in dollar terms.
Centum’s partners in the project include Gulf Energy and Sichuan Electric Power Design and Consulting Company Limited.