Updates on NEPAD regional infrastructure projects

August 8, 2007

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The following report covers the current status of three regional projects – a collaboration of the African Development Bank and the World Bank under the NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF).

The projects are:

Togo-Benin-Ghana power interconnection
Kenya-Uganda oil pipeline
Tanzania-Zambia-Kenya power interconnector
Togo-Benin-Ghana power interconnection
Date of IPPF approval: 27 October 2004
Prepatory activities financing sources:
– NEPAD-IPPF: USD500,000
– DBSA-AFD PPF: USD300,000
– BOAD: USD510,333.31
– VRA: USD359,611.69
Physical project costs estimate: USD118 million
Objectives:

To support the Governments of Benin, Togo and Ghana through their power utilities to update the feasibility study and detailed designs of the Benin-Togo-Ghana electricity interconnection, and the development of a detailed environmental impact assessment for the project.

Achievements so far

The preparatory activities of the project for which the NEPAD-IPPF grant was made have been successfully completed.

On the basis of the outputs of the preparatory activities supported by the IPPF, the project has achieved financing for physical implementation from ADF, IDA, IsDB and BOAD.

Based on the revised cost of the project determined from activities supported by NEPAD-IPPF, the ADF has approved financing of USD48.36million, IDA has approved financing of USD14.63million, IsDB has approved financing of USD13.66million and BOAD has approved financing of USD13.35million for the project.

The balance of the funds of USD17.30million is provided by the beneficiaries – Volta River Authority (USD7.40 million) and Central Electricity Board of Togo and Benin (USD9.90 million).

Kenya Uganda oil pipeline
Date of IPPF approval: 5 November 2004
Preparatory activities financing sources:
– NEPAD-IPPF: USD 454,000
– DBSA-AFD PPFS: USD300,000
– GoK and GoU: USD0,038 each
Physical project estimated costs: USD 75 million
Objective

The objective of the grant for which the NEPAD-IPPF was approved is to support the Governments of Uganda and Kenya in the solicitation process for a private sector investor in the project.

This entailed the preparation of the tender process leading to bidding, evaluation, negotiation, award and contract for a joint venture with a private sector investment partner, and assistance to the Governments of Uganda and Kenya in securing financing for the project.

Project brief

Developers: Zambia, Tanzania, Kenya Governments
Estimated cost: US$860 million
Construction period: 36 months
Expected commercial operations date: 2011
Description: the development of a 1,600km 400MW HVAC power interconnector and associated substations linking Zambia, Tanzania and Kenya.

Achievements so far

Following an international competitive bidding process launched in 2005, Tamoil was selected as the strategic partner and developer for the project on July 2006.

Negotiations with the preferred bidder were held in Kampala in August 2006. As a result of these negotiations, a Heads of Agreement was signed between the preferred bidder Tamoil and the countries.

Following detailed negotiations, on 27 January 2007 a contract award of US$80-million was made to Tamoil to build and operate the Eldoret-Kampala oil pipeline extension.

The construction work on the pipeline was scheduled to commence by July 2007. Completion of construction is scheduled by August 2008.

Following the successful delivery of the project, Rwanda is discussing with the Governments of Uganda and Kenya for extension of the pipeline to Rwanda.

Zambia-Tanzania-Kenya power interconnector

Date of IPPF approval: 17 December 2004
Preparatory activities financing sources:
– NEPAD-IPPF: USD500,00
– DBSA-AFD: USD300,000
Physical project estimated costs: US$860 million
Objectives

The scope of activities of the Zambia-Tanzania-Kenya electricity interconnection supported by the NEPAD-IPPF Special Fund consists of four distinct phases: pre-development phase, investor selection phase, concession negotiation phase and financial closure phase.

The IPPF support is to facilitate the engagement of a private sector participant in the project and achievement of financing for physical implementation.

Achievements so far

The following milestones have been completed:

Inception report;
Project development structure;
Financing strategy;
The project information memorandum (“PIM”).
Next steps

Facilitate power off-take arrangements;
Road shows;
Short listing of potential lenders and potential contractors;
Negotiation with potential lenders;
Announcement of the selected contractor;
Financial/legal close;
Contractor mobilisation;
Commencement of construction. Source : NEPAD, august 8, 2007