Ngong wind firm gets Sh23.5bn loans insurance guarantee in Kenya
Developers of the 100-megawatt Kipeto Wind Power Farm will tap emergency funds from African Trade Insurance Agency (ATI) to service a Sh23.53 billion loan in event of monthly payment delays by Kenya Power .
ATI, the Pan-African trade and investment insurer, on Monday said it has reached a deal to provide a 10-year standby revolving and on-demand insurance cover for the wind power project to be put up at the base of Ngong Hills in Kajiado.
The emergency facility will cushion the project from short-term cash flow challenges arising from payment defaults for a maximum of six months by the near-monopoly Kenya Power for electricity supplied to the national grid.
ATI did not disclose the exact guarantee size citing client confidentiality, but said the standby loan was similar to its partial guarantee facilities which usually range from $10 million (Sh1.01 billion) to $20 million (Sh2.02 billion).
“It’s a very short drawdown facility. Typically, our insurance policy has a 180-day waiting period, but this is not one of that kind. It’s almost a vanilla type of guarantee that allows us to respond at a very short notice,” ATI senior underwriter Benjamin Mugisha said on phone.
“It will only be drawn as and when there’s a (payment) delay in order for the project to continue to meet its obligations to lenders and maybe fund its operating costs.”
“They can draw on it for those monthly delays … up to six months, but once Kenya Power and Lighting Company makes payment, they will be used to reimburse the facility.”
Kipeto, which signed a 20-year power purchase agreement with Kenya Power in July 2015, will be Kenya’s second largest wind power project on connection to the national grid, initially set for 2020. Source: Business Daily