Standard Bank arranges for $120m for Zimbabwe power

In Summary

May 17– South Africa’s Standard Bank has joined the Eastern and Southern African Trade and Development […]

May 17– South Africa’s Standard Bank has joined the Eastern and Southern African Trade and Development Bank (PTA Bank) to provide a $120 million debt package for Zimbabwe Power Company (ZPC).

Tandiwe Njobe, the Regional Head: Investment Banking, at Standard Bank said,“This funding will assist in improving access to power for Zimbabwe and Namibia, and in the medium to long term, benefits of improved power supply and reliability will also extend to other Southern African Power Pool (SAPP) members.”

Standard Bank acted as Lead Arranger in the transaction and the money is for the rehabilitation of existing power infrastructure at Kariba South Hydro Power Station and Hwange Thermal Power Station.

She said, “The proceeds will be applied to significant capital expenditure which will increase capacity and improve efficiency of the power stations. Without reliable access to power, industry and economic growth are negatively impacted.”

The Standard Bank of South Africa is the largest operating entity of Standard Bank Group, Africa’s largest bank by assets. Standard Bank Group reported total assets of R1,95 trillion (about $143 billion) at 31 December 2016, while its market capitalisation was R246 billion ($18 billion).

The transaction was a continuation ofa previous funding arrangement with ZPC,which went towards their contribution into the 300MW expansion at Kariba South Hydro Power Station. Access to energy remains critical to the future growth potential of sub-Saharan Africa, yet power supply remains extremely limited across large parts of the region.  It has been well articulated that inadequate energy supply constrains economic growth and development on the continent.

Njobe said, “This is a landmark transaction in which we could leverage our sector and technical expertise in both markets, as well as our understanding of the regional power dynamics and local regulatory environments, to deliver value to ZPC and Namibia Power Corporation, (NamPower). To make this transaction work we engaged with four regulatory bodies and key policy makers in four ministries in Namibia and Zimbabwe.”

The facility is cross border, placing reliance for repayment on a long-term Power Purchase Agreement(PPA) between ZPC and NamPower.  ZPC has a long track record of delivering power to NamPower.  The PPA provides a long term and sustainable cash flow stream to ZPC, enabling the entity to raise further funding for new projects and now for the rehabilitation of existing infrastructure.

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