The Emerging Africa Infrastructure Fund (EAIF) has signed a Participation Agreement with the International Finance Corporation (IFC) to provide a $21m B loan to Central Termica de Ressano Garcia S.A. (CTRG).

Other lenders, in addition to IFC, are ABSA Bank and Proparco, the French development finance institution.  

FMO, the Dutch development bank, also provided a B loan under the IFC loan to CTRG. 

The club of lenders disbursed debt facilities totalling $189m.

Completed and brought into operation in early 2015, the 175MW plant at Ressano Garcia is located near the border with South Africa, about 70 miles from Maputo.

The facility is owned by CTRG and is currently operated by the Finnish power station builder and operator, Wärtsilä.

CTRG is owned 51% by Mozambique’s integrated electricity utility Electricidade de Mozambique (EDM) and 49% by the South African Sasol Group (Sasol).

Sasol is an international energy and chemicals business, listed on the Stock Exchanges in Johannesburg and New York.

EDM and Sasol financed the plant’s construction with a combination of equity and a bridging loan from Sasol, with the intention of refinancing the bridge loan with bank debt.

EAIF was invited into the lending group given its involvement in the Mocuba Solar project in Mozambique.

EAIF’s Executive Director, Emilio Cattaneo, said: “This is a very effective public/private partnership model where the developer has taken the up-front risk and brought Mozambique an asset essential to maintaining the country’s economic progress. In addition, Mozambique’s public finances will benefit from tax and concession fee income over the life of the power purchase agreement between CTRG and EDM.”

EAIF is managed by Investec Asset Management (IAM), one of the largest third-party investors in private equity, credit, public equity and sovereign debt across the African continent.

Nazmeera Moola, Head of EAIF at Investec Asset Management, said: "In addition to the CTRG gas-fired plant and the Mocuba solar facility in Mozambique, in the past year we have signed hydro, solar, oil and gas power station transactions in Uganda, Senegal and Mali. Our depth of expertise across sub-Saharan Africa, increasingly in renewable energy, and in cleaner thermal generation technologies, energy markets and regulation means we bring added confidence to investors and help strengthen economic development in many parts of the continent." 

Mozambique is rated a DAC1 country, meaning that it is among the poorest, least developed and fragile states in the world.

At least half of the country’s 24 million people are estimated to live below the poverty line.

Male life expectancy is 50 years and women live on average just two years longer.

Mozambique’s economy has grown at between 6% and 8% in the decade up to 2015, but fell back to 3.5% in 2016 as global commodity prices dropped and there was a Sovereign debt crisis.

Growth in 2016/17 is forecast to turn out higher, mainly due to increased economic activity and increases in commodity prices.