Equity financing for Djibouti 60 MW wind farm project

Published: 03/03/20

Trinity International LLP is pleased to announce that it recently advised an equity consortium comprising of Africa Finance Corporation (AFC), Climate Fund Managers (CFM) as manager to Climate Investor One’s (CIO) Construction Equity Fund, FMO, (the Dutch development bank) and Great Horn Investment Holdings (GHIH) in respect of a 60 MW wind farm project in the Ghoubet region, near Lake Assal, Djibouti. The project vehicle is a Djibouti-based limited liability company entitled, Red Sea Power SAS Limited.

Djibouti is currently heavily dependent on thermal generation and imported power from Ethiopia for its electricity consumption. The project represents the first utility-scale renewables project to begin construction in Djibouti and is viewed as being a key milestone in diversifying Djibouti’s energy mix. The power generated will be sold under a long-term power purchase agreement to Electricité de Djibouti, the state-owned public utility.

Funding was provided entirely by way of equity contributions from each of the consortium members. SiemensGamesa (a German/Spanish conglomerate) is undertaking both the construction and operation and maintenance of the plant. The project is expected to commence commercial operations in 2021. AFC took the lead developer and project manager role, whilst CFM took the lead technical role with FMO providing support on all insurance and E&S related matters. GHIH assisted with the necessary in-country engagement with EDD and the Government of Djibouti.

The transaction adds to Trinity’s significant track-record of both advising on projects in the Horn of Africa as well as advising on first in-country power projects. The project is also one of the first major IPPs in the continent which has applied a model of being fully equity financed at the outset with the intention that project finance debt will be applied later in the life of the project. The Trinity team comprised senior partner Paul Biggs, partners Kaushik Ray and Luke Muchamore, head of private equity Hugh Naylor, counsel Harvinder Deol and associates Nicolas Boittin and Elizabeth Handley.

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