AfDB approves US $256 million investments in infrastructure, water, sanitation and health
The Board of Directors of the African Development Bank Group (AfDB) held its first regular meeting since the Bank returned to its statutory headquarters in Abidjan on Monday, September 8 and approved a combined US $256 million for the financing of investments in Nigeria and Ethiopia as well as a multinational projects preparation facility.
· US $150-million senior loan to Lekki Tolaram Port
The approvals comprise a US $150-million senior loan to Lekki Port LFTZ Enterprise for the construction of a Greenfield seaport in the Lagos Free Trade Zone, 60 kilometres east of Lagos.
The project follows a 45-year concession granted to Lekki Port LFTZ Enterprise (LPLE), the Special Purpose Vehicle, by the Nigerian Ports Authority (NPA) under a build, own, operate and transfer scheme.
It involves construction of port infrastructure such as breakwaters, quays, approach channels, dredging of the basin as well as captive utilities such as water and power. On completion, the port would handle 2.5 million 20-foot equivalent units (TEUs), 16.7 million tonnes (MT) of liquid cargo and 4.5 MT of dry bulk. Construction is expected to start in January 2015 with the container terminal operations expected to start in December 2018.
The project, estimated at $1.675 billion, will be financed through a 54/46 debt to equity ratio
It is aligned with the Bank’s Nigeria Country Strategy Paper 2012-2016 which stresses infrastructure development in the non-oil and transport sector as well as the country’s Vision 2020, which emphasizes modernizing infrastructure. The project is also in line with the Bank’s Regional Integration Strategy Paper (RISP) for West Africa which emphasizes linking regional markets through regional transport infrastructure.
· US $5 million to Kukuza Project Development Company
The Bank will contribute a US $5-million equity investment to the establishment of Kukuza Project Development Company (KPDC), a new firm that would focus on early-stage design and preparation of African infrastructure projects.
KPDC will assume turnkey responsibility for preparing the contractual, technical and financial arrangements of its projects, and marketing such projects to a range of potential private and public-private investors for onward implementation. The company expects to process between two and four new infrastructure projects per year. Thus, in 10 years the company aims to develop 30-40 projects for a combined possible investment of over US $5 billion.
KPDC’s main sponsor is Infrastructure Leasing & Financial Services Limited (IL&FS), one of India’s leading infrastructure development and finance companies, incorporated in 1987 to commercialize infrastructure projects and set up value-added financial services. Other initial investors in KPDC include Allied Investment Partners (AIP) of Abu Dhabi, India Exim Bank and State Bank of India (SBI), one of the world’s leading project finance banks with a 10% market share and an extensive network of Indian investors amongst its active corporate clients.
KPDC’s initial capitalization is expected to be US $25 million with the five equity shareholders – AfDB, IF&LS, AIP, SBI and the Exim Bank – holding a stake of 20%, 20.5%, 20.5%, 19.5% and 19.5%, respectively. The initial capitalization will fund the company’s expenses incurred in developing its projects until advisory fees make the venture self-sustaining and profitable.
KPDC is intended to become an important vehicle in delivering “advisory services and institutional support at the policy and project levels [as] critical enablers of private sector development,” as called-for in the Bank’s recently approved Ten Year Strategy. KPDC is aligned with the Bank’s objective to develop modern public- and private-sector infrastructure in Africa that supports sustained economic growth; the Bank’s new Ten Year Strategy to become increasingly catalytic by progressively extending the Bank’s operations upstream into early-stage project development; and the objectives of the recently approved Africa50 vehicle.
· US $91.10 million for Ethiopia’s One Water, Sanitation and Hygiene National Programme (OWNP)
The Board approved a loan of UA 60 million (US $91.10 million) and a technical support grant of €7.63 million (US $10.06 million) from the Rural Water Supply and Sanitation Initiative (RWSSI) Trust Fund to finance the country’s mega water, sanitation and hygiene program, one of the biggest of such projects in the world.
The One Water, Sanitation and Hygiene National Programme (OWNP) is expected to deliver improved and sustainable water supply facilities in rural and pastoral areas, institutions and urban areas; improved sanitation facilities and better hygiene; improved WASH sector capacity for planning, budgeting, monitoring, reporting and sustaining services at decentralized and federal levels.
The direct beneficiaries are people based in rural and pastoral areas, who will benefit from improved and more inclusive provision of WASH services at household and institutional levels, and who will benefit from the attendant well-being, time-saving, and productivity gains.
The program will lay emphasis on the least served majority of Ethiopians (about 83% of the population who live in rural areas). The youth and women will especially benefit from the establishment of sector-related employment opportunities.
Ultimately, the OWNP is estimated to cost US $2.4 billion. Other institutions funding the project include the UK Department for International Development (DFID), UNICEF the World Bank and the Government of Ethiopia.
The Board meeting followed a flag-raising ceremony formalizing the Bank’s return to its headquarters after more than 11 years in its temporary relocation agency in Tunis