China International Water & Electric Corp., a subsidiary of China Three Gorges Corp., builder of the largest hydroelectric power plant in the world, has signed two concession agreements with the Republic of Guinea – one concerning the operation of the hydroelectric power plant of Kaléta and the other concerning the construction and operation of the Souapiti hydropower plant as well as two power purchase agreements with the state utility, Electricité de Guinée (EDG).
The 40-year Kaléta concession and 25-year Souapiti concession were attributed by the Ministry of Energy and Hydraulics to two project companies, the shares in which are each owned by China International Water & Electric Corp. and by the Guinean state. The revenues of the two concession holders will come from the sale of electricity to EDG.
In the framework of the Souapiti project, the Guinean government and the Export-Import bank of China (China EximBank) have signed a loan agreement for $1.175 billion to finance the hydroelectric dam at Souapiti. This loan will be retroceded to the concession holder which will take charge of repaying the loan with revenues generated by the sale of electricity to EDG.
The bank loan represents 85% of the financing of the works, the remaining 15% being supplied by the shareholders of the Souapiti project concession holders. The cost of the works provided in the construction contract signed by China International Water & Electric Corp. has been fixed at $1.383 billion.
For the Guinean government, the aim of these projects is to strengthen the country’s infrastructures and promote economic development in Guinea. The production of energy by the Souapiti power plant provided in the plant’s construction contract will coincide with the implementation of the sub-regional integration programmes including interconnections with the member states of the Organisation pour la Mise en Valeur du fleuve Gambie (OMVG), the Côte d’Ivoire, Liberia, Sierra Leone and Guinea interconnection (CLSG), the construction of the Linsan-Fomi line and the implementation of the West African Power Pool (WAPP).
China International Water & Electric Corp. was advised by Baker McKenzie with a team led by Richard Mugni, Partner and head of the firm’s African practice in Paris, Fabien Hecquet and Arslane Hatem, associates.
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