Blackstone Group LP (BX:US), the world’s biggest buyout firm, plans to invest in energy projects in Africa worth $3 billion within the next 12 months amid increasing demand for power on the continent.
Blackstone plans to invest in the 480-megawatt Ruhudji hydropower plant in southern Tanzania through its Sithe Global Power LLP unit, David Foley, senior managing director of New York-based Blackstone, said yesterday in an interview in Kampala, the Ugandan capital. It will also invest in Rwanda’s 150-megawatt Ruzizi hydro project that will supply power to neighboring Burundi and the Democratic Republic of Congo.
“As the demand for power increases in Africa, Blackstone together with Sithe has a number of projects,” he said. The projects are in the “early stage negotiation and development phase.”
Africa has 15 percent of the world’s population and accounts for only 3 percent of energy consumption, according to a 2011 report by the African Union and other continental organizations that studied power markets demand over the next three decades. Demand for electricity is projected to increase by 5.7 percent annually from 2.4 percent, it said. The percentage of Africa’s population without access to electricity is 59 percent, compared with 21 percent in developing nations in Asia, according to the study.
Blackstone will invest in hydropower and geothermal projects, Foley said. All projects the company will undertake must be backed by the World Bank and its private-investment arm, the International Finance Corp., he said.
Sithe and Industrial Promotion Services Kenya Ltd., an affiliate of the Aga Khan Fund for Economic Development SA, jointly own Uganda’s $900 million 250-megawatt Bujagali hydropower plant, which reached full capacity in July. Uganda’s government, which contributed $20 million, is a minority shareholder in the project, which is being inaugurated today.
“All projects are different, but Blackstone typically seeks to form public-private partnerships like we did with Bujagali,” Foley said
The construction of Bujagali, which is Blackstone’s biggest energy investment in Africa, began in May 2007, and replaced the nation’s reliance on 100 megawatts of thermal power, while eliminating a power deficit of 170 megawatts, according to Blackstone.
Equity financing by shareholders accounted for $200 million of the funding and the rest came from lenders including the International Finance Corp., the African Development Bank, the European Investment Bank, the German Development Bank and the French Development Bank.
The Ugandan plant, located 80 kilometers (50 miles) east of Kampala and run by Bujagali Energy Ltd., will be transferred to the government for a token $1 after 30 years, Foley said.
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