Exclusive interview with Carl Kachale Chirwa, Head of trade Finance, Sub-Saharan Africa, Citi Kenya. He is a speaker during the upcoming EAPIC masterclass sessions on Wednesday 26 August in Nairobi on “Power Project Finance: Attracting Investors & Raising Funds”.
Any specific projects in the energy sector in East Africa that the Citi Kenya is particularly excited about?
As Citi, we are particularly excited about recent developments in the geothermal space in Kenya which is considered one of top ten geothermal locations in the world and the foremost in Africa.
Kenya plans to increase geothermal capacity to 848MW by 2018 up from the current installed capacity of 432MW, reducing foreign oil dependency and is expected to ultimately contribute around 25% the country’s total energy mix.
Apart from geothermal, we are also tracking other developments in the entire renewable energy space with the Kenyan government proposing to contribute up to 61% of the stretch target of 5,000MW of planned additional generating capacity.
What are the main challenges in project finance in the energy sector in this region?
The main challenges in project finance in the sector mostly occur during the pre-development phase and often arise when managing community relations to ensure a win/ win /win situation for the investors, the surrounding communities and the public at large.
Private-public projects seem to be having quite a bit success lately…
The trajectory is encouraging as the Government of Kenya has to be commended for its sincerity in developing an enabling environment for private-public partnerships especially through the introduction of a progressive standardised Power Purchase Agreement Framework.
What surprises you about this sector?
What surprises me most about the sector is the vast untapped potential still available for interested investors in the renewable market whether it is Geothermal, Wind or Solar in Kenya.
If you look further afield in the East African region, Tanzania and Mozambique have discovered incredible reserves of natural gas off the Indian Ocean Coast. With an estimated 46.5 trillion cubic feet of natural gas reserves that are expected to rise to 200 trillion cubic feet in the next two years,
Tanzania is now firmly on the world energy map as a hot spot for the global energy industry. Mozambique has claimed to have discovered an estimated 50 to 70 trillion cubic feet (Tcf) of recoverable natural gas off the coast. This find means the country has the third largest projected liquefaction capacity in the world after Qatar and Australia.
What is your message to would be investors in this sector?
My message to potential investors is to come speak to Citi as early as possible to partner with you so that you can leverage our global network of more than 100 countries as well as benefit from the soft skills built from our intimate local knowledge of Africa. We have been operating in Kenya for 40 years and we having presence in 11 countries across sub-Saharan Africa coupled with world class experience in financing the energy sector.
At EAPIC you are part of the programme. Can you give us a sneak preview of your address?
I will focus mostly on the tools that Citi has developed that can help potential investors and save some school fees navigating the local investment landscape in Sub Sahara Africa which can tend to be complex for most foreign investors.
What are you most looking forward to at EAPIC?
I look forward to connecting with investors, development partners and possibly identifying bankable projects to take forward under the Power Africa initiative.
Anything you would like to add?
Power is a key focus sector for Citi in Africa. As you may be aware, at the US Africa summit held in Washington last year, Citi committed $2 billion (ZAR25 billion) of Incremental Capital under President Obama’s Power Africa Initiative.