KTDA POWER COMPANY LTD. (FMO-45122)

Countries
  • Kenya
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • Netherlands Development Finance Company (FMO)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Bank Risk Rating
B
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Dec 18, 2015
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
Kenya Tea Development Agency (KTDA )
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Agriculture and Forestry
  • Energy
The service or industry focus of the investment. A project can have several sectors.
Investment Amount (USD)
$ 15.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Bank Documents
Primary Source

Original disclosure @ FMO website

Updated in EWS Feb 26, 2019

Disclosed by Bank Jun 20, 2018

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

WHO IS OUR CLIENT

Kenya Tea Development Agency (KTDA ) is the largest tea business in East Africa, representing 60 percent of all Kenyan tea sales. KTDA was privatized in 2000 and is indirectly owned by 570,000 tea farmers, through 66 tea factories. KTDA is a management and service provider offering services to tea factories and farmers. Services included management services for factories, trading, warehousing, branding, pre-financing and power projects. The KTDA entities deduct their cost (e.g. of processing) and a fee from the final tea sales price, while the rest of the tea sales price is paid out to farmers. KTDA is consistently looking at the entire tea value-chain to see where it can cut cost and provide ancillary services. KTDA is now setting up small hydro projects, through its subsidiary KTDA Power (or the Company), to reduce energy cost, which is one of the major costs in the processing of tea. Several tea factories have joined hands to save equity to invest in a hydro project.

FUNDING OBJECTIVE

KTDA Power will design, construct, operate and maintain seven run-of-the river small-hydropower plants (SHPs) with a total installed capacity of 16MW at various locations in Kenya. The SHPs will provide captive power generation for several KTDA tea factories, and will sell any excess to the majority state-owned utility company, Kenya Power and Lighting Company (KPLC). Each SHP will be owned by newly created asset holding companies, Regional Power Companies (RPCs). KTDA Power will have a 12.5 percent share in each RPC while the remaining shares are held by several tea factories in the region. KTDA Power will on-lend the money to the different RPCa€™s and in turn to different SHPs. There are four RPCa€™s owning seven hydro projects. By retaining factory profit, the tea factories have saved equity over several years. Total Project cost is USD 85.6 million, financed for 65 percent by debt and 35 percent by equity. Total debt package of USD 55 million is arranged by IFC. IFC will take USD 25 million (50 percent GAFSP) and FMO and Proparco both USD 15 million. FMO will participate in a B-loan financed by IDF. KTDA Holdings and its largest subsidiaries will provide a first demand corporate guarantee and unlimited deficiency support throughout the full lifetime of the loan.

WHY WE FUND THIS PROJECT

The investment rationale is that captive power is imperative for the tea business: energy makes up 30 percent of total tea processing cost. To remain cost competitive, the tea factories have to reduce their energy costs. Tea-growing-areas have excellent potential for small-scale hydro's and there is good credit risk through corporate guarantee and full deficiency support. KTDA is a large and financially strong group with an excellent track-record. Additionally, the investment aims to have a high development impact: Generating renewable energy is marked within FMO as "Green". As the Group has a cooperative structure and the shareholders and ultimate beneficiaries are smallholder farmers, the deal can be marked as "Inclusive" as well. The project is expected to create 2,100 jobs during construction and around 60 after commissioning.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.

Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

South Africa
+31 70 314 96 96
joburg-office@fmo.nl

3 on Glenhove
Corner Glenhove & Tottenham Avenue, Melrose Estate 2196
Johannesburg South Africa

ACCOUNTABILITY MECHANISM OF FMO

Communities who believe they will be negatively affected by a project funded by the Dutch Development Bank (FMO) may be able to file a complaint with the Independent Complaints Mechanism, which is the joint independent accountability mechanism of the Dutch Development Bank (FMO) and the German Investment Corporation (KfW) . A complaint can be filed in writing, by email, post, or online. The complaint can be filed in English or any other language of the complainant. The Independent Complaints Mechanism is comprised of a three-member Independent Expert Panel and it can provide either problem-solving, compliance review or both, in either order. Additional information about this accountability mechanism, including a guide and template for filing a complaint, can be found at: https://www.fmo.nl/independent-complaints-mechanism.

How it works

How it works