The end of 2011 saw the close of the first phase of the groundbreaking Kivuwatt gas-fired power plant project in Rwanda. The project, which aims to extract methane gas from below the waters of Lake Kivu in Rwanda, is the first example of this type of power extraction in the world. The project will be completed in three phases to reach total capacity of 100MW. The first phase is 25MW at a cost of around US$142 million.

As well as being the first project of its kind in the world the KivuWatt power project is also the first large scale IPP in Rwanda and the largest project financing in the country. The project also exhibits a unique financing structure made up of an integrated financing structure for a gas extraction facility, a pipeline and a 25MW power plant.

The context

The lake from which the gas will be harvested is naturally hazardous. It produces methane from the lake bed which bubbles to the surface and has caused a number of spontaneous explosions.

ContourGlobal will develop, construct and operate a platform-based gas extraction system that will be moored off the Rwandan coast and will extract methane gas from a depth of 350 meters at Lake Kivu. The gas will be processed and transported by pipeline to ContourGlobal's power plant being developed in Kibuye, Rwanda.

By tapping the indigenous fuel the KivuWatt project will significantly lower the cost of electricity necessary to drive Rwanda’s fast growing economy. Phase I of the project alone will increase Rwanda’s installed power capacity by 40 per cent.  The project could eventually produce power for export to Uganda, Burundi and DR Congo.

Kivuwatt also represents the first large scale use of the gas, the extraction of which will greatly mitigate the environmental hazards associated with a natural release of the lake gases as well as provide an environmentally friendly and sustainable source of power generation.

The project

The KivuWatt project is an integrated methane gas extraction and production facility and associated 25MW power plant located on Lake Kivu in Kibuye, Rwanda. Phase 1 of the project involves the extraction of the gas from the lake and a power plant with 25MW installed capacity. Phase 2 will ultimately raise the plant’s capacity to 100MW, adding a further three gas extraction barges. The first 25MW is expected to come online in 2012. The second phase is for an additional 75MW; construction is due to start six months after the first 25MW is commissioned.

The output will be sold to the Rwandan state-owned utility Electrogaz under a 25-year PPA. Phase 1 output will be connected to the national grid via a new dedicated 11kV transmission line installed by Electrogaz. Phase 2 will be connected to the existing 220kV transmission system via two new transformers, to be installed by ContourGlobal's project company. The project also benefits from an offtake agreement with the country’s Energy, Water & Sanitation Authority.

The financing

Project sponsor ContourGlobal secured a US$91.25 million financing package for Phase I of the Kivuwatt power project. Financing is being provided by the following development institutions:

• Emerging Africa Infrastructure Fund
• Netherlands Development Finance Company
• The African Development Bank
• Belgian Investment Company for Developing Countries

The total project cost of Phase 1 is US$142.2 million. The financing will be wrapped by the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

Companies involved with the project are:

Sponsor: Contour Global
Borrower: Kivuwatt Ltd
Arrangers: Emerging Africa Infrastructure Fund & FMO
Lenders: EAIF, FMO, AFDB, BIO
Facility/Security Agent: BNYM

Lenders Legal Counsel: Clifford Chance
Lenders Technical & E&S Advisor: Royal Haskoning
Lenders Insurance adviser: Indecs Consulting
Model auditor: Mazars LLP

Borrower Counsel: Norton Rose
Borrower Technical Adviser/Owners Engineer: IV-AGA
Borrower Environmental Adviser: Sinclair Knight Merz (Europe) Ltd & Exponent, Inc.
Borrower Insurance Adviser: Moore McNeill LLC