Infrastructure fund to finance Rwanda water facility
The Emerging Africa Infrastructure Fund (EAIF) announced the signing of the financing for a large-scale water treatment facility in Kigali, Rwanda, on Monday.
It is the first Bulk Surface Water Supply in sub-Saharan Africa using a public/private partnership (PPP) model. It is also one of the few sub-Saharan Africa water infrastructure projects being done on a Build, Operate and Transfer (BOT) basis and is EAIF’s first water project in a big city.
The site for the new facility is at Kanzenze, south of Kigali. Water will be drawn from the Nyaborongo River to be treated before distribution to domestic, commercial and industrial customers. The plant will have the capacity to supply up to 500 000 people in Rwanda’s capital, Kigali, providing 40 million litres of fresh, clean water a day.
A member of the Private Infrastructure Development Group (PIDG), EAIF is mainly funded by the governments of the UK, The Netherlands, Sweden and Switzerland, as well as private sector banks and FMO, the Dutch development bank and its German equivalent, KFW.
EAIF, the mandated lead arranger of the financing, is lending Kigali Water Limited (KWL) a fully-owned subsidiary of Metito, one of the world’s largest water infrastructure and utility providers, $19 million of Senior Debt and $2.6 million of Junior Debt.
The African Development Bank is providing another $19 million of Senior Debt. All of the loans are for 18-year terms. The lenders are covering $40.6 million of the capital cost of the $60.8 million project. The balance will be provided as equity finance by Metito.
The project also benefits from a $6.25 million grant from PIDG’s Technical Assistance Facility. The grant was a significant element in the creation of the financial package.
Another PIDG facility, DevCo, which is managed by the International Finance Corporation (IFC), provided initial financial support to the Government of Rwanda for the legal, financial, technical and environmental feasibility assessments of the project.
The IFC advised Rwanda’s government on this work. It ensured an optimal solution for the long-term needs of Kigali and recommendations for a public/private partnership structure that best suited the development objectives of the Rwandan government.
The announcement of the project financing is being hailed as a landmark moment in Rwanda’s social and economic development.
The country aims to see 100% of its 12.4 million people having reliable access to clean water within the next few years. Currently, some 86% of urban areas and 72% of rural areas have access to improved sources of drinking water.
“The conclusion of the financing is tremendous news for Rwanda,” says EAIF Chairperson David White.
“Fresh, clean water has a fundamental role to play in economic development. Water-dependent businesses like hotels, food processing and leisure, will have greater confidence in investing because of the Kanzenze water works,” said White.
“The financing exercise has been a model of cooperation between EAIF, the African Development Bank, the Government of Rwanda and Metito.”
When complete, the facility will provide around one third of Kigali’s water. In addition to the public health and economic development benefits of the project for Kigali’s one million population, it will also mean a significant reduction in water rationing in the city.