International Finance Corp. arranged a syndicated loan of $70 million for Umeme Ltd. to enable the power distributor to expand its network and deliver electricity to more homes and businesses.
Standard Bank Group Ltd.’s and Standard Chartered Bank Plc’s local units and the Dutch Development Bank were the other lenders that participated in the financing package, the Umeme said Thursday in a statement.
The loan will contribute to Umeme’s plan to improve the reliability of its distribution network, more than double its customer base to 3.2 million connections and reduce commercial losses to 13% by 2025. The company’s $460 million investments since 2013 have helped grow its customer base to 1.4 million, install pre-paid meters for most of them and cut energy losses to 16.6%.
Umeme, whose main shareholder is the state-controlled National Social Security Fund, is in talks with the government to extend its 20-year concession that’s due to expire in 2025. IFC has a minority stake in Umeme.
“Once the concession extension is concluded, the company would be able to raise more capital to evacuate and uptake the new generation capacity,” Umeme Chairman Patrick Bitature said in the statement. Bitature was referring to an additional 600 megawatts that the government expects to come from the Karuma hydro-power project scheduled to start in the first quarter of next year, Bloomberg reported.
