MCB is facilitating Senegal's endeavour to improve its national electrification rate through its USD 60 million participation in the syndicated project finance facility of USD 140 million to Karpowership. MCB was not only a co-mandated lead arranger but provided the highest loan commitment. The project finance facility is enabling Karpowership to operate its 235 MW Powership alongside the shores of Dakar since August 2019.
The Powership is contributing to around 15% of Senegal's electricity supply. According to Africa Energy Outlook 2019, Senegal's electrification rate was 69% in 2018, with a 92% rate in urban areas and only 42% in rural areas. As per the Government's Plan Sénégal Emergent, a national roadmap adopted back in 2014, the state ambitions to increase its electrification rate to 100% by 2025, whilst focusing on lowering electricity generation costs by reducing its dependence on imported liquid fuels and increasing electricity access to rural areas. Providing electricity to places outside the ambit of urban areas is directly in line with Sustainability Development Goal ("SDG") n° 7 of the United Nation's charter on Sustainable Development.
The Powership will soon shift from the use of heavy fuel oil to gas. This fuel switch-over will generate material reduction in Senegal's fuel bill with positive spill-over effect on electricity costs in line with the Plan Sénégal Emergent. Being the first power generation plant fueled by gas, the Powership is laying the foundation stone of Senegal's plan to diversify its energy mix. Moreover the use of gas will enable Senegal to cut its carbon emission in furtherance of SDG n°13 on Climate Change. Senegal ambitions to shift primarily to natural gas for its power production by 2035, thereby reducing further the national grid's emissions factor.
The Powership's fuel transition is being facilitated by a Floating Storage and Regasification Unit ("FSRU"). Following successful sea trials, the FSRU has departed Singapore and is expected in Senegal in the coming weeks. The FSRU is a KARMOL's enterprise - KARMOL is a joint venture between Karpowership and Mitsui O.S.K. Lines, Ltd.
Commenting on the Powership's syndicated project finance facility and on MCB's strong involvement in the project, Zaahir Sulliman, Head of Specialised Finance, MCB, said: "We are proud to be contributing towards Senegal's universal electrification goal and its transition from reliance on heavy fuel oil to LNG for its electricity production. This commitment is in line with Success Beyond Numbers, the Group's corporate sustainability strategy, which aims at aligning business development, socioeconomic progress and profitability with the notion of sustainability over time".
Mr. Sulliman also stressed out: "MCB is aware of its responsibility in the face of the climatic emergency and committed by 2022, to stop financing new coal power-plants and discontinue the trade financing of both thermal and metallurgical coal. Financing Karpowership in Senegal is a first step in the right direction and we are looking forward to increase our participation in projects that foster energy production whilst promoting both climatic and environment friendliness in an endeavor to increase living standards".