Africa: How an American Business Brought Electricity to One of Africa's Poorest Countries

Lomé Thermal Power Plant
7 August 2017
guest column

As Togo hosts the African Growth and Opportunity Act (AGOA) Forum this week to foster improved economic relations between the United States and Africa, the country will also showcase what American ingenuity and business can achieve in the developing world.

Smaller than the state of West Virginia, Togo is also the site of a major 100 megawatt gas-fired power plant that was built by an American company and has served to triple access to electricity in this once isolated country. And because such an ambitious project was able to succeed in a place that had little track record of successful project finance -- and lacked even the roads to move equipment from the port to the site of the plant -- the country today is a testament to the power of the private sector in addressing some of the biggest development challenges the world faces.

A decade ago, Togo was suffering crippling power shortages that posed a major hurdle to progress. Togo sits on a sliver of land between Ghana and Benin that had been part of a regional interconnected energy market until imports from neighboring countries became inadequate to meet growing demand. The country had recently held democratic elections, moved past a financial crisis, and was working to restore investor confidence. But like so much of Sub-Saharan Africa, regular blackouts restricted the quality of life, forced factories to operate below capacity and limited the potential of businesses to grow.

Around that time, ContourGlobal, a young New York company, was beginning to pursue major infrastructure projects in developing markets and saw the great need for a new source of power in Togo. But it struggled to raise sufficient financing.

By Introducing reliable electricity, the power plant has improved health care facilities, businesses, factories and schools

That support came from the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution. OPIC supports American businesses in emerging markets with financing and political risk insurance when those are not available from private lenders and insurers. Together, OPIC and ContourGlobal negotiated with the Government of Togo terms of a 100 megawatt power plant that could run on a variety of different fuel sources.

Completed in 2010, the Lome Thermal Power Plant represented the largest investment in electricity ever made in Togo and tripled the country’s generation capacity. It’s won multiple awards and was recognized as one of the Top 40 public-private partnerships by the International Finance Corporation and Infrastructure Journal.

So how did such a challenging project come together?

There were several factors contributing to its success, including a committed and competent investor, and strong political support from all levels of the Government of Togo. Despite challenges, such as delays in securing a long-term gas supply agreement, the Government understood that the benefits- not only of additional electricity but also of demonstrating the ability to secure world class international financing.

OPIC worked closely with ContourGlobal and the Government of Togo to put together a financeable transaction and a deal structure that built in a workable risk allocation for all key parties.  The agency understood that the project made sense and found solutions to various obstacles that appeared. But a key factor in this project’s ultimate success was the ability of ContourGlobal, our private sector partner, to carry this project forward.

By improving the reliability of the electricity supply for those connected to the grid – health care facilities, businesses, factories, schools – the power plant has improved many lives. Introducing a reliable source of electricity has also helped spur investment and development in Togo, including the rehabilitation of the port in Lome, which is a major driver of economic activity through the country. It has also supported local job creation and knowledge transfer and helped Togo demonstrate to the world that it can attract world class investors and that the Government of Togo is a reliable and committed partner.

A few years ago, when OPIC recognized ContourGlobal with an OPIC Impact Award for excellence in development, the company’s CEO Joe Brandt noted that the project could not have been completed without OPIC’s support. At OPIC, we know that ContourGlobal’s commitment to take on such a challenging project and work through multiple obstacles was also essential to this ultimate success. It’s a testament to the power of business to marshal the resources, ingenuity and resolve to achieve big things.

Edward A. Burrier is Vice President, Office of External Affairs, Overseas Private Investment Corporation

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