RFQs near for Ethopia's Tulu Moye geothermal phase 1
TM Geothermal Operations (TMGO) – a 50/50 joint venture between Reykjavik Geothermal and Meridiam Infrastructure Africa Fund – is set to invite requests for pre-qualification (RFQs) in November to EPC contractors for the DFI-backed first phase of the $2.2 billion 520MW Tulu Moye geothermal project in Ethiopia's eastern Rift Valley.
Bidders have four weeks to submit RFQs, while RFPs are expected to launch in January 2020 with proposals due in March. A source close to the deal says if prospective EPCs offer Operation and Maintenance contracts with their bids, there will be a significant added value stapled to the bid.
The first 50MW phase comprises the drilling of around ten production wells and two injection wells, construction of a steam-gathering and injection system, a single unit water-cooled condensing steam power plant, and a 230kV transmission line to the Koka-Wakena line. The project is backed by a 25-year PPA signed with state-owned energy utility Ethiopian Electric Power on 19 December 2017. Initial drilling for the first phase is scheduled to be complete by August 2019, with commercial operations in December 2021.
Stage one has a total project cost of $263 million and is being financed with an oversubscribed 18-year $193 million debt package provided by DFIs including the EIB, AfDB, FMO, DEG, and Proparco. OPIC is the only DFI in the funding mix to have not yet been mandated, but is expected to be imminently. Given the adolescent nature of Ethiopia’s renewable energy market, pricing is high at around 500bp.
The $70 million equity portion is being put up by sponsors. Meridian will provide $40 million, there will be a $1.1 million grant from the USTDA and a $10 million grant provided by the Geothermal Risk Mitigation Facility (GRMF). The GRMF is funded by the UK’s Department for International Development and Germany’s KFW as a means of allowing countries on or around the East African Rift Valley to utilise thermal resources and power.
The lender, technical, legal, social and insurance advisory line-up will be appointed imminently, while financial close has been pushed back from April to September 2020.
