Kuwait Fund extends $27 million loan for geothermal plant in Djibouti

Signing of loan agreement of Djibouti government and Kuwait Fund (source: Twitter/ Ilyas M. Dawaleh)
Alexander Richter 27 Mar 2018

An agreement over a $27 million loan by Kuwait Fund was signed today for the financing of a 15 MW geothermal project in Djibouti.

In a ceremony today, a loan agreement over the amount of KWD 8 million (Kuwaiti Dinar) or around $27 million for the financing of a 15 MW geothermal power project in Djibouti.

The loan agreement between the Republic of Djibouti and Kuwait Fund for Arab Economic Development, stipulates the extension of a Loan of Kuwaiti Dinars K.D. 8 million equivalent to about US$ 27.2 million, to the Republic of Djibouti to assist in the financing of a Geothermal Power Station Project with a planned capacity of 15 MW. An agreement (Project Agreement), concerning arrangements for implementation of the Project, was also signed between Kuwait Fund for Arab Economic Development and Djibouti Geothermal Power Corporation which is undertaking the Project. It is worth-mentioning that the Fund is a Kuwaiti Public Corporation which relies entirely on its own resources for making loans and providing other kinds of development assistance”.

The Loan Agreement was signed on behalf of the Republic of Djibouti by His Excellency Elias Mousa Douala, while the Project Agreement was signed on behalf of Djibouti Geothermal Power Corporation by Eng. Qeyad Mousa Ahmad, Chief Executive Officer of the said Authority. Mr. Hesham Al-Waqayan, Deputy Director-General of Kuwait Fund for Arab Economic Development, signed both the Loan and Project Agreements on behalf of Kuwait Fund.

The project aims to contribute to meet part of the demand for electricity in Djibouti, reduce the interruption of electricity services and reduce the import of fuel and electricity from abroad, through the establishment of a new power station using geothermal energy through the use of renewable local resources. The project also aims to protect the environment from contaminants from thermal stations using fossil fuels.

The project includes the drilling of about 10 wells for the production of steam and reclaimed water re-injection and the construction of a 15 MW power station at Jalla Koma (Phase I), 120 km west of the capital, Djibouti, in the area of ??Lake Assal. The new generation station will be connected to the central network by a 230 kV transmission line and a length of about 2 km. It also includes consulting services. The main components of the project are:

First: Steam Production Facilities

  1. The work of the initial equipment such as the construction of the road leading to the site of the project and the extension of water pipes
  2. Supply, work and testing necessary to drill about 10 wells at depths ranging from 600 to 1200 meters, including eight steam production wells and two water injection wells with all necessary connections, equipment and devices.
  3. Supplying and installing water transfer pipes from condensers and injection pumps with all their accessories from joints and valves.
  4. Supply, installation and testing of steam separators with all their basic requirements.

Second: Electricity Generation Facilities

Including the supply, installation and testing of 3 units of power generation each of about 5 MW with the necessary requirements to connect the station to the electrical network, spare parts and all the necessary mechanical and electrical supplements, civil works and control system and measurement.

Third: Consulting Services

Including the preparation of tender documents, assistance in the analysis of bids, supervision of the implementation of the project, participation in the tests in the country of the factory and preparation of training programs to develop the capacity of local cadres. It also includes preparing the study of the environmental and social benefits of the project.

Project implementation is expected to be completed by the end of 2021.

The Loan is made for a term of 25 years, including a grace period of 5 years, and is to be amortized in 40 semi-annual installments, the first of which will be due on the first date on which interest or other charges on the Loan will fall due, in accordance with the Loan Agreement, after the expiry of the said grace period. The Loan bears an interest rate at 2% per annum, in addition to 0.5% per annum to cover administrative costs and other expenses incurred in the implementation of the Loan Agreement.

The loan is likely for the Gale-Le-Koma geothermal project and was initially announced in July 2017.

Source: Derwaza, Ilyas M. Dawaleh

Note: This article was updated with details shared in the official release by Kuwait Fund (March 27, 2018).