Artumas Secures Big Bucks for Power Project

Wednesday, October 17, 2007

Artumas Group announced that it has executed an Arranger Agreement with FMO, the Netherlands Development Finance Company, to facilitate the financing of Artumas’ planned 300 MW integrated power project in Tanzania. According to the company the agreement will allow it to focus on its exploration and production ambitions in Tanzania, while still retaining a 20% stake in the power project as its managing partner and sponsor. 

The project is comprised of two phases, generation and transmission. FMO will act as Arranger for both phases and the two finance facilities of approximately $225 million and $400 million, respectively.  

A special purpose company has been formed, the Tanzania Generation Company Ltd. (TanGen), to build, own and operate the 300 MW gas-fired power plant located at Artumas’ existing green-field site in Mtwara. The estimated capital cost of the 300 MW power plant is approximately $225 million.

A second special purpose company will build, own, operate and transfer a high voltage transmission interconnection to the Tanzania national grid. This company will be owned by third party equity shareholders. The estimated capital cost of the transmission interconnection is approximately $400 million. Discussions with private equity sources include Tanzania based pension funds and investment banking groups located in the Middle East. Artumas will not be taking an equity position in this special purpose company.

Stephen Mason, President and CEO of Artumas stated, “It is expected the financing of the infrastructure component of the project will involve donor groups including various International Financial Institutions (IFIs) focused on supporting sustainable economic development initiatives.  We are very pleased to be working with FMO, who will assist and arrange the required structured financing for the large integrated power project.  Given FMO’s experience in infrastructure investments in Africa, typically in syndication with a number of other IFIs, we feel very confident in reaching financial closing on what will certainly be a key contribution to Tanzania‘s future economic and social wellbeing.”

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