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New power link funded by EBRD and Kazakh Development Bank
International commercial banks join in providing longest ever credit for Kazakh power
The European Bank for Reconstruction and Development has agreed to provide $60 million in financing for the construction of a new transmission line allowing the north of Kazakhstan to transmit its surplus power to the more populated south of the country, thus preparing the ground for the development of a Central Asian regional energy market.
The EBRD is acting as lender of record for the full $60 million. Of this, $20 million has been syndicated to Austria’s Raiffeisen Zentralbank Oesterreich (RZB) and $5 million to Germany’s Bayerische Landesbank.
The borrower is the state-owned Kazakhstan Electricity Grid Operating Company (KEGOC), which has a monopoly on high-voltage transmission.
The EBRD’s $35 million portion is being lent for 12 years, with the two commercial banks providing nine-year credit. This transaction marks the first time that the Kazakh power sector is gaining access to such long-term funding from commercial banks without the benefit of a sovereign guarantee. Moreover,, the Development Bank of Kazakhstan has agreed to advance KEGOC a 15-year loan of $21.2 million for the project.
The loans will fund construction of a 250-km first section of what will eventually be a 1,115-km transmission line linking the north of Kazakhstan, where most of the country’s power is generated, to the south, home to the majority of the population and where demand for electricity is growing steadily.
The fact that international commercial banks are joining in this long-term financing, without the benefit of a sovereign guarantee (unlike the EBRD’s $45 million loan to KEGOC in 1999), represents an important milestone for Kazakh infrastructure projects, said Anthony Marsh, Director of the EBRD’s Power and Energy Team.
The new link should make power supplies more reliable, Mr Marsh said at a signing ceremony in the Kazakh capital Astana, stressing it was also an important stepping stone towards the goal of enabling north Kazakhstan to supply an integrated Central Asian electricity market.
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