The Civil Engineering Contractor August 2018 | Page 10

INFRASTRUCTURE AFRICA

EAST AFRICA

KENYA

Infrastructure projects on pension funds ’ radar

The World Bank has encouraged Kenya ’ s growing body of pension schemes to invest their capital in public-private partnership ( PPP ) projects . This is in line with the government ’ s efforts to open up infrastructure as a new asset class for institutional investment . World Bank senior financial sector specialist , Caroline Cerruti , describes Kenya ’ s infrastructure needs as ‘ vast ’ with about USD4-billion a year , creating an opportunity for longterm institutional investors such as pension funds . According to Kenya ’ s Retirement Benefits Authority , the pensions sector had assets under management of over KS1-trillion as at end- 2017 and schemes are under pressure to generate returns for members by diversifying their investment . Cerruti addressed trustees of several pension schemes across the country during the annual Trustees Forum . She describes bank lending as a diminishing source of long-term financing given the growing constraints of commercial banks ( through international Basel regulations ) to make long-term loans for PPP projects . She explains that it therefore makes better sense for the government to search for long-term financing for various infrastructure projects from pension schemes . She labelled this ‘ an opportunity ’. In the upcoming budget , the Kenyan treasury is expected to table a proposal to revise the asset classes in which pension schemes are permitted to invest . In Kenya , the regulator has been supportive of opening more investment channels . This will be presented in the upcoming budget proposal to open infrastructure investment as a new asset class for pension schemes . She says there are about 67 local projects in the pipeline that pension schemes could take part in , with the first five PPP road projects coming to market in need of about USD3- billion to USD4-billion . Among them being the 175km Nairobi – Nakuru toll road project , final bids for which were submitted in March ; and the second Nyali Bridge construction in Mombasa , which is in the pre-qualification stage . The Bank urged local pension funds to invest in PPP projects through the Infrastructure Debt Fund as senior debt providers — not equity partners — to ensure they have the highest priority in terms of repayment . The case for infrastructure was a combination of the diversification benefits for alternative investment , as well as good returns from infrastructure assets . It was noted that international pension schemes are also looking at infrastructure investments in Kenya to maximise benefits to their members , so Kenyan pension schemes should follow suit .

SOUTHERN AFRICA

ZAMBIA / ZIMBABWE

Joint bid for USD3-billion Zambian – Zimbabwe project

Global electrical engineering giants , China Power and US firm General Electric ( GE ), have made a joint bid for a contract to construct the 2 400MW Batoka Gorge Hydropower Project being co-developed by Zambia and Zimbabwe . Zimbabwe ’ s Energy and Power Development Minister Simon Moyo was reported in the Lusaka Times as saying the two electrical engineering giants had jointly expressed strong interest in the project . The energy minister said that while Zimbabwe had successfully commissioned the Kariba South Extension Project in March this year , which added 300MW to the national electricity grid , the country remained short of power capacity , whereas the country ’ s goal was to be energy self-sufficient as well as be a net exporter of power . Moyo told the Lusaka Times he would engage his Zambian counterpart to discuss ways in which the implementation of the Batoka power project , which the two countries need urgently to resolve power deficits in their countries , could be expedited . The Batoka Gorge sits on the Zambezi River bordering Zimbabwe and Zambia , and whose administration is shared by both countries . It supplies water to the jointly owned Kariba Dam , which the two countries use for power generation : 1 050MW for Zimbabwe and 1 080MW for Zambia . “ I do know my colleagues would want to accept this development . I will consult and we will meet as members of the Zambezi River Authority to discuss how we can speed up the programme ,” said Moyo . The USD3-billion Batoka power station will be situated 60km downstream of the Victoria Falls on the Zambezi River and is expected to improve the two countries ’ power supply , currently in deficit , and also to feed into the Southern African Power Pool . Zimbabwe ’ s and Zambia ’ s demand for energy are forecast to more than double by 2035 .

The Zambezi River is the site of another power generating plant for Zimbabwe and Zambia .

Alan Rambling

8 - CEC August 2018