Blackstone to boost energy investments in Africa

Blackstone Group plans to start investing in energy projects in Africa worth $3 billion amid increasing demand for power on the continent.

Blackstone plans to invest in the 360- to 480-megawatt Ruhudji hydropower plant in southern Tanzania through its Sithe Global Power unit, said David Foley, senior managing director of Blackstone, in a Sunday interview in Kampala, Uganda. It will also invest in Rwanda’s 150-megawatt Ruzizi hydro project that will supply power to neighboring Burundi and the Democratic Republic of Congo.

“As the demand for power increases in Africa, Blackstone together with Sithe has a number of projects,” he said. The projects are in the “early stage negotiation and development phase.”

Africa has 15% of the world’s population and accounts for only 3% of energy consumption, according to a 2011 report by the African Union and other continental organizations that studied power markets demand over the next three decades. Demand for electricity is projected to increase by 5.7% annually, it said. The percentage of Africa’s population without access to electricity is 59%, compared with 21% in developing nations in Asia, according to the study.

Blackstone will invest in hydropower and geothermal projects, Mr. Foley said. The company declined to comment on project costs.

Sithe and Industrial Promotion Services Kenya, an affiliate of the Aga Khan Fund for Economic Development, jointly own Uganda’s $900 million 250-megawatt Bujagali hydropower plant, which reached full capacity in July. Uganda’s government, which contributed $20 million, is a minority shareholder in the project, which was scheduled to be inaugurated on Monday.

“All projects are different, but Blackstone typically seeks to form public-private partnerships like we did with Bujagali,” Mr. Foley said

The construction of Bujagali, which is Blackstone’s biggest energy investment in Africa, began in May 2007 and replaced the nation’s reliance on 100 megawatts of thermal power, while eliminating a power deficit of 170 megawatts, according to Blackstone.

Equity financing by shareholders accounted for $200 million of the funding and the rest came from lenders including the International Finance Corp., the African Development Bank, the European Investment Bank, the German Development Bank and the French Development Bank.

The Ugandan plant, located 50 miles east of Kampala and run by Bujagali Energy, will be transferred to the government for a token $1 after 30 years, Mr. Foley said.