Amakhala Wind

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The project involves a construction, operation and maintenance of the Amakhala Emoyeni Wind Energy Facility (the “Project” or “Facility”) located in the Eastern Cape, South Africa. The Project is being developed by Exxaro Resources Ltd. and The Tata Power Company Ltd., through Cennergi (Pty) Ltd (“Cennergi”), a 50:50 joint venture company. Cennergi have established a company, Amakhala Emoyeni RE Project (Pty) Ltd (thereafter referred to as “Amakhala”). Amakhala, which owns 95% of the Project, while the remaining 5% is held by 2 separate community trusts. IFC propose a loan of $72 million to Amakhala to support development of the Project. Windlab Developments South Africa (“Windlab”) initially identified some 270 km2 in the Eastern Cape as being suitable for establishment of a wind energy facility. Thereafter, Windlab undertook an Environmental Impact Assessment (“EIA”) for establishment of a wind facility on the identified area. While the total energy to be generated by the facility was not defined, it was to accommodate 350 wind turbines and associated infrastructure (access roads, substations etc.). Following completion of the EIA, Windlab received approval to proceed with the facility from the regulatory authorities. Subsequent to the above, the South African Government initiated a bidding process for renewable energy projects in accordance with the national renewable energy independent power producer procurement (REIPPP) programme. One of the bidding criteria was that any proposed wind project could only have a capacity of 140 MW. Thus Windlab separated the proposed facility which covered an area of 270 km2 and included 350 turbines, into 4 separate individual phases. In doing so, each phase could then be submitted as a separate project in accordance with the Government’s bidding process for renewable projects. Cennergi acquired the rights for phase 1 of the overall facility as initially considered by Windlab and this phase will generate some 138 MW of power. This phase, the Project, obtained preferred bidding status in May 2012 in accordance with the REIPPP programe and financial close is anticipated by end March 2013. To date none of the other phases have been acquired by developers from Windlab or approved for development in accordance with the Government’s bidding process. The Project is located on 5 private farms covering 130 km2. The farms are primarily used for farming sheep with a similar use in the broader surrounds, and game farming. Population densities are very low in the general area and the two closet towns, Bedford and Cookhouse, are over 15 km from the site The Project will accommodate 66 wind turbines with an individual capacity of 2.1 MW and include additional infrastructure such as underground power cables linking the turbines, access roads on the farms and a substation. Eskom, the national power generator who is also responsible for transmission of electricity within South Africa, will construct a 132 kV transmission line from the Project’s substation to their substation which is located adjacent to the Facility. The transmission line is approximately 19 km in length and will transect the Project area. The Eskom substation into which energy from the Project will be transferred is one of the primary regional substations. To accommodate the Project this substation only requires an additional transformer which will be situated within the existing site boundary. Construction of the Project will take approximately 24 months and executed on a engineering, procurement and construction (“EPC”) basis with oversight by Cennergi and Hatch Africa, the owner’s engineer. The EPC contractor is in the process of being identified, however only companies with extensive prior experience in wind facilities have been engaged to tender on the project. For purposes of operations, Amakhala will establish a maintenance team who will be based in the area.