Songas - Songo Songo Gas to Power Project

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AES achieved financial closure for its long awaited US$316 million Songo Songo gas-to-electricity project (Songas) in November 2001. It was also Tanzania's first independent power producer, and East Africa's second. The project included a gas processing plant on Songo Songo Island, a 225 Km (140 mile) natural gas pipleine to transport the gas to Ubongo power plant and other industrial users in Dar es Salaam, and conversion of the Ubhongo thermal power plant to natural gas based power plant. Power from the plant was supplied to Tanzania Electric Supply Company (Tanesco) under a 20-year power purchase agreement. The ownership of the existing facility at Ubungo and the corresponding outstanding debt obligations was transferred to Songas. AES was the lead sponsor in Songas, whose other partners were the Tanzania Development Finance Company Ltd (TDFL), Globeleq (the power sector subsidiary of the Commonwealth Development Corporation (UK)), FMO (Dutch Development Finance Company) and the EIB (European Investment Bank), the Tanzanian gas and power utilities Tanesco and TPDC (Tanzania Petroleum Development Corporation). AES, advised by HSBC, bought out the original partner, Trans Canada Pipelines (TCP). Equity contributions equivalent to US$72 million included US$50 million from AES, US$18 million from Globeleq and US$4 million from EIB. In April 2003, AES sold its stake in Songas to then minority-holder CDC Globeleq. AES sold its stake in Songas with its stake in South Africa's AES Kelvin for a combined US$337 million. CDC Globeleq operated and owned 100% of the preferred A shares and 54% of the common shares. In Feb 2004, FMO purchased 82% of the Preferred B shares in the Songas for US$14.4 million. The project began commercial operations in July 2004. In June 2005, two additional turbines were installed to increase capacity from 115 MW to 190 MW. The debt/equity split is 70:30. None