Project summary^1
Azito, the largest thermal power plant in West Africa, was financed partly through A and B
loans from the International Finance Corporation (IFC), which is part of the World Bank
Group. It was the first major private infrastructure project in sub-Saharan Africa (South
Africa excluded) to be financed with private commercial bank term loans. The International
Development Association’s (IDA’s) partial risk guarantee was critical in attracting commer-
cial lenders to Côte d’Ivoire, a country that was not yet an established international borrow-
er. The IDA is also part of the World Bank Group.
In 1990, after a state-owned corporation responsible for the electricity sector ran into dif-
ficulty, the government had signed its first concession for the generation, transmission, dis-
tribution, export and import of electricity. Success with that concession led the government
to increase private-sector participation. Legal issues in the course of the Azito project nego-
tiations included:
- the use of project assets for collateral;
- the availability of international arbitration in the event of a project dispute;
- structuring power sector revenues through a cash-flow waterfall; and
- preventing dilution of Azito project cash flows as a result of subsequent project
approvals.
The government acknowledged the need to develop concession contract laws to cover Azito
and future projects. The project is a model for future infrastructure projects in the region. It
will be a test of the government’s credibility, and of its willingness to comply with its oblig-
ations to the sponsors and lenders.
The power sector in Côte d’Ivoire
History since 1952
Starting in 1952, Énergie Électrique de Côte d’Ivoire (EECI), a government corporation over-
seen by a unit of the Ministry of Economic Infrastructure, was responsible for generation, trans-
mission, and distribution of electricity. In the 1980s, however, EECI ran into financial difficulty
as a result of overexpansion, droughts, financial mismanagement, the deterioration in the coun-
try’s economy and problems with collecting bills from other government agencies. The compa-
ny accumulated significant debt despite levying some of the highest electricity tariffs in the
world. At the same time, the poor performance of many other public enterprises, the increas-
ingly competitive international economic environment, and successful experience with a water
and sewerage concession granted to a private Ivorian/French consortium led the government to
formulate a privatisation program in 1990. It focused first on large enterprises in the infrastruc-
ture and agroindustry sectors that would have the biggest impact on the economy.^2
Faced with a national emergency in the electricity sector, the government of President
Félix Houphouët-Boigny sought the advice of international power companies and French
multinationals operating in Côte d’Ivoire on a private solution. In October 1990 the govern-
ment signed a 15-year concession for generation, transmission, distribution, export and
import of electricity with Compagnie Ivoirienne d’Électricité (CIE), which is owned by a
consortium consisting of Bouygues, a major French construction and engineering company
POWER PLANT