with similar projects, experience in Côte d’Ivoire, risk-bearing capacity and insurance
relationships to the project.- The new sectoral cash-flow waterfall was the major structural innovation, establishing a
system for power concessions that provides clear risk allocation and sound financial
management.
Strong also noted several outstanding issues whose resolution over the next few years will
influence future participation in power and other infrastructure sectors in Côte d’Ivoire.
- Political pressure for lower retail electricity prices may make the project’s covenants
with respect to the price of electricity difficult to enforce. - While the gas supply currently appears to be adequate for the Ciprel and Azito projects,
continued public management of the gas sector and improved coordination between the
Ministry of Hydocarbons and the Ministry of Energy will be important to ensure that it
is adequate in the future and not compromised by the needs of other future projects. - Azito is a test of the government’s credibility, and its ability and willingness to comply
with its obligations to the sponsors and lenders, including the proper management of gas
reserves and electricity tariffs. - The lenders see the IDA’s political risk guarantee as not just political risk cover, but a
commitment by the World Bank Group to monitor the project and encourage the gov-
ernment of Côte d’Ivoire to meet its commitments; and Azito will test the agency’s lever-
age in fulfilling that role.
(^1) This case study is based on an article by John S. Strong, ‘Azito: Operating a New Era of Power in Africa’, Journal
of Project Finance, Fall 2000; follow-up discussions with Mr Strong; and various other articles in the financial
press.
(^2) Strong op. cit., p. 39.
(^3) Ibid., p. 40.
(^4) Ibid., p. 42.
(^5) Ibid., p. 43.
(^6) Ibid., p. 43.
(^7) Ibid., p. 44.
(^8) ‘Cote d’Ivoire Awards Second BOT Power Contract’, International Trade Finance, 20 June 1997, p. 10.
(^9) Denes, Marco, ‘Azito: A Benchmark for Africa’, Project Finance, March 1999, p. 16.
AZITO, CÔTE D’IVOIRE