We saw a major wave of resource investment announcements the past week. Focused on one unexpected part of the world.
The Eastern African nation of Kenya.
The country’s oil sector has been a major story the last few years — with significant discoveries by groups like Tullow and Africa Oil turning up potential for billions of barrels in reserves.
And the country wants to capitalize on this success.
To do so, state-owned National Oil Company of Kenya (NOCK) announced that it will seek $2 billion in international funding. Which will reportedly be used to finance a participating equity stake of between 15% and 20% in oil discoveries around the country.
NOCK’s chief executive officer said the company is “working on the best way to source for the money”. But it certainly appears of late there is considerable interest from international backers for investments of this size in Kenya.
Just look at another recent announcement: successful project funding for a major Kenyan coal-fired power plant.
Last week, the Industrial Commercial Bank of China (ICBC) said it will provide $1.2 billion in funding for the construction of the power plant. A 1,000 MW development being advanced by a consortium of local companies.
The total price tag for the project is expected to be $2 billion. Meaning that the ICBC funding already provides a strong anchor, and should help see the project through to full financing.
It’s of course not surprising to see China stepping in as a major backer here. Given that Chinese firm Fenxi Mining has been one of the pioneers in advancing coal blocks within Kenya.
The power plant loan may thus be a way of ensuring demand for Fenxi’s product here — and continuing to shore up China’s influence in Eastern Africa.
A loan to the national oil company might further cement such connections. Don’t be surprised to see an announcement emerging on that front over the coming months.
Here’s to getting in early,
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