News and Media | 14-10-2008

No financial knockout for BWSC


What could have been an impossible task to overcome these days has however proven possible. Despite the crisis which at the moment shakes the financial industry worldwide, the Danish company Burmeister & Wain Scandinavian Contractor A/S (BWSC) is expanding its activities in Kenya with the so far biggest privately financed power plant. The ambition is to contribute in solving the massive electricity problems which the Kenyans have faced for several years. On top of that, BWSC is celebrating its success by expanding the number of employees even further. 

While the growth in many Danish and foreign companies is currently limited by the financial meltdown, BWSC's persistent dialogue with leading European financial institutions has shown to pay off. Having succeeded in settling a financial agreement of a total investment of €112 M, while other companies are defeated because of the bleeding stock market, BWSC is now about to realize the construction of a much­needed power plant in Kenya on a "Build-Own-Operate-Transfer basis".

No scars from financial crisis 
The 90,000 kW power plant will be built outside Mombasa with BWSC as responsible for the construction, operation and maintenance. The energy production from the plant will be able to cover the electricity need of more than 400,000 households. 

In times where the financial industry is on one of its so far biggest global meltdown followed by more stringent credit capabilities, the reason behind BWSC's success is to be found in the company's persistent project development approach which comprises several different stakeholders. After 3 ½ years of intense work - and two international tender processes - an effective agreement has now been obtained. 

The financing of the plant is based on a 20-year power purchase agreement entered with the national transmission and distribution company Kenya Power & Lighting Company. The agreement provides good financial security for future earnings. 

BWSC, the Danish Industrialisation Fund for Developing Countries (IFU) as well as an English and a Dutch investment company contribute as investors with 25 per cent of the financing of the plant as equity. The remaining amount is debt financed by a number of leading European development banks. 

Furthermore, as far as the Kenya project concerns, as well as many other ongoing projects, beneficial long-term operations and maintenance agreements have been signed ensuring attractive and stable revenues for BWSC for many years in the future. For the Danish growing company, such reliable agreements are milestones for further investments and expansion of new business areas and markets. 

"We have been really good at tracing relevant projects, localizing the right investors and establishing an attractive position on markets in growth. And with the arrival of even more projects, we expect further growth. This gives us great competencies and credibility when facing our clients and lenders", states Søren Barkholt, Executive Director at BWSC.

Catalyst for Kenyan growth 
Besides being an attractive financial investment, the power plant is also an investment in the Kenyan society. Hence, the initialization of the new power plant will be of significant importance for Kenya: 

  • Monthly savings of over € 5 M exclusively on oil consumption compared to the existing emergency generation.
  • Better prepared for climate changes which have caused longer periods of drought and more unpredictable heavy rain.
  • Limitation of noise and air pollution as well as the use of fossil fuels.
  • Creating highly skilled, valuable job opportunities under and after the construction of the plant.
  • Corporate Social Responsibility policy for the protection of local interests.

"Only around 18 per cent of the Kenyan population have access to electricity and this situation hampers the further development of the country. Better electricity supply to more people will function as a catalyst for the development of the country and contribute to the establishment of more job opportunities within sectors as agriculture, industry and health care", states Søren Barkholt. 

Consequences for the staff 
The immense success has also changed the internal resource situation at BWSC. Thus, the company is not only going to allocate Kenyan conscientious and vigorous employees with spirit of adventure. The development also means that BWSC will allocate more employees to the Danish headquarter. Despite the tighten employment situation, Søren Barkholt takes an optimistic view on the future: 

"We receive applications from potential employees, and why should we not?" asks Søren Barkholt. "Who would not like to have the whole world as their place of employment whether it is in The Bahamas, Kenya or Allemd? In any case, there will be plenty of opportunities and exciting international challenges for the employee", smiles Søren Barkholt. 

All in all, the Kenya project is an example of - crisis or not - that it is possible to invest in economically sound projects in Africa. It is still a challenge to enter the African markets, but with patience and much creativity, even the most difficult mission becomes possible.