Spotlight on the best sustainability deal of 2008

DEG to present its award-winning geothermal project in Africa, Olkaria III, at the Deutsche Welle Global Media Forum in June

Bruno Wenn, aged 55, has been chairman of the board of management of Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG) since October 2009. As part of Germany’s development cooperation, DEG is responsible for commercial development cooperation and finances long-term, private investment in developing and emerging economies. At its annual press conference, DEG said expanding climate finance was an “important objective”. Olkaria III, a geothermal power plant in Naivasha, Kenya, is a flagship project being featured in a special workshop at this year’s Deutsche Welle Global Media Forum in Bonn, Germany. Wenn will represent DEG at the workshop.

DW:Olkaria III is the first privately funded geothermal project in Africa. Is it also a good example of how cost-effective climate projects can be?

Wenn: What makes Olkaria III special is that it is in fact the first privately funded geothermal power plant in Africa. In late 2008 we arranged the funding to expand the power plant through a consortium and, together with the KfW Development Bank, provided a US million long-term loan to the owner and operator. The debt financing totaled US5 million. Before entering into a cooperation, we carry out project due diligence to ensure that it works, is cost-efficient and environmentally and socially compatible, and will benefit sustainable development. In every respect, Olkaria III is a shining example of a cost-effective climate project. Emeafinance Magazine, a financial magazine that annually recognizes the best project financing in the European, Middle Eastern and African markets, named Olkaria III the best sustainability deal of 2008.

DW: What kinds of obstacles had to be overcome in order to implement such an ambitious project?

Wenn: As a rule, private infrastructure projects in developing countries pose a challenge and cannot be completed from one day to the next. In the case of Olkaria III, we benefited from long-term cooperation with the KfW Development Bank and the state-owned utility, KenGen.

Arranging the entire debt financing was also challenging. DEG pulled many lenders on board. It was an exciting mix because the more partners involved in a deal, the more views you have to square with one other. DEG performed its role as coordinator very well.

DW: At the Global Media Forum you’ll be speaking at a workshop devoted to this project. Is geothermal energy a good future resource for Africa?

Wenn: It’s not only a good future resource, it’s a good resource now. In 2008, global geothermal capacity was just slightly less than that of solar energy. There’s great potential on the American continent and in Asia. At present, the U.S. uses the most geothermal energy, followed by the Philippines, Indonesia and Mexico.

Geothermal energy can play an important role in Africa. There’s great potential, especially along the East African Rift. The Olkaria III project and our plans to increase its capacity form a kind of African nucleus for further development in the region and are an important step forward.

DW: Climate protection is on everyone’s lips. How do you assess the debate?

Wenn: In Germany and around the world, the current climate debate is strongly defined by the public sector’s role. In some respects, very great detail is given to the volume of investment needed for climate change adaptation measures and for circumventing future emissions, mainly by increasing energy efficiency and using renewable energy.

The private sector’s part has mostly been missing from the broader public discussion so far. Now, however, – and this is partly due to the failed Copenhagen process – concrete discussion procedures have been initiated that encompass both the public and private sectors. I am confident that workable approaches will come of that in the near future.

All stakeholders in this area must work toward reaching a long-term, global agreement on the parameters required in the two fields of activity: adapting to climate change and preventing greenhouse gas emissions.

DW: In Germany, coverage of Africa often entails negative headlines. Can an event like the Global Media Forum help to change that?

Wenn: Enthusiasm about the first FIFA World Cup on African soil will hopefully generate many positive headlines. So far the public image of Africa has been one of poverty, corruption and crises. That is very unfortunate because Africa is a continent on the cusp of change. Political and economic conditions have improved over the past few years. German companies have also benefited from that. A client of ours, Schwenk Zement KG, is one of the pioneers taking advantage of the opportunities in Africa and using DEG support to set up the first cement factory in Namibia. Too many people overlook such opportunities. I hope that the Global Media Forum will help to open more people’s eyes to Africa’s diversity.