Ivory Coast signs $500 mln loan deal with China's Exim

ABIDJAN Wed Jan 9, 2013 12:50pm EST

ABIDJAN Jan 9 (Reuters) - Ivory Coast's government has agreed a $500 million low-interest loan from China's Export-Import Bank to finance construction of a 275 megawatt hydropower station near the western town of Soubre.

The West African nation is investing heavily in major infrastructure projects in the wake of a years of political turmoil and is pushing to increase energy production by 150 MW per year over the next decade.

"This is a $500 million loan over 20 years with an (interest) rate of 2 percent and a grace period of nine years," Zhang Guoqing, China's ambassador in Ivory Coast, said at the signing of the accord.

"This is the largest loan agreed with Ivory Coast in over 30 years," he said.

Construction by Chinese state-owned hydropower engineering firm Sinohydro is due to begin in February and last 56 months. Upon completion, the dam will be the country's largest hydropower station.

"The Soubre project ... will allow us to boost Ivory Coast's hydroelectric capacity, balance our energy mix and confront at a low cost the rising growth in domestic consumption," Mines and Energy Minster Adama Toungara said.

He said the government hoped to launch a feasibility study for a second dam of the same size on the Louga River before the end of the year.

Unlike many countries in sub-Saharan Africa, Ivory Coast has an enviably reliable power supply and exports electricity to neighbours Ghana, Burkina Faso, Benin, Togo and Mali.

It has plans to add Liberia, Guinea and Sierra Leone to its grid.

Consumption at home and abroad is growing rapidly, however, and investment in the sector was hobbled during a 10-year political crisis that divided the world's top cocoa grower into a rebel-held north and government-controlled south.

A brief 2011 war ended the impasse and reunited the country. The government has since promised to spend $500 million to renew the utility sector and is seeking additional financing.

Plans include construction of a 330 megawatt thermal power station near the commercial capital, Abidjan.

In November, Ivory Coast-based Foxtrot International announced plans to invest nearly $1 billion over five years to boost production of offshore gas to supply the country's thermal power stations. (Reporting by Loucoumane Coulibaly; Writing by Joe Bavier; editing by Jane Baird)