American Partners Electrify Africa
More than 3 million barrels of oil pass each day through the 20 km wide Bab al Mandeb strait that sits between the coasts of Djibouti and Yemen — a choke point for world energy security. Black Rhino, a key Power Africa partner and an American energy company based in Africa has been developing a pipeline that will bring fuel from the coast of Djibouti inland to Africa, reducing energy costs and increasing security.
Black Rhino is wholly owned by Blackstone, one of the largest alternative asset managers in the United States, and develops power plants and fuel storage facilities and pipelines in Africa with leading American technology and leveraging Blackstone’s global energy and infrastructure experience, Black Rhino develops large-scale, transformational projects. Black Rhino’s projects in Djibouti, Ethiopia, and Nigeria in particular are strategically significant for the United States.
According to Black Rhino CEO Brian Herlihy: “Power Africa teams in Nigeria and Djibouti have been extremely helpful in advancing our deals. [The Power Africa] Transaction Advisor in Nigeria played a huge role in driving the pace of progress with the government and making us aware of opportunities in Nigeria such as helping us complete a grid study to advance our deal.”
Despite being Africa’s most populous country, Nigeria has one of the lowest electricity consumption rates per capita in the world. The potential is there — its grid produces less power than the state of Iowa, despite having a population more than fifty times Iowa’s size. After the Government of Nigeria began a privatization process to unbundle generation, transmission and distribution, Black Rhino partnered with the Dangote Group to jointly invest in power projects, an enormous opportunity for an American-backed infrastructure development firm to partner with one of the largest and most successful African enterprises. Power Africa has since played a leadership role in enabling the power sector for private investment, including thorough implementation of the Put Call Option Agreement, which is now being utilized in projects across the African continent.
In the northern region of Nigeria, Black Rhino is developing a utility-scale solar PV power plant in Kano State, a project that will provide upwards of 100 MW of electricity to a region that is desperately in need of power. In the southern part of Nigeria, it is in late stages of development of a gas-fired power plant, one of the lowest-cost baseload power plants in the country, and an associated transmission line. This project will significantly improve electricity supply when the plant is commissioned in 2021.
Numerous other projects are in the portfolio, ensuring that Black Rhino will be a major contributor to foreign direct investment and infrastructure development in Nigeria for years to come.
Djibouti and Ethiopia
Djibouti is the home to the only permanent American military base in Africa, and plays an important role in combating terrorism. Djibouti also sits at a strategic choke point of the Suez Canal, which makes the country critically important from a trade and security standpoint for the U.S. It also is a country where nearly half the population does not have access to electricity. Black Rhino and Power Africa have been working hand-in-hand to identify projects that will help ensure energy security for Djibouti to promote continued stability in the region.
The Horn of Africa Pipeline (HOAP) Project is a strong example of a privately-funded Power Africa project that stimulates local and domestic market development through leveraging private sector investment and experience. HOAP is a fuel ship offloading and storage terminal and long-distance pipeline designed to transform Ethiopia’s fuel importation supply chain.
Ethiopia’s GDP growth rate has been amongst the top five in the world over the past ten years, and its fuel demand has continued to increase. A country of 100 million people, it currently imports more than 90% of its required fuel through the port of Djibouti, and transports it via fuel tanker truck over 800 kilometers by road to Addis Ababa, the capital of Ethiopia. Ethiopia’s fuel supply has been hindered in recent years due to constraints on the number of trucks the road from Djibouti to Addis Ababa can safely accommodate, and the limited capacity of the port infrastructure in Djibouti. As regional fuel demand increases, these stresses grow, causing a drag on Ethiopia’s economic growth.
The most critical need in many African countries is relief from electricity and fuel supply constraints. By leveraging private sector capital for energy infrastructure projects in places like Nigeria, Djibouti, and Ethiopia, Power Africa and Black Rhino/Blackstone promote economic growth for Africans and Americans alike.
“Power Africa has demonstrated how the U.S. government can bring together partners in an unprecedented way to help the private sector make sound investments in Africa that not only promote development, but that also create opportunities for American investors,” says Blackstone Senior Managing Director Sean Klimczak. “This model makes doing business in Africa significantly more efficient and generates new revenues for the U.S., while promoting US security interests and, more importantly, building transformational infrastructure across the African continent.”