GuarantCo Guarantees for Development

Description:

Calcom Cement India Limited (“Calcom”) proposes to mobilize project debt of Rs. 2,683 mn to part finance the proposed 0.75 MTPA clinkerisation unit and a 1.40 MTPA cement grinding unit in Assam. The total project cost has been estimated at Rs. 4,144 mn. Calcom proposes to set up a split location cement-manufacturing unit as under:
• A 0.75 MTPA clinkerisation unit in the North Cachar Hills district of Assam, and
• A 1.4 MTPA grinding unit about 70 kms from the clinkerisation unit, in the Nagaon district of Assam

The proposed project will be the largest cement capacity in N-E, with a scale of about thrice the next largest local player.

Description:

Spencon is a mid sized local civil works contractor headquartered in Nairobi specialising in the water, roads and power sectors. They were having trouble obtaining additional performance bond lines from their banks in order to bid for and execute projects in East Africa. Standard Chartered, their main banker, was unable to provide the full requirement of USD 30 million, largely due to bank regulations on single obligor limits. GuarantCo’s guarantee made it possible for Standard Chartered to offer the full additional facility required.

Developmental Benefit

Performance Bonds are a prerequisite for carrying out any construction project in Africa and they are the most significant financial bottleneck for the company. Large construction contracts, often donor funded, are regularly awarded to international construction companies, at 15 – 25% higher prices, because local companies cannot furnish the full performance bonds required.
GuarantCo’s facility will help lower the cost of infrastructure in the target countries by enabling greater competition and local private sector participation. There will be continued expansion and employment for over 800 permanent Spencon staff and over 3,700 semi skilled personnel across East Africa.