Sunday, May 26, 2024
BusinessCorbetti undergoes ownership change

Corbetti undergoes ownership change

Owners of Corbetti Geothermal WorldCo have sold their shares to a blend of new companies. Meridiam has become the major shareholder, overtaking from Berkeley Energy, while InfraCo Africa and Reykjavik Geothermal (RG) have become minor shareholders of Corbetti Geothermal Plc.

Once the transaction is finalized, for which the sales deal is already done in the UK and only documentation issues in Ethiopia remain, Meridiam will become the sole operator of geothermal projects in Ethiopia.

Of the existing shareholders of Corbetti, which includes Berkeley energy, Island Drilling Company (IDC), Reykjavik Geothermal (RG), only RG, an Icelandic firm, which is a minor shareholder, maintained its holding. Berkeley and IDC have transferred all of their shares.

The new share buyers in Corbetti, which are Meridiam and InfraCo Africa, now own Corbetti, along with RG. InfraCo Africa is a subsidiary of Project Infrastructure Development Group (PIDG), a UK based pension fund manager and financer of frontier markets.

Meridiam is a Paris based Investment Company, which is also a pool of other fund managers. Meridiam and RG have already set foot in Ethiopia, owning the Tulu Moye Geothermal Energy (TMGO), which is in progress through a pool of investment from France, USA and Iceland.

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All of the companies engaged in the transaction, are fund managers based in Europe.

Corbetti is a geothermal potential project located in Arsi zone, Oromia state, some 270 kilometer south of Addis Ababa. It secured a latest exploration license from Ethiopian authorities in 2020, when the signing was done between Corbetti, the Ethiopian Ministries of Finance, and Water, Irrigation and Energy (MoWIE) and the EEP.

The latest agreement was to generate 50 MW, at a cost of USD one billion and sell the energy to the Ethiopian Electric Power (EEP). However, the project did not see a progress so far. The previous agreement that was entered was to generate 500 MW, at a cost of USD 2.5 billion.

The geothermal projects were introduced during the Obama administration, under the African Electrification Program, which allocated funds for limited energy, compared to hydropower projects. Both the licenses for Tulu Moye and Corbetti were initially held by Nagib Ababiya, an Ethiopian investor, before the licenses were transferred to the foreign fund managers, without an official disclosure.

Though the real reason for the ownership transfer of Corbetti has not been revealed, sources disclosed that Corbetti has been through court litigation, related to the project land in Arsi. The case, under which thirteen farmers in the project area filed a lawsuit demanding compensation, is ongoing at Arsi High Court.

Officials at the Ministry of Water, Irrigation and Energy and Corbetti confirmed the share transfer to Meridiam is finalized and only documentation issues and tax issues remain, before publicly announcing the deal.

An official at the Ministry stated the transfer of shares to Meridiam is very good for the progress of the project, since Meridiam has experience at the Tulu Moye site. An official at Corbetti also said it is an issue of owners share restructuring and will not affect the company.

Nonetheless, people close to the issue stressed it is a major sales transaction, covered up under the name of a share transfer.

“They are using the phrase ‘share transfer’, just to evade tax. It is a common term. But in actual, big money is being transacted. The foreign companies simply do not want to pay any tax in Ethiopia. They already persuaded the Ministry it is just a mere share ownership transfer,” said an official who closely follows the process.

“If the Ministry Finance also buys this reason, then Ethiopian tax authorities cannot make any tax claims over the transaction. The existing owners do not sell to the new owners, at least without a 30 to 40 percent profit margin,” added the official.

The Reporter also confirmed that currently, Meridiam, TMGO and Corbetti are finalizing preparations to share the same office in Addis Ababa.

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