Wednesday, November 04, 2009

Get Ready to PPP

Public-Private Partnerships (PPP's) are the topic du jour. While Congress dithers on health care deform, the Obama team circles the globe promoting PPP's.

Neal Wolin (formerly of The Hartford) pushed PPP's in Africa
Tim Geithner will sell PPP's in Japan
President Obama offered PPP's to the Muslim world in his Cairo speech

Companies and Markets reported:

The proliferation of PPP schemes and infrastructure investments in the United States has undoubtedly accelerated in the past two years.

Their study mentions Texas toll roads and The Carlyle Group's bid for Virginia Ports as promising indicators.

The Hartford announced innovative insurance policy underwriting for PPP's. Their press release coincided with Neal Wolin's African trip.

Public-private partnerships don't stop at our border. The World Bank, Export-Import Bank and Overseas Private Investment Corporation (OPIC) all want to help American companies PPP globally. Politically connected Americans stand ready to help. A Zoellick here, an Albright there, and a Frist in global finance?

American branded corporations stand to win big in global PPP'ing. Rest assured these foreign subsidiaries will gladly take U.S. federal money, without repatriating any earnings. Take the Rwandan PPP case highlighted by Treasury's Neal Wolin:

In Gisenyi, on Lake Kivu, an American company has joined in a public-private partnership with the Rwandan government to develop a $325 million power generation facility to extract methane from the lake.
Neal didn't mention the firm, but a little digging led to ContourGlobal. Their March 2009 press release stated:

ContourGlobal announced today that its subsidiary ContourGlobal Kivuwatt Ltd signed an agreement with the Republic of Rwanda to develop an integrated gas extraction and electricity generation facility which will provide 100 MW of natural gas fired electricity to Rwanda and the East African Region.

ContourGlobal’s $325 million Kivuwatt project will be the first large scale facility to extract methane from the depths of Lake Kivu, a deep water lake located on the border of Rwanda and the Democratic Republic of Congo. Lake Kivu possesses a unique source of energy, methane gas held in solution deep within the lake water.

In Africa, ContourGlobal is currently constructing electricity generating projects in three countries: Togo, Nigeria and Rwanda. The company is also actively developing additional projects in Sub-Saharan Africa.

Reservoir Capital Group is a privately held investment firm with approximately $4 billion under management and is ContourGlobal’s controlling shareholder.

An October 2009 press release revealed OPIC is supplying ContourGlobal with "political risk insurance" and financing for African power generation projects. What else did Neal Wolin sell during his visit to sub-Saharan Africa? Who benefits?

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