Typische Herausforderungen und Risiken für Investoren in

Successful together
The Regulatory Regime- PPAs and IPP Leasing Models in Kenya
Sebastian Wichmann | Berlin | 2 September 2015
© Rödl & Partner
15.09.2015
1
Agenda
01
The Regulatory Process
02
Tax impact – PPA vs Leasing
03
Rödl & Partner
04
Contacts
© Rödl & Partner
15.09.2015
2
Agenda
01
The Regulatory Process
02
Tax Impact – PPA vs Leasing
03
Rödl & Partner
04
Contacts
© Rödl & Partner
15.09.2015
3
Power Purchase Agreements (PPAs) – Regulatory Regime
The Regulating Entities
 Ministry of Energy & Petroleum
 Energy Regulatory Commission (successor to Electricity Regulatory Board)
 Kenya Power or private off-taker
 Rural Electrification Authority
The Process - Licensing
•
KPLC vs Industrial Off-taker – PPA and Generating Licence/Permit
© Rödl & Partner
15.09.2015
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Land Rights – Leases and Licences
 Greenfield projects – when acquiring land need to be aware of the designated land use
 Agricultural land – ownership restricted
 Other types of user depends on the owner for instance Kenya Forestry Service or Wildlife
Service.
 Speculation prior to projects – need for confidentiality.
 Private land – amalgamation of title
© Rödl & Partner
15.09.2015
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Agenda
01
The Regulatory Process
02
Tax Impact – PPA vs Leasing
03
Rödl & Partner
04
Contacts
© Rödl & Partner
15.09.2015
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The Tax Regime – PPA Model (IPP and Industrial Off-Taker)
 Corporation Tax
 Branch
 Subsidiary
 Transfer Pricing Issues
 VAT (Solar contractors – Inputs VAT and Import Duty exempt)
 Withholding Tax; Kenya – Germany DTA
 Cash flow impact
 Recent developments – Legal Notice No. 165 (August 2015) & Energy Bill 2015
© Rödl & Partner
15.09.2015
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Tax Implications – Leasing Model
 An IPP can opt to provide the entire power generation facility under an operating lease
or finance lease arrangement
 Income Tax Act definitions - operating lease and finance lease
 Resident vs. non-resident lessors
 Tax benefits and positive cash flow impact
© Rödl & Partner
15.09.2015
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Repatriation of Profits
Repatriation of profits
 As a branch
 As a subsidiary
 Tax efficient options
Nature of payment
Dividends
Interest
Royalty
© Rödl & Partner
Kenya-Mauritius DTA WHT rates Kenya-Germany DTA WHT rates
5%
15%
10%
15%
10%
15%
15.09.2015
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Agenda
01
Land Rights
02
Power Purchase Agreements
03
Rödl & Partner
04
Contacts
© Rödl & Partner
15.09.2015
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About Rödl & Partner in Africa
Offices in Africa
Associated offices in Africa
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15.09.2015
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Your Contacts
Sebastian Wichmann
Rödl & Partner Nairobi
2nd Floor, West Wing, ICEA Lion Center
Chiromo Road
Nairobi
Telefon
+254 (732) 188 636/637
[email protected]
Dr. Marcus Felsner
Rödl & Partner
Straße des 17. Juni 106
10623 Berlin
Telefon
+49 (30) 810 795-51
Fax
+49 (30) 810 795-59
[email protected]
Ulrike Brückner
Rödl & Partner Johannesburg
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2007 Bedfordview
Telefon
+27 (11) 479-3000
Fax
+27 (11) 479 30 33
[email protected]
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Questions?
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