Last week, the government of Nigeria, which was represented by the Ministry of Finance and Nigerian Bulk Electricity Trading Plc (NBET), announced that it has completed the signing of the World Bank Partial Risk Guarantees in support of the 450MW Azura-Edo Independent Power Plant.
Nigeria: Financial lenders
The Guarantees comprise a Debt Mobilisation Guarantee, which is capped at $117 million and a Liquidity Guarantee, which is capped at $120 million.
According to The Guardian, the combined worth of these Guarantees amounts to a total investment in the Azura power plant of more than $900 million.
This amount has been pooled by various financial lenders: the International Finance Corporation, a member of the World Bank, is providing $80 million of which $30 million is allocated to ‘subordinated debt’.
Last year, the IFC said they had prepared a further $212.5 million of which $177.5 million had been raised with Dutch DFI Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden, FMO, a group of eight development finance institutions who have a long-term finance agreement.
The remainder of the debt financing is coming from a pool of foreign investors who were arranged by the Standard Chartered Bank, SCB, and Rand Merchant Bank, RMB, which was approved by the World Bank and the Multilateral Investment Guarantee Agency, MIGA.
Nigeria gas to power
The Azura gas to power project is expected to deliver power to an additional 14 million consumers, who currently do not have access to conventional power.
Despite having a wealth of gas deposits, an estimated 35% of the Nigerian population have access to modern electricity.
The project includes the construction, operation and maintenance of an open-cycle gas power plant, development of a 330kv transmission line and an underground gas pipeline spur connecting the plant to the region’s main gas trunk line, IFC said in a statement.
According to The Guardian, the first phase of the power plant is expected to come online in 2018.
Large scale power projects
The Azura power project has played a part in the contractual framework for the development of other large-scale independent power producers.
The Guardian reported that the signing last week is a significant milestone in the evolution of the Nigerian electricity sector, which is evident of the commitment shown by the President of Nigeria, Muhammadu Buhari – led administration to drive investment in the West African country’s power sector.
The Permanent Secretary, Ministry of Power, Ambassador Godknows Igali, said: “This landmark development confirms the Buhari administration’s commitment to the continuation of the power sector reforms which is anchored on attracting private sector investments, and establishing and supporting institutions that are critical to the reforms.
“The Federal Government will continue to strengthen NBET, NERC and the Transmission company in furtherance of the reforms.”