2 May 2013 – The World Bank has committed to provide US$145 million to Nigeria’s gas related electricity sector through its first Partial Risk Guarantee (PRG) for the gas sector.
The PRG agreements, in support of the gas supply and aggregation, were signed in April 2013 between the World Bank and the Power Holding Company of Nigeria (PHCN), Egbin Power, Chevron Nigeria, and Deutsche Bank.
Under the 10 year agreement which is based on the industry template developed by Nigeria National Petroleum Corporation (NNPC), Chevron Nigeria will provide gas to Egbin power plant and through that ensure gas availability and reliability for power generation. This is the first time that Egbin power plant is able to procure gas under long-term arrangements.
The payment security instrument used is a 10 year letter of credit issued by Deutsche Bank. The absence of long-term gas supply arrangements has been one of the main causes of power shortages in Nigeria, as the gas had to be procured on a best endeavour basis, which often was of low quality and insufficient quantity, resulting in poor performance of the power plants.