About 14 different global financial lenders including Nigeria’s First City Monument Bank (FCMB) have collectively pulled about $1 billion to finance the 450 megawatts (MW) Azura-Edo Independent Power Plant (IPP) being developed in Edo state by Azura Power Holding Limited (APHL).
The IPP is being developed by Aldwych International, Africa Infrastructure Investment Fund (AIIM), and Asset and Resource Management (ARM) in conjunction with the government of Edo state which has about five per cent equity stake in the project.
The Azura-Edo IPP is a project-financed Greenfield power generation plant that will generate 450MW of electricity when commissioned by late 2016. It is expected to cost about $700 million to build, while an additional $300 million will be expended on developing gas supply infrastructure that will solely service the plant.
The Managing Director of APHL, Dr. David Ladipo, told reporters Monday in Abuja that as much as 14 global lending institutions have rallied financial resources to fund the power project.
Ladipo disclosed at a meeting with the Minister of Power, Prof. Chinedu Nebo, that the financiers include Standard Chartered Bank, Rand Merchant Bank, Siemens Bank, KfW Bankengruppe of Germany, Stanbic IBTC, First City Monument Bank (FCMB), The Netherlands Development Finance Company (FMO) and International Finance Corporation (IFC).
Other global financiers that on the funding party for the project as stated by Ladipo are the German Investment Corporation (DEG), French Investment Corporation, Emerging Africa Infrastructure Fund, the World Bank Group and Swedfund of Sweden amongst others.
He explained that the financial sources has unlocked more than $700 million of project-financed investment for the IPP and an additional $300 million worth of investment for gas processing which will be constructed and operated by indigenous firm, Seplat Petroleum.
According to him, the project is also being supported with guarantees and insurance coverage by the World Bank and the Multilateral Investment Guarantee Agency (MIGA) while the federal government is currently reviewing the various consets and approvals such as the Power Purchase Agreement (PPA) and Put-Call Option Agreement needed by Azura prior to financial closure which is expected in May, 2014 and the subsequent issuance of a notice to proceed to the Engineering Procurement and Construction (EPC) contractor.
“The Azura power project has over $700 million in capital for the project and in addition to that, there has to be investment in gas processing to supply the gas molecules that will used. Part of what we have on the gas supply side is a Nigerian independent gas supplier which is Seplat Petroleum Company.
It has done a fantastic job since it took over the Oben gas plant from Shell and turning the gas plant around to double its productivity within a couple of years, they have been working with us negotiating gas supply agreement with us and have currently taken the contract to NPDC (Nigeria Petroleum Development Company) which will need an approval from it. They are going to be making significant investment in gas infrastructure to supply the needed gas to us,” Ladipo said.
Nebo in his remarks explained that the project underscores the confidence of investors in Nigeria’s power sector.
He added that the project also reflects the positive multiplier effects created by the capitalisation of the Nigerian Bulk Electricity Trading Company (NBET) and the associated provision of Put Call Option Agreement being provided by the federal ministry of finance.
The Coordinating Minister for the Economy and Minister of Finance, who also played host to the investors in her office in Abuja, said the Azura-Edo IPP is a totally fresh Greenfield project that will be developed from the scratch by the investors, as opposed to investing in existing facilities, adding that this underscored the huge confidence of the investors in the prospects of the Nigerian economy in general and the power sector in particular.
According to her, the Azura-Edo project reflects the positive multiplier effects created by the capitalisation of the Nigerian Bulk Electricity Trading Company (NBET) and the concomitant provision of the Put Call Option Agreement being provided by the Federal Ministry of Finance.
“Through this project, the combination of these two sources of lender security simultaneously has unlocked more than $700 million of project-financed investment in large scale IPP and more $300 million worth of investments in gas processing, for a total $1 billion worth of investments,” the minister said.
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© dARA for Royal Times of Nigeria Newspaper, 2014. |
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posted in Business by Tunde LEMUEL