19 foreign investors to invest N160 billion in new Azura-Edo IPP

APC Chairman, Adams Oshiomhole
APC Chairman, Adams Oshiomhole

The IPP will initially generate 450MW of electricity.

A consortium of 19 global investors on Monday committed to invest about $1 billion (about N160 billion) in the development and execution of the Azura-Edo independent power project, IPP.

To be located in Edo State, Azura-Edo IPP is a $735 million greenfield initiative that comprises two phases, the first of which would have the capacity to generate about 450 megawatts, MW of electricity.

Promoters of the project led by David Ladipo said the financing would be through a combination of two sources of lender security of $700 million project-finance investment and more than $300million of investments in gas process infrastructure.

The Azura project, notes Mr. Ladipo, reflects the positive multiplier effects created by the capitalization of the Nigerian Bulk Electricity Trading Company, NBET, and the overall provision of the Put Call Option Agreement being provided by the Federal Ministry of Finance.

Reputed to be the second IPP in the country, after the 140 MW Aba power plant by Geometric Electric Power, the lead sponsor of the project, Azura Power Holdings Limited, is owned by Amaya Capital and American Capital Energy & Infrastructure.

The co-sponsors in the project consist of Edo State government, Aidwych International, Africa Infrastructure Fund 2, AIIM and Asset and Resources Management ARM.

Lenders to the project include Standard Chartered Bank, Rand Merchant Bank, Siemens Bank, KfW, Stanbic-IBTC, First City Monument Bank, FMO Bank of Netherlands, and the World Bank Group including the International Finance Corporation IFC.

Others include DEG (German Investment Corporation), Proparco (French Investment Corporation), Emerging Africa Infrastructure Fund, ICF Debt Pool, Frontier Markets Fund Managers, Swedfund of Sweden)  and CDC of United Kingdom.

The Minister of Finance, Ngozi Okonjo-Iweala, who received representatives of the investing firms in the company of her counterpart in the Power Ministry, Chinedo Nebo, described the project as a milestone initiative that is also being supported with guarantees and insurance coverage by the World Bank and the Multilateral Investment Guarantee Agency, MIGA.

Mrs. Okonjo-Iweala said the Federal Government was reviewing the various consents and approvals, including the Power Purchase Agreement, PPA and the Put-Call Option Agreement needed by Azura prior to financial close and prior to the issuance of a notice to proceed to the engineering, procurement and construction, EPC contractor.

The Facilitator of the project, David Ladipo, said the initiative is a genuine demonstration of public-private partnership involving some key government agencies, including the Nigerian Gas Company NGC, Transmission Company of Nigeria, TCN and the Nigerian Electricity Regulatory Commission NERC.

Mr. Ladipo described the project, which would have an initial capacity of 450 MW and ultimately expanded to reach about 1500 MW generation capacity, as the first of its kind in the country, in terms of engineering complexity.

The Minister of Power, Chinedo Nebo, said the project is one of the best to be conceived, as it is holistic in its conception, including provision for the investment of another $3million in the development of gas infrastructure to take care of all possible mechanisms capable of causing a failure.

“It shows that the project, the second IPP at the 140 MW Aba IPP by Geometric Electric, would contribute significantly to the effort to resolve the power supply problem, as it would generate at the initial capacity about 450MW, which is one tenth of the current national generation capacity.

“What we have in Nigeria today is a situation where suppressed demand for electricity is about 3 to 4 times what the country is generating. That is why the Federal Ministry of power would do everything to ensure that the project is realized on time,” Mr. Nebo said.

Through this project, the combination of two sources of lender security simultaneously, has unlocked more than $700 million of project-financed investment in a large-scale IPP and more than $300 million worth of investments in gas processing, for a total of $1 billion worth of investments.

Mrs  Okonjo-Iweala said the Azura project has been identified by the Ministries of Finance and Power, NBET and the World Bank Group as a “frontrunner” IPP, which would help to leverage additional investment not just for other IPPs, but for other participants in the sector (including upstream gas producers and downstream distribution companies).

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