The World Bank on Monday approved $80 million (about N13.44 billion) debt financing for the Azura Power West Africa Limited.
The financing is to be provided by the International Finance Corporation, IFC, a member of the World Bank Group.
The Azura-Edo IPP, jointly executed with the Edo State government, is expected to help strengthen Nigeria’s gas-to-power value chain and deliver much-needed electricity to almost 14 million people.
The project has been developed by a consortium of investors led by Amaya Capital Limited, a principal investment firm focused on energy projects in West Africa.
The other shareholders are American Capital Energy and Infrastructure, the Africa Infrastructure Investment Fund 2, Aldwych International Limited, Pan African Infrastructure Development Fund 2 LLC, and the Asset & Resource Management Company Limited.
The 450 MW gas-fired independent power project consists of the construction, operation and maintenance of an open-cycle power plant located in Edo State.
The project also includes the construction of a short 330kV transmission line and an underground gas pipeline spur connecting the power plant to the country’s main gas trunk line.
Co-founder of Amaya Capital, Sundeep Bahanda, and Managing Director of the Azura-Edo IPP, David Ladipo, said in a joint statement that the completion of the financing was a major milestone in the project development timeline.
IFC is providing $50 million in debt for its own account, and $30 million of subordinated debt, for a total of $80 million.
IFC is also mobilizing $212.5 million, of which $177.5 million has been jointly raised with Dutch DFI Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden, FMO, in long-term financing from a pool of eight development finance institutions.
IFC is acting as co-Lead Arranger with FMO for the senior DFI tranche of the financing.
The balance of debt financing is being provided by international commercial lenders, co-arranged by Standard Chartered Bank, SCB, and Rand Merchant Bank, RMB, and guaranteed by the World Bank and the Multilateral Investment Guarantee Agency, MIGA.
First City Monument Bank, FCMB, is administering a local currency facility provided from the Central Bank of Nigeria’s Power and Airline Intervention Fund through the Bank of Industry. Standard Chartered Bank is the Global Lead Arranger for the project.
“This project is a cornerstone of the World Bank Group’s Energy Business Plan for Nigeria to support the country’s extensive energy reform program,” Director for Infrastructure at IFC, Bernie Sheahan,
“The World Bank Group’s substantial involvement in the Azura-Edo power project confirms its commitment to help the Federal Government of Nigeria develop a sustainable gas-to-power sector”.
IFC has worked closely with its sister institutions of the World Bank Group, which are providing additional support to this landmark transaction.
The Azura-Edo IPP is the first project to benefit from the World Bank Guarantees to support the mobilization of private capital in the power sector in Nigeria, and would further gains from political risk insurance to be provided by MIGA for equity and commercial debt.
As the first project-financed greenfield independent power project in Nigeria since the country’s ambitious power sector reforms, the transaction is expected to form a replicable model for future power plants in the country.
Such an arrangement would pave the way for further private sector investment in Nigeria’s energy sector.
Currently, it is estimated that only 35% of the Nigeria’s total population has access to electricity in Nigeria, despite the country housing the world’s eighth largest gas reserves.
IFC is the largest global development institution focused exclusively on the private sector. Working with private enterprises in about 100 countries, the bank deploys capital, expertise, and influence to help eliminate extreme poverty and boost shared prosperity.
In 2014, the IFC provided more than $22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development.