A Review of the Nigerian Energy Industry

FBN Capital, banks boost power reforms with $225m Accugas funding

29 March 2013, Lagos – The on going efforts to reform the nation’s power sector received a major boost as FBN Capital and four banks committed $225 million to support construction of gas pipeline project of Accugas Limited.

The documentation for the funding was completed at a ceremony where FBN Capital, its parent company- First Bank of Nigeria Plc, UBA, FCMB and Stanbic IBTC signed a US$225 million Syndicated Medium Term facility.

The facility is to be utilised towards refinancing the existing US$55 million debt secured for the Akwa Ibom gas pipeline project, with the balance of US$170 million to be used towards part financing the cost of expanding its gas processing facilities and building a new gas pipeline to supply gas to the Calabar NIPP power plant.

FBN Capital Limited acted as the Global Coordinator Bank, Financial Modeling Bank and also undertook the role of de-facto Financial Adviser to the Borrower; while UBA, First Bank of Nigeria Plc, Stanbic IBTC and FCMB, jointly acted as Mandated Lead Arrangers on the transaction.

The Calabar Project is the second phase in Accugas’ gas processing and distribution development programme aimed at bringing the substantial gas reserves from the South East Niger Delta market to meet the growing energy demand from power plants and industrial users in the region. It involves the construction of a 37km gas pipeline from the Uquo gas field in Akwa Ibom State to Oron for delivery of 131 MMscfpd of gas to the 560MW power plant in Calabar. Construction of this new pipeline is scheduled to be completed in July 2014.

Speaking on the transaction, Philip Ihenacho, Chief Executive Officer, Seven Energy l, thanked the deal team for the laudable work done to bring this material transaction to a close.

“The successful signing of the Accugas financing clearly shows the confidence the financial institutions have in Accugas and Seven Energy, as well as the prospects for the Nigerian gas market,” he said.

Commenting on the deal, Bruce Burrows, Chief Financial Officer of Seven Energy, stated: “The completion of the Accugas financing marks a major milestone in the project’s evolution. With construction of the Ibom gas pipeline (Phase 1) now completed and on track to deliver gas to Ibom Power Plant from April 2013, we are now embarking on Phase two with construction of the Calabar gas pipeline, already commenced.
*Babajide Komolafe, Vanguard

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