24 April 2013, Lagos – Accugas Limited has begun the development of a $225 million (N35.78 billion) project designed to increase the supply of gas to two power plants in Nigeria, to boost power supply in the country.
Announcing the closure of the $225 million facility from Nigerian banks, the company, a wholly-owned subsidiary of Seven Energy, said it is in the process of constructing a central processing facility, CPF, and pipeline to supply gas to Ibom Power, located in Akwa Ibom State, and the Niger Delta Power Holding Company, NDPHC’s, Calabar Power Plant located in Cross River State.
The company said the objective of the project is to satisfy the growing gas demands from power plants and industrial users, following ongoing reforms in the power sector.
It further stated that the project, which is scheduled to be completed in 2014, will fulfill the gas supply contract obligations to both the Ibom and Calabar power plants.
The Chief Executive Officer, Seven Energy, Mr. Philip Ihenacho, was quoted as commending the technical partners and the financiers, saying, “The successful signing of the Accugas financing clearly shows the confidence that the financial institutions have in Accugas and Seven Energy, as well as the prospects for the Nigerian gas market.”
Also, Mr. Tolu Osinibi, Executive Director, FCMB Capital Market, one of the Mandated Lead Arrangers (MLA), and technical bank for the facility, said the bank’s commitment to the project was a demonstration of its commitment to the development of Nigeria’s power sector.
He added, “The technical bank team ensured that all the technical issues related to this novel project have been identified and addressed.”
He also expressed confidence that the project will be completed on schedule, and that it will add significant value to the country’s power generation capacity.
He commended the efforts of the technical bank team in ensuring due diligence in ensuring that the transaction was concluded on time.
Similarly, the Vice President, Project and Structured Finance, FCMB Capital Markets, Mr. Robert Grant, described the facility as a landmark transaction, which supports the federal government’s gas-to-power initiative of providing gas to existing power plants to immediately increase output.
He said, “This further demonstrates that private sector investments will be instrumental to further development of the Power sector reform value chain post the Bureau of Public Enterprises privatisation exercise.”
FCMB Capital was appointed with Stanbic IBTC Plc as technical banks to the financing deal, as they were identified as demonstrating the ability to identify and allocate the technical risks associated with such complex projects.
Accugas noted that in transactions of this nature, technical banks are primarily responsible for identifying and ensuring that all technical-related issues are satisfactorily addressed on behalf of the syndicate of lenders.
“For example, in this transaction, the technical banks worked with a competent Technical Consultant to ensure that the CPF and pipeline infrastructure are built to specifications and have the required regulatory approvals.”
*Press statement, Seven energy