*Represents 1,500mw power plant facility
18 October 2014, Sweetcrude, Lagos – The Federal Government has said that Nigeria’s power sector generating capacity will received additional boost when construction of 450megawatts Azura-Edo Independent Power Project, IPP in Benin is completed.
The 450mw project is the first phase of 1, 500mw power plant facility in the country with a short transmission line connecting the power plant to a local substation and a short underground gas pipeline connecting the power plant to the country’s main gas-supply.
President Goodluck Ebele Jonathan who led the ground breaking foundation laying ceremony in Edo state said the project represents almost a billion dollars in significant foreign direct investment into the power sector; comprised of $700 million in construction of the power plant and $300 million in associated gas supply infrastructure.
President Jonathan said the project has an estimated completion date of early 2017 to contribute power to the national grid adding that the federal government will continue to do its part to ensure that the growth of the electricity industry becomes self-sustaining.
“The Azura project demonstrates, without a doubt, that we have laid a strong foundation on which we are building a sound and sustainable electricity industry, with great expectations for robust growth in the sector.
“It is the first generation project to receive the World Bank Partial Risk Guarantee and Multilateral Investment Guarantee Agency (that is MIGA) support.
“It is the first signal from the global financial industry that the years of work that the federal government has dedicated to the reform of the power sector, in order to attract private sector developers and financing, is finally yielding returns.
President Jonathan explained that close proximity to the Azura power project, is the 508MW Ihobvor NIPP generation plant, which has been generating power since last year.
It was gathered that the Azura-Edo project is the first of a new wave of project-financed greenfield IPPs currently being developed in Nigeria.
In addition, the financing of the Azura-Edo IPP involves equity and debt from a consortium of local and international financiers.
The project also incorporates an additional investment being made by Seplat Petroleum Development Company PLC (“Seplat”) in new gas processing facilities at its Oben Gas Plant, which, as part of Seplat’s joint venture with the Nigerian Petroleum Development Company (NPDC), will supply the Azura-Edo IPP with the project’s fuel gas requirements.
Sweetcrude Reports learnt that the Azura-Edo project is being developed by a consortium of local and international investors led by Amaya Capital Limited and American Capital Energy & Infrastructure.
The other sponsors contributing equity to the project according to industry source are the Africa Infrastructure Investment Fund 2 (AIIF2), Aldwych International Ltd, and the Asset & Resource Management Company Ltd (ARM).
It was also gathered that the Engineering, Procurement and Construction contractors are Siemens and Julius Berger Nigeria; with an Operations & Maintenance contract in place with the PIC Group (a subsidiary of Marubeni).
The Azura-Edo IPP is also said to be the first Nigerian power project to benefit from the World Bank’s ‘Partial Risk Guarantee’ structure, specifically created to meet the developing needs of emerging markets world-wide, and political risk insurance for equity and commercial debt from the Multilateral Investment Guarantee Agency, also part of the World Bank group.
Significantly, industry source said that the overall transaction will be underpinned by financial support provided by the Federal Government of Nigeria through a Put and Call Option Agreement agreed by Dr Ngozi Okonjo-Iweala, the Coordinating Minister for the Economy and Honourable Minister of Finance; complementing the Power Purchase Agreement that was signed in 2013 between Azura and the Nigerian Bulk Electricity Trading PLC (NBET).
The first phase of the plant, which is targeted to come on stream in 2017, is forecast to create over 1,000 jobs during its construction and operation.
Mr. Sundeep Bahanda, co-founder of Amaya Capital and Dr. David Ladipo, Managing Director of Azura, said in a joint statement: “This ground breaking ceremony is a major milestone in our project development timeline, and the President’s endorsement a strong demonstration of the critical importance of this project to the Nigeria power sector reforms.
“By working closely with the government over a number of years the Azura-Edo project has been used to develop many of the template contracts and documentation that will be used in project financed power projects over the coming years.
“We would like to sincerely thank President Jonathan and his administration for their commitment to seeing this project to completion, and for taking the time to share today with us.
” We would also like to commend Governor Oshiomhole for his relentless determination to modernise the infrastructure of Edo State and thank him for his unstinting support for the Azura Project.”
Opiuyo Oforiokuma, Managing Director of the ARM Infrastructure Fund and the lead indigenous project sponsor said; “The Azura-Edo project is a leading example of the strength of partnership that can exist between indigenous and international equity partners, sponsors and financiers.
“By combining specialist local equity, through our infrastructure fund, with international equity and debt, alongside best in class contractors the Azura-Edo project is a world class example of how to develop an infrastructure project in Africa.”