Standard Chartered says $750m Azura financing structure template for similar IPPs

Standard Chartered Bank Nigeria is leading other banks as the Global Mandated Lead Arranger to mobilise financing for the $750 million Azura-Edo Power Project, a transaction that brings high hopes, especially in creating a template for other similarly financed Independent Power Plants (IPPs) in the country.

Azura Power plant is the first IPP to be foreign private investor led in the country and is projected to add 450 megawatts to the national grid at first phase and peak at 1,500 megawatts at the project’s final completion.

Bola Adesola, Standard Chartered Bank’s managing director, describes the project as a major innovative initiative being undertaken by private investors in the Nigeria’s power sector reforms as it would help boost electricity output and reposition the Nigerian economy on the path of sustainable development.

Azura-Edo IPP has received a lot of international funding from both the equity and debt sides, and is a 450 megawatts project being developed on the outskirts of Benin City, Edo State. The project financing involves $200 million of equity and $530 million of debt from a consortium of local and international financiers.

Speaking on her bank’s role in the flagship project, Adesola is optimistic that the Azura Power Plant would serve as a template from which other investors could learn and invest in the power sector in Nigeria.

Her words: “The power generation from this transaction is expected to tangibly impact Nigeria’s economic growth and the banks are proud to be part of this, and Standard Chartered in particular is proud to be playing an important role in progressing and structuring the transactions by acting as structuring bank and Global Mandated Lead Arranger.”

She says the bank’s advisory, structuring and financial contribution to this transaction forms part of its $2 billion pledge to President Obama’s ‘Power Africa’ campaign launched last year, which aims to bring electricity to more than 20 million Africans within five years.

According to Adesola, her bank is well on course to exceed the $2 billion target ahead of time, noting that the pledge is more than 20 percent of the total private sector commitment so far. Azura is owned by Amaya Capital Limited and American Capital Energy and Infrastructure.

The Africa Infrastructure Investment Fund 2, Aldwych International Ltd, the Asset and Resource Management Company Ltd, and FMO (the Dutch development finance company) are also sponsors contributing equity to the project.

The Azura-Edo IPP is the first local power project to benefit from the World Bank’s recently developed Partial Risk Guarantee structure, she says.

World Bank’s ‘Partial Risk Guarantee’ structure is specifically created to meet the developing needs of emerging markets globally, creating political risk insurance for equity and commercial debt from the Multilateral Investment Guarantee Agency – also part of the World Bank Group.

Ngozi Okonjo-Iweala, Nigeria’s minister of finance, says the overall transaction will be underpinned by financial support provided by the Federal Government through a Put and Call Option Agreement agreed by complementing the Power Purchase Agreement signed last year between Azura and the Nigerian Bulk Electricity Trading plc.

Onyinye Nwachukwu