• Saturday, July 13, 2024
businessday logo

BusinessDay

Stakeholders meet over $900m Azura-Edo IPP

Azura Power Plant

Hope is rising for businesses and individuals in Edo State and other parts of Nigeria as stakeholders in Azura-Edo Independent Power Producer (IPP) project located in the state are meeting this week to finalise issues that will eventually pave way for the ground breaking ceremony of the 459-megawatts plant, a source close to the project has said.

The agreement has reached such an advanced stage that sources close to the discussion told BusinessDay that the ground-breaking has been tentatively fixed for an undisclosed date next month.

This is coming on the heels of expression of support by the Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank Group for the project this weekend.

The  power project which has reached financial close  is expected to bring reliable and affordable energy to nearly 12 million residential consumers.

The Federal Government under the administration of President Muhammadu Buhari   had approved the project in order to swiftly  rev up power generation in the country, following prolonged foot dragging by the previous administration.

Requiring financing of about US$900 million, Azura-Edo is the first wholly project-financed IPP in Nigeria. MIGA’s support is part of a larger programme being implemented by the World Bank Group to mobilise nearly US$1.7 billion of private-sector financing to support Nigeria’s energy reform programme in general.

In particular, the World Bank, the International Finance Cooperation (IFC), and MIGA have worked jointly to finance Azura-Edo with a package of guarantees, loans, and political risk insurance.

MIGA’s guarantees for the project total $492 million. They cover equity investments by Amaya Capital Ltd., American Capital Energy and Infrastructure, Aldwych Azura Limited,  the African Infrastructure Investment Fund 2 Power Holding, and Asset and Resource Management Ltd. MIGA is also covering commercial lending by Siemens Bank, KfW IPEX, Rand Merchant Bank, and Standard Bank—with Standard Chartered Bank acting as agent on behalf of the lenders. Hedging instruments by Standard Chartered and RMB are also covered by MIGA’s guarantees.

Azura-Edo consists of the construction, operation, and maintenance of a 459-megawatt, gas-fired, open-cycle power plant in the vicinity of Benin City, Edo State, Nigeria. It also includes the construction of a short 330-kV transmission line connecting the power plant to the Benin North substation and a short underground gas pipeline spur connecting the power plant to the country’s main gas trunk line.The project will deliver power not only to Nigeria, but also the broader West African Power Pool.

While Nigeria is endowed with abundant energy resources, including the world’s eighth largest reserves of natural gas, 65 percent of its population still has no access to electricity.

To underscore its commitment to the on-going power sector reform, government  had completed the signing of the World Bank Partial Risk Guarantees (PRGs) in support of the 450MW Azura-Edo Independent Power Project (IPP).

Olusola Bello