Country Nigeria
Sector Energy
Signing Date November 25th, 2014
Total Project Cost $900M
ICF Debt Pool Exposure $25M
IFI Exposure $267.5M

Project Description

The project involves the construction of a 459 MW gas fired power plant near Benin City, Edo State Nigeria in an Open Cycle Gas Turbine configuration. The Project is the first phase of a 1,500MW open-cycle plant (built with the capability of conversion to combined cycle). The facility includes a gas receiving station, water treatment facilities and power plant; as well as access to onsite switchyard, transmission line & pipeline spur. The Project will sell power under a 20-year Power Purchase Agreement with state-owned Nigerian Bulk Electricity Trading. Gas is to be sourced from nearby fields through a long-term Gas Supply Agreement with Seplat, a leading indigenous energy company.

Financing Structure

Total cost of the Project is estimated at approximately USD900M. As of year-end 2014, loan remained undisbursed and satisfaction of CPs to First Disbursement is still pending. The senior loan consists of three tranches: i) a DFI tranche which was sourced from IFC, FMO, DEG, Proparco, EAIF, CDC, Swedfund, OPIC and ICF DP; ii) a commercial bank tranche led by Standard Chartered Bank; and iii) a local currency tranche led by FBN Bank.

Infrastructure Component

Proceeds from the loan will be used to fund the construction of a 459 MW gas fired power plant. Construction is set to begin in Q1 2015 and expected to take up to 36 months to complete.

Investment Rationale

Good Competitive Position: Very competitive source of energy and competing against diesel generators which are much more expensive.

Large Unmet Demand: The demand for electricity in Nigeria is immense with a population that is desperately short of grid-delivered electricity, with a significant gap between electricity demand and supply. Existing demand is estimated at a minimum of 10,000 MW while potential demand could reach more than 100,000 MW.

Supportive environment: The Federal Government of Nigeria has demonstrated a great degree of commitment to this transaction and the power sector reform program.

Development Impact

• The project is expected to create over 1,000 jobs during its construction and operation.
• Analysts consider that there is probably no other country in the world that has a bigger gap between electricity demand and electricity supply. Currently, only 40% of the population has access to electricity, leaving the vast bulk of the country’s poor in the dark with only 20% of rural households serviced. The project should ensure that of the Nigerian power reform, lead to power being available to most of the 160M Nigerians and contribute to a reduction of the average cost of electricity by a factor of 4.
• As well, the project mobilized local capital with local banks involved in the financing


Project could not have been funded or materialized without the significant DFI contribution and MIGA/WB credit enhancements.