IFC, a member of the World Bank Group, signed agreements to provide US$80 million of debt financing to Azura Power West Africa Limited, a 450 MW gas-fired independent power project (IPP) in Nigeria.
The Azura-Edo IPP consists of the construction, operation and maintenance of a 450 MW gas-fired open-cycle power plant located in Edo State, Nigeria. It also includes the construction of a short 330 kV transmission line and an underground gas pipeline spur connecting the power plant to the country’s main gas trunk line.The project has been developed by a consortium of investors led by Amaya Capital Ltd. The other shareholders are American Capital Energy and Infrastructure, the Africa Infrastructure Investment Fund 2, Aldwych International Ltd, Pan African Infrastructure Development Fund 2 LLC, and the Asset & Resource Management Company Ltd.
The total project investment is estimated at US$750 million.
IFC is providing US$50 million in debt for its own account, and US$30 million of subordinated debt, for a total of US$80 million. IFC is also mobilizing US$212.5 million, of which US$177.5 million has been jointly raised with Dutch DFI Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), in long-term financing from a pool of eight development finance institutions.
IFC acted as co-Lead Arranger with FMO for the senior DFI tranche of the financing. The balance of debt financing is being provided by international commercial lenders, co-arranged by Standard Chartered Bank and Rand Merchant Bank (RMB) and guaranteed by the World Bank and the Multilateral Investment Guarantee Agency (MIGA). First City Monument Bank (FCMB) is administering a local currency facility provided from the Central Bank of Nigeria’s Power and Airline Intervention Fund through the Bank of Industry. Standard Chartered Bank is the Global Lead Arranger for the project.
In mid August, the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, approved up to US$50 million in direct financing for the project.
Azura-Edo IPP is the first project to benefit from the World Bank Guarantees to support the mobilization of private capital in the power sector in Nigeria, and will further gain from political risk insurance to be provided by MIGA for equity and commercial debt.
The transaction is expected to form a replicable model for future power plants in the country, and as such pave the way for further private sector investment in Nigeria’s energy sector. Currently, it is estimated that only 35% of the population has access to electricity in Nigeria, despite the country housing the world’s eighth largest gas reserves.