Azura Power Holdings Limited and other stakeholders have signed the equity and loan financing documents for the financing of its Azura-Edo Independent Power Project (IPP) in Benin, Edo State.
The signing of the financing contracts is a further milestone towards the beginning of construction work at the project, which will begin in January 2015.
Co-founder of Amaya Capital, Mr. Sundeep Bahanda and the Managing Director of Azura, Dr. David Ladipo said in a joint statement that the completion of the financing was a major milestone in the project development timeline.
“We have been working very closely with our financing partners over the past few years and today’s signing reflects all the tireless work put in by all the financiers and our advisors. By also working closely with the Federal Government of Nigeria since 2009 when this project was conceived, the Azura-Edo project is being used to develop many of the project and financial contracts into templates that will be used in project financed power projects over the coming years,” said the statement.
Chief Executive Officer of Standard Chartered Bank for Africa, the Global Mandated Lead Arranger for this transaction, Diana Layfield said “the expertise, effort and commitment dedicated to the Azura Edo transaction from diverse stakeholders inspired confidence and inspiration for other markets to attract investment and increase their respective power output to support long term economic growth. This transaction forms part of Standard Chartered’s commitment to Power Africa – a dynamic public-private partnership, lead by President Obama, which aims to deliver over 30,000MW of power across Africa in 5 years.”
The signing was witnessed by senior government officials including the Permanent Secretary for Ministry of Power, Ambassador Godknows Igali; Vice Chairman of the Nigerian Bulk Electricity Trading PLC (NBET) Mr. Saka Isau; Managing Director of NBET, Mr. Rumundaka Wonodi; and the Commissioner for Market, Competition and Rates at the Nigerian Electricity Regulatory Commission, Mr. Eyo Ekpo.
The Azura-Edo project is the first of a new wave of project-financed greenfield IPPs currently being developed in Nigeria.
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 are the Africa Infrastructure Investment Fund 2 (AIIF2), Aldwych International Ltd, and the Asset & Resource Management Company Ltd (ARM).
The debt financing is being provided by a consortium of 15 banks from nine countries led by Standard Chartered Bank (SCB) as Global Mandated Lead Arranger for the project, IFC, a member of the World Bank Group, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO) and Rand Merchant Bank (RMB), a division of FirstRand Bank Limited.
FCMB Capital Markets was the Local Loan Arranger for the Central Bank of Nigeria’s Power and Aviation Infrastructure Facility (BOI-PAIF) through the Bank of Industry
The IPP is also 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, 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 the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala; complementing the Power Purchase Agreement that was signed in 2013 between Azura and the Nigerian Bulk Electricity Trading PLC (NBET).
The Azura-Edo IPP comprises a 450MW open cycle gas turbine power station; 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.
It represents the first phase of a 1,500MW power plant facility. The plant’s location on the outskirts of Benin City is ideal because of its close proximity to Nigeria’s biggest gas distribution pipeline (which makes gas feedstock easily available) and its unique accessability to the country’s high voltage transmission network (which facilitates the evacuation and distribution of power).
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.