news - FMO invests in Azura in Nigeria

FMO, the Dutch development bank, signed today agreements to provide $40 million of senior debt financing to Azura Power West Africa Limited, a 450 MW gas-fired independent power project in Benin City, Edo State, Nigeria (the Azura-Edo IPP). The project will strengthen the gas-to-power value chain in Nigeria and deliver much-needed electricity to almost 14 million residential consumers in the country.

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 330kV 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, a principal investment firm focused on energy projects in West Africa. 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.

Mr. Sundeep Bahanda, co-founder of Amaya Capital and Dr. David Ladipo, Managing Director of the Azura-Edo IPP, said in a joint statement: "The completion of the financing is a major milestone in our 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.”

IFC, a member of the World Bank Group, is providing loans of $80 million ($50 million of senior debt and $30 million of subordinated debt) and mobilizing $212.5 million (of which $177.5 million has been jointly raised with FMO) in additional long-term financing from a pool of eight development finance institutions (DFIs). FMO acted as co-Lead Arranger with IFC 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 (SCB) 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 Aviation Infrastructure Facility through the Bank of Industry. Standard Chartered Bank is the Global Lead Arranger for the project.

IFC has worked closely with its sister institutions of the World Bank Group, which are providing additional support to this landmark transaction: the Azura-Edo IPP is the first project to benefit from the World Bank’s ‘Partial Risk Guarantee’ structure in the power sector in Nigeria, and will further gain from political risk insurance to be provided by MIGA for equity and commercial debt.

“This project is a cornerstone of the World Bank Group’s Energy Business Plan for Nigeria to support the country’s extensive energy reform program,” said Bernie Sheahan, Director for Infrastructure at IFC. “The World Bank Group’s substantial involvement in the Azura-Edo power project is a clear confirmation of our commitment to help the Federal Government of Nigeria develop a sustainable gas-to-power sector”.

“The transformation process of the energy sector in Nigeria will be strengthened by this important milestone,” said Huub Cornelissen, Director of Energy at FMO. “This great IPP project will provide Nigeria with reliable and affordable power going forward, thereby improving the levels of electrification across the country.”

As the first project-financed greenfield independent power project in Nigeria since the country’s ambitious power sector reforms, 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.

About FMO

FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With an investment portfolio of EUR 6.6 billion, FMO is one of the largest European bilateral private sector development banks. www.fmo.nl

Press contact:

Paul Hartogsveld

Phone: +31 70 314 99 28

E-mail: p.hartogsveld@fmo.nl