FG, Seven Energy sign $112 million World Bank partial risk guarantee

04 Nov 2016
Financial Nigeria

Summary

The signing of the agreement is very significant because it is the first gas-to-power guarantee that the World Bank has provided for encouraging investment in the gas sector in Nigeria. - Phillip Ihenacho

Seven Energy’s Chief Executive Officer Phillip Ihenacho

The Federal Government of Nigeria and Seven Energy have signed a $112 million World Bank partial risk guarantee (PRG) for the supply of natural gas to the 560MW Nigerian Integrated Power Project (NIPP) in Calabar, Cross River State, according to a statement released on Friday.

The World Bank PRG will secure the supply of up to 130 million cubic feet per day (MMcfpd) of natural gas to NIPP Calabar and enable the consistent generation of an additional 560 MW of electricity to the national grid, about 20 percent of current power generation in Nigeria.

Speaking during the signing ceremony at his office in Abuja on Thursday, Vice President Yemi Osinbajo said the agreements will help to improve power supply and encourage investment in the power sector.

“I must say that this is a very significant event for us and as we all know this is the first PRG for gas that we are signing,” Osinbajo said. “We know that it will encourage investment in gas infrastructure and we are certainly looking forward to the multipliers that will come from it.”

The World Bank PRG, which is backed by the federal government, guarantees payments to Seven Energy’s wholly-owned subsidiary, Accugas. Kemi Adeosun, the Minister of Finance, signed the agreement on behalf of the federal government while Rachid Benmessaoud, the World Bank’s Country Director for Nigeria signed for the Washington D.C.-based multilateral lender.

"The signing of the agreement is very significant because it is the first gas-to-power guarantee that the World Bank has provided for encouraging investment in the gas sector in Nigeria,” said Phillip Ihenacho, Seven Energy’s Chief Executive Officer. “It assists in securing and leveraging the $700 million investment already committed into gas infrastructure in Nigeria. This structure enables the investor to be confident that they will get paid on time because there is a guarantee from the World Bank and that unlocks a lot more investments in the gas and power sectors in Nigeria.”

Founded in 2004, Seven Energy is the leading integrated gas company in Southeast Nigeria, currently delivering over 110 million MMcfpd of gas to three power stations, a cement plant, and a fertilizer factory. The company forecasts gas deliveries to increase to 150 - 200 MMcfpd over the coming year, which will provide long-term supply of gas to additional off takers for power generation and local industry.


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