Investors seal pact on capital restructuring of N15b Aba IPP

‘Why Nigeria missed power road map targets’ 

The sponsors and creditors of the Aba Integrated Power Project (Aba IPP) and Afrigem Integrated Utilities Limited have signed the transaction implementation agreement for additional equity investment and total capital restructuring of the scheme, preparatory to the commissioning of the plant in November.

The N15 billion Aba IPP is the nation’s first indigenous fully integrated green-field electricity project. The signing of the agreement, hosted by Diamond Bank Plc, was effected on Friday in Lagos.

Afrigem Utilities is a West African focused development and investment company with a 720 MW pipeline of energy solutions project in the region.

This agreement will bring on board the expertise of Afrigem Utilities in the operations and management of the Aba IPP, ensuring that it is primed to deliver uninterruptible electricity supply to the industries, commercial enterprises, urban and rural residents of Aba metropolis to make the city a major regional commercial hub in country.

Essentially, Afrigem Utilities has articulated a three-year value creation programme to commission Aba IPP by November 2015 and increase plant capacity from 141 MW to 341 MW by 2018.

The Chairman of Geometric Power Limited, Professor Bart Nnaji, led the signing on behalf of the project sponsors, while the Vice Chairman of Afrigem Utilities, Mallam Samaila Zubairu , led the signing on behalf of the investors. The creditors included Diamond Bank Plc., Asset Management Company of Nigeria (AMCON) and Stanbic IBTC Bank Plc.

Speaking during the signing ceremony, Professor Bart Nnaji expressed delight at the new development, applauding “everyone who helped to see this day come to pass. We are very happy that this project is on track and with this new investment we will bring power to the people of Aba and look forward the economic revival that this will bring to Nigeria.”

Zubairu emphasised the bankability of the integrated power project model as the template for growing capacity of reliable power supply, which will accelerate Nigeria’s GDP growth, create jobs and unleash the creative energy of Nigerian youths.

According to him, “the integrated utility model, with clear line of sight to cash flow and satisfied customers, is the foundation for lighting up Nigeria and the rest of the ECOWAS region.”

He explained that “Nigeria missed the power road map targets of 10,000MW in 2014 and 20,000MW by 2016 because of inadequate investment capital and failure to secure fuel for power plants.

“Mobilizing the investment capital required to increase generation capacity to 40,000 MW by 2020 rests on showcasing completed projects like the Aba IPP, so that the very high risk premium for construction and completion risk in Nigeria is demystified.

Afrigem Utilities appreciates the invitation to be a partner of such a laudable initiative set to open up Nigeria’s power sector for long term institutional capital”. Also speaking at the event, the Deputy Managing Director and Chief Risk Officer of Diamond Bank Plc., Caroline Anyanwu, stated that the new agreement signals a huge economic leap in the generation and distribution of electricity energy in Nigeria.

“I believe that the immense benefits that this new transaction implementation agreement will make Nigeria a better place, especially as it will help boost economic output when the power plant starts generating power. “We commend Geometric Power, StanbicIBTC, AMCON and others that have made this initiative work today.

The partnership with Afrigem Utilities is a good one for the creditors and sponsors of Aba IPP and for growth in the Nigerian electricity supply industry”. The founding Chairman of Neimeth Pharmaceuticals Plc and former President of the Nigerian Economic Summit Group, Sam Ohuabunwa said “the entire business community is delighted that this pioneer, patriotic project has come thus far.”

He recalled how “the project sponsors sacrificially took up the challenge by the visiting former President of the World Bank, James Wolfensen, to establish the project. in order to meet the critical need of industrialists as well as ingenious low- and middle-scale manufacturers like shoemakers who were being thrown out of business by unreliable power supply from the national grid”.

Former Chairman of the Aba Chamber of Commerce, Echeme Nnanna Kalu, noted that the Aba IPP was designed to be a model of how to develop sustainable power projects in the Nigerian power sector without the Federal Government committing itself unduly to complicated sovereign guarantees, which seek to attach national assets to the guarantees for every power developer.

He added that “there are now eight brand new substations constructed by Geometric Power in Aba instead of the three dilapidated substations inherited from the Power Holding Company of Nigeria (PHCN), which have been refurbished to international standards by the Aba IPP sponsors, in addition to completion of the 141 MW power plant and 27kilometres of natural gas pipeline from Owaza in Ukwa West Local Government Area to Osisioma, on the outskirts of Aba where the plant is located.”

Energy consultants, top bank executives, attended the ceremony as well as representatives of the various professional parties, namely Olaniwun Ajayi LP; the transaction counsel, Udo Udoma Belo-Osagie; sponsors’ counsel, Templars; creditors counsel; and Afrinvest as financial advisers to the sponsors.

Other professional parties to the transaction include Sao Capital Limited as financial advisers to Afrigem Utilities; Allen & Overy as legal advisers; KPMG Advisory Services for financial/tax due diligence; and PriceWaterhouseCoopers as tax advisers.