BY INWALOMHE DONALD
After a long and complex gestation with frequent setbacks caused by Edo PDP and former President Jonathan, 450MW Azura-Edo gas power project finally reached financial close on 28 December, 2015. Azura Power West Africa managing director and Amaya Capital director David Ladipo told African Energy the first debt drawdown had taken place on 29 December with notice to proceed issued to engineering, procurement and construction contractors Siemens and Julius Berger the following day.
President Buhari has come to the rescue of Governor Adams Oshiomhole by ordering the resumption of work at Edo-Azura power plant. Former President Jonathan with the influence of Edo PDP ordered stoppage of work for what they believed that Oshiomhole will take the credit of the project when completed.
The Multilateral Investment Guarantee Agency, MIGA, the political risk insurance and credit enhancement arm of the World Bank Group, has pledged its support for the Azura-Edo Independent Power Producer, IPP.
The power project which requires about US$900 million has reached financial close is expected to bring reliable and affordable energy to the nation’s grid, aimed at serving nearly 12 million residential
The MIGA support is part of a larger programme being implemented by the World Bank Group to mobilise nearly US$1.7 billion of private-sector financing to support Nigeria’s energy reform programme in general. In particular, the World Bank, the International Finance Cooperation (IFC), and MIGA have worked jointly to finance Azura-Edo with a package of guarantees, loans, and political risk insurance.
MIGA’s guarantees for the project total $492 million. They cover equity investments by Amaya Capital Ltd., American Capital Energy and Infrastructure, Aldwych Azura Limited, the African Infrastructure
Investment Fund 2 Power Holding, and Asset and Resource Management Ltd.
MIGA is also covering commercial lending by Siemens Bank, KfW IPEX, Rand Merchant Bank, and Standard Bank—with Standard Chartered Bank acting as agent on behalf of the lenders. Hedging instruments by Standard Chartered and RMB are also covered by MIGA’s guarantees.
Azura-Edo is the first wholly project-financed IPP in Nigeria, and “consists of the construction, operation, and maintenance of a 459-megawatt, gas-fired, open-cycle power plant in the vicinity of Benin City, Edo State, Nigeria. It also includes the construction of a short 330-kV transmission line connecting the power plant to the Benin North substation and a short underground gas pipeline spur connecting the power plant to the country’s main gas trunk line. The project will deliver power not only to Nigeria, but also the broader West African Power Pool.
Oshiomhole has taken upon himself some ambitiously near impossible tasks and turned them around. The Azura/Edo Independent Power Project and Edo Water Storm project are obvious examples. The former is a $1 billion project and the first Nigerian power project to benefit from the World Bank’s risk guarantee status, covered by the global bank’s Partial Risk Guarantee structure for developing needs of emerging global markets. It is very credible evidence that the state is a viable centre for global investment hob.
Azura-Edo one billion dollar power project is a clear demonstration of the confidence of the international community, including World Bank in the economy of Edo State led by Comrade Adams Oshiomhole. It is an indication that Edo State is investor friendly as the Government under Comrade Adams Oshiomhole has put in place the necessary infrastructure to attract investors to the state. This is another project conceptualized by the Edo state Government under the Public private partnership programme to unlock the industrial potentials in the state and make the state the nation’s energy hub”. The project is located at Ihovbe/Orior Osemwende Communities, off Benin Lagos bypass, Benin City.
The foundation laying ceremony of the $1 biliion Azura-Edo 1,000 megawatts gas-powered independent power plant was performed by former President Goodluck Jonathan at Ihovbe/Orior Osemwende communities, off Benin-Lagos Bypass, Benin City. The project was later stopped in the same 2014 because the former President and Edo PDP were ashamed that Governor Oshiomhole will take the credit for attracting such project to Edo State and the first project of such in Nigeria and Africa.
The first phase of the project, which was conceptualized in 2010 and jointly incubated by the Edo State Government under comrade Adams Oshiomole and Amaya Capital, the key promoters of Azura power west Africa Ltd, is 450-500 mega watts to be scaled up to 1,000 megawatts in the second phase.
The Azura project is the first Nigerian power project to benefit from the World Bank’s “Partial risk guarantee” structure which was specifically created to meet the developing needs of emerging markets
globally. The Azura-Edo IPP is expected to create the template for the successful development of IPPs in Nigeria and Edo state is playing a pioneering role in determining the future of Nigeria’s power sector.
Azura-Edo IPP will provide over 4,000 direct and indirect jobs for the people of the state from the construction to the post-construction period of the project.
Nigerians laud the cooperation between the governor of Edo State, comrade Adams Oshiomole, the World Bank and the private sector over the remarkable partnership in the power and energy sector between the FG and the state. Work on the $1 billion Azura Edo State Independent Power as ordered by President Buhari resume this January as President Buhari turned the sod for the commencement of construction work on the project.
President Buhari who assured that the Federal Government will work with the private sector to grow the economy hailed the project which was conceptualized in 2010 and jointly incubated by the Edo State Government under Comrade Adams Eric Oshiomole and Amaya capital, the key promoters of Azura Power West Africa Ltd as a first in many ways. According to the President, “We are happy to associate with Azura in this private investment. This project is a first in so many ways. It is the first financed private power plant, it is also the first power project to see the world bank financial guarantee agencies”. He said, “This 450 megawatts of new generation capacity will attract almost $1 billion
mainly in foreign investment into the power sector. This is made up of $700 million in the construction of the power plant and $300 million associated with the gas infrastructure.
Oshiomhole was concerned under President Jonathan about contradictory positions of the Federal Government on the operations of the electricity distribution companies. The Federal government had unbundled the Power Holding Company of Nigeria, in order to radically transform the power sector. Unfortunately, the outcome belies the effort. Abuja’s fresh desire to inject $350 billion into the sector for facilities upgrade over a 15-year period and the predilection for making excuses for non-performance of the electricity distribution companies expose the underbelly of the power privatisation scheme.
Governor Adams Oshiomhole has lauded President Buhari and Azura power project which allows foreign investors with the technical, managerial and financial capacity to key into the power reform programme.
Inwalomhe Donald, Justice Research Centre, Benin City.