FG, World Bank Sign $500 Million Gas Supply Agreement
The Federal Government and the World Bank on Thursday signed a Partial Risk Guarantee (PRG) gas supply agreement.
The Agreement is for the supply of gas to the $500 million Calabar gas plant to boost energy supply by 500 megawatts.
Vice President Yemi Osinbajo, who witnessed the signing of the agreement at the Presidential Villa, said the event is very significant for the country.
He noted that it would encourage further investment in gas infrastructure.
Osinbajo said government expected that going by the current power situation, the investment was worth celebrating.
He added that government was grateful to the World Bank and the investors in the Calabar plant for coming to the aid of the country in its quest for more energy supply.
“We are looking forward to the multiplier effect that will come from this investment.’’
The Vice President noted that the gas plant traversed Rivers, Cross River and Akwa Ibom States, saying the investment portends greater things happening in the future.
Managing Director, Niger Delta Power Holding Company (NDPHC) Ltd., Chiedu Ugbo said the agreement was to tackle the gas supply issues in the plant.
FG, World Bank Sign Multi-million Dollar Gas Supply Agreement
The plant was built to generate about 561 megawatts of electricity.
He stated that the agreement was to enable the gas supplier to supply about 131 million cubic feet of gas daily to the Calabar plant from its field in Akwa Ibom.
Mr. Ugbo said it was the first PRG agreement for the payment security for the supply of gas to cushion any breach in payment.
According to him, the Calabar Generation Company is owned by the NDPHC, a government concern.
He added that in the event of breach, JP Morgan under the World Bank would pay and be reimbursed gradually in 12 months.
Gas Supply Agreement To Boost Power Generation
Also speaking, Chief Executive of Seven Energy, Philip Iheanacho, said this was the first gas-to-power guarantee that the World Bank had provided for encouraging investment in the gas sector in Nigeria.
He said it had unlocked about $700 million investment into gas infrastructure in the country.
“Seven Energy has committed its shareholders together with its banks for very significant investment on the back of this guarantee from the World Bank.
“It is a means of attracting capital into the gas sector, which is critical to the power sector in Nigeria.”
Mr. Iheanacho noted that the World Bank had a programme of gas-to-power guarantees that could be used for further investments in the sector.
According to him, The big challenge for investors in the gas sector was their worry about payment risks.
He, however, explained that “this structure enables investors to be confident that they would be paid on time as it is guaranteed by the World Bank.’’
Adding that it will unlock a lot more investment in the gas and power sector in Nigeria.
Finance Minister, Kemi Adeosun and Mr. Ugbo signed for Nigeria while Rachid Benmessaoud, World Bank Country Director, and Mr. Iheanacho signed for the World Bank.