These projects are a critical element of the World Bank Group Energy Business Plan for Nigeria, a statement said yesterday.
World Bank partial risk guarantees approved included up to US$245 million for the 459-megawatt (MW) Azura Edo power plant near Benin City, Edo State; and US$150 million for the 533-MW Qua Iboe plant in Ibeno, Akwa Ibom State. Both plants are gas-fired.
The Boards of IFC and MIGA approved loans and hedging instruments of up to US$135 million and guarantees of up to US$659 million for the Azura Edo project.
“Efficient, affordable and reliable access to electricity is essential for small and medium-sized enterprises in Nigeria to accelerate job creation,” said Makhtar Diop, Vice President, Africa Region, World Bank.
“I am glad that we were able to support Nigeria’s extensive energy reform program and provide direct assistance to increase generation capacity by mobilising nearly US$ 1.7 billion of private sector financing through a range of instruments.”
The IBRD guarantees included forward-looking mitigation and risk-sharing arrangements, designed to augment the country’s power sector reforms, while building market confidence and setting industry benchmarks.
IFC’s investment and MIGA’s guarantee for the Azura Edo power plant will support a trail blazing project at the centre of Nigeria’s ambitious power sector programme, while setting a replicable model for future power projects.
“Addressing energy needs in Nigeria requires investment from the public and private sectors,” said Jean Philippe Prosper, IFC Regional Vice President, adding that “working across the World Bank Group, we can help catalyse significant private investment in an environment that best assures successful delivery of increased power supply.”
Nigeria is endowed with abundant energy resources, ranking as the world’s eighth largest producer of natural gas. Yet, 65 percent of its population – some 100 million people – has no access to electricity. Unlocking the flow of Nigeria’s extensive natural gas reserves will expand power supply and energy exports to neighbouring countries in the West Africa Power Pool.
Support to private sector-financed independent power producers (IPPs) forms a critical part of the Nigerian Government’s Power Sector Reform Roadmap, a strategy to improve power services throughout the country that is widely supported by the Nigerian public.
“We expect the Azura Edo IPP to have a strong demonstration effect and to set a precedent for future private sector investors,” said Michel Wormser, MIGA Vice President and Chief Operating Officer.
Under the joint Energy Business Plan, the World Bank Group has committed to leverage its diverse competencies along the energy value chain to support the provision of affordable, reliable, and sustainable energy services in Nigeria.
The approach was anchored in long-term support and extensive technical assistance to the reform process and capacity building of sector institutions.
The business plan also included IFC project structuring and investments along with tailor-made packages of risk-mitigation instruments that include World Bank Partial Risk Guarantees and MIGA political risk insurance.
The approved project is also fully aligned with the World Bank Group Country Partnership Strategy that prioritises improving Nigeria’s power supply, which is critical to expanding inclusive economic growth.
