January 15th, 2016
Azura-Edo Independent Power Project reaches financial close and enters construction
The project, which consists of the development, financing, construction, operation and maintenance of a 450MW gas-fired open-cycle power plant located in Edo State, reached financial close on 28 December, 2015. The total funding committed is approximately US$900 million provided by 20 international banks and equity funders. The project will be built by a joint venture of Siemens and Julius Berger Nigeria and is expected to be fully operational by 2018. Siemens will also provide major maintenance support under a Long term Service Agreement. The project will sell all its power to the Nigerian Bulk Electricity Trading PLC (NBET) and will burn gas supplied under a long term agreement by Seplat.
The Azura-Edo project was conceived and driven by Amaya Capital as lead sponsor. Aldwych International acted as co-developer and technical partner through 4 years of development. The project company Azura Power West Africa Limited (APWAL) is owned 2.5% by Edo State Government and 97.5% Azura-Edo Limited, which in turn is owned 50% by Amaya Capital together with American Capital Energy & Infrastructure, 30% by Africa Infrastructure Investment Fund 2 Power Holdings, 14% by Aldwych together with the Pan-African Infrastructure Development Fund (PAIDF) 2, and 6% by ARM-Harith Infrastructure Fund.
Aldwych is also acting as construction manager for the project via its wholly owned subsidiary Aldwych Azura Operations Limited under a Technical Services Agreement with APWAL.
Debt financing parties include the International Finance Corporation, Standard Chartered Bank, Rand Merchant Bank, Standard Bank, First City Monument Bank, Siemens Bank, FMO, KfW, DEG, Proparco, Emerging Africa Infrastructure Fund, ICF Debt Pool, Swedfund, CDC and OPIC. The debt facilities were split across a commercial tranche of US$234 million (backed by a mixture of MIGA PRI and IBRD PRG products), a US$267 million DFI tranche, a Naira 24 billion (US$120 million) local bank tranche (with a natural hedge) provided under the Central bank of Nigeria Power and Aviation Intervention Fund, and a US$65 million DFI mezzanine facility.
The project represents Nigeria’s first true privately developed, greenfield, limited recourse project-financed independent power plant selling power to NBET and as such, much of the resulting project documentation and financial structure can and will be used as a template for further investments in the power sector in Nigeria.
Crispin Holliday, the Aldwych Commercial Director who led the Aldwych involvement in the transaction said: “We are delighted to have been able to work with the impressive and visionary Amaya team and the rest of the project sponsor and advisor group in developing the project and honoured to be the technically qualified sponsor for this benchmark project that will show the way for other similar projects in Nigeria. The involved institutions of the Federal Government of Nigeria, and most particularly the NBET team led by Rumundaka Wonodi, are to be congratulated for their vision and determination to develop the Nigerian power sector and to create a world-class project that has attracted finance from around the world.”
The project is another vivid demonstration of the experience and capabilities of the Aldwych management team, whose track record in bringing such challenging and pioneering transactions to fruition is unparalleled on the continent. It is also a testament to the commitment to African infrastructure development of Harith General Partners, the managers of the PAIDF funds and to President Obama’s Power Africa initiative, of which both Aldwych and Harith are founder members, and which provided critical support to the transaction in a number of different ways. Credit should also be given to the best-in-class support provided to the sponsors by counsel Trinity International, financial advisors Fieldstone Private Capital Group, local counsel Templars, owners engineer PB Power, environmental advisor ERM and insurance broker and advisor AON.
Lenders advisors included senior lenders counsel Clifford Chance, mezzanine lenders counsel Allen & Overy, local counsel Olaniwun Ajayi, technical and gas advisor Lummus, environmental advisor Royal Haskonig and insurance advisor INDECS.