Some key global firms have shelled out $1 billion for the Azura-Edo Independent Power Plant (“IPP”) is a project-financed electricity power generation project being developed in Edo State, South-South Nigeria.

The project is in two phases, the first of which will generate 450MW for a total capital cost of $735 million while ultimately the IPP is projected to generate 1,500 MW upon completion.

The Azura IPP is a Green-field project (that is, a fresh project that will be developed from the scratch by the investors, as opposed to investing in existing facilities.)

“This underscores that the investors have a lot of confidence in the prospects of the Nigerian economy in general and the power sector in particular,” the Federal Ministry of Finance said this evening.

The ministry in a statement by Paul C Nwabuikwu, Special Adviser to the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, said that “the Azura project reflects the positive multiplier effects created by the capitalisation of Nigerian Bulk Electricity Trading Company (NBET) and the concomitant provision of the Put Call Option Agreement being provided by the Federal Ministry of Finance.”

It added: “Through this project, the combination of these two sources of lender security simultaneously has unlocked more than $700 million of project-financed investment in a large scale IPP and more than $300 million worth of investments in gas processing, for a total of $1 billion worth of investments.”

The lead sponsor of the Azura-Edo IPP is Azura Power Holdings Limited (“APHL”) which, in turn, is owned by Amaya Capital and American Capital Energy & Infrastructure. APHL’s co-sponsors in the Azura Project consist of the Edo State Government; Aldwych International; Africa Infrastructure Investment Fund 2 (AIIM); and Asset and Resource Management (ARM).

The lenders to the project are Standard Chartered, Rand Merchant Bank, Siemens Bank, KfW, StanbicIBTC, FCMB, FMO (Netherlands), World Bank Group (IFC, MIGA, World Bank), International Finance Corporation (IFC), DEG (German Investment Corpoartion), Proparco (French Investment Corporation), Emerging Africa Infrastructure Fund, ICF Debt Pool, Frontier Markets Fund Managers, Swedfund of Sweden) and CDC of UK.

This milestone project is also being supported with guarantees and insurance coverage by the World Bank and the Multilateral Investment Guarantee Agency (MIGA).

“The Federal Government is reviewing the various consents and approvals such as the Power Purchase Agreement and the Put-Call Option Agreement needed by Azura prior to financial close and prior to the issuance of a notice to proceed to the EPC contractor,” the Finance Ministry disclosed.

It said that “the major benefit of the project is the 450 MW that the project will generate in the first phase which will boost power supply to industries, businesses and homes,” adding:

“The development of the Azura project has also helped to create a whole suite of bankable template documentation that can be used on all future project-financed IPPs.

“Beyond this, the Azura project has been identified by the Ministries of Finance and Power, NBET and the World Bank Group as a ‘frontrunner’ IPP, which will help to leverage additional investment not just for other IPPs but for other participants in the sector (including upstream gas producers and downstream distribution companies).”

•Photo shows Finance Minister Okonjo-Iweala.