The U.S. government through its Agency for International Development (USAID) and Infrastructure Credit Guarantee Company Limited (InfraCredit) today signed a Declaration of Partnership to provide increased access to electricity to consumers in Port Harcourt. Investments to the bond will be overseen by Stanbic IBTC Trustees.
The 13 billion naira ($36.1 million) co-guarantee for a 15-year bond will allow GEL Utility Limited, a member of the Genesis Energy Group that develops, operates and provides both on- and off-grid power solutions, access long-term local currency financing at a reasonable interest rate and tenor.
The financing terms, consistent with a favorable investment environment, will permit GEL to expand its generation and distribution capacity in areas with low energy access.
“Today’s partnership marks the first-ever risk sharing arrangement between USAID and InfraCredit and emphasizes both institutions’ dedication to supporting the development of Nigeria’s power sector,” said USAID Mission Director Stephen M. Haykin at the signing event.
“As a result, more consumers in Port Harcourt will have access to a reliable power supply.”
At the signing ceremony, InfraCredit Chief Executive Officer Chinua Azubike said InfraCredit is committed to facilitating investments in the power sector by providing guarantees in collaboration with its strategic partners such as Power Africa.
“When we are able to draw on [Power Africa’s] capacity, networks, competence and credit quality,” he said, “we can achieve our mutual objective of bridging the power infrastructure gap.”
The transaction with GEL – the first beneficiary of the co-guarantee arrangement between InfraCredit and USAID – demonstrates how private sector-led institutions can efficiently access the Nigerian debt capital market to fund the expansion of their power generating and distributing capacity.
The proceeds of the bond stemming from this co-guarantee agreement will fund the implementation of the Excess Power Program in collaboration with the Nigerian National Petroleum Corporation and fund replacement of GEL Utility Limited’s current short-term financing with long-term local currency debt.
GEL currently delivers electricity to the Port Harcourt Refining Company through an 84-megawatt power plant. Through this new partnership, GEL will make 14 megawatts of excess generated electricity from their power plant available to customers within the Port Harcourt area either through Port Harcourt Electricity Distribution Company or directly to eligible customers.