WASHINGTON, May 6, 2014 – The World Bank, IFC and MIGA Board of Executive Directors have approved a package of loans and guarantees supporting a series of energy projects that will help boost independent power generation and ease crippling energy shortages in the Federal Republic of Nigeria, Africa’s largest economy. These projects are a critical element of the World Bank Group Energy Business Plan for Nigeria.
World Bank partial risk guarantees approved include up to US$245 million for the 459-megawatt (MW) Azura Edo power plant near Benin City, Edo State; and up to 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$659 million for the Azura Edo project.
“Efficient, affordable and reliable access to electricity is essential for small and medium-sized enterprises in Nigeria to accelerate job creation,” said Makhtar Diop, Vice President, Africa Region, World Bank. “I am glad that we were able to support Nigeria’s extensive energy reform program and provide direct assistance to increase generation capacity by mobilizing nearly US$ 1.7 billion of private sector financing through a range of instruments.”
The IBRD guarantees include 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 center of Nigeria's ambitious power sector program, 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. “Working across the World Bank Group, we can help catalyze significant private investment in an environment that best assures successful delivery of increased power supply.”
Nigeria is endowed with abundant energy resources, including the world’s eighth largest reserves 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 neighboring 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 is anchored in long-term support and extensive technical assistance to the reform process and capacity building of sector institutions. The business plan also includes 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 prioritizes improving Nigeria’s power supply, which is critical to expanding inclusive economic growth.