Less than half of Nigeria's 145 million people have access to electricity. The problem of power is particularly acute in the country's vast rural areas, where only one in five households can access electricity for light, cooking, or other uses.
Modern economies are – literally – run on electricity. Despite Nigeria's vast reserves of oil, its economic growth will be hamstrung unless businesses, industry, and a rapidly-growing population can count on reliable sources of electricity.
Investment requirements in Nigeria's power sector are especially high. Per capita power consumption in Nigeria is a mere two percent of that in South Africa, and between 5-7 percent of that in Brazil or China.
To help address the crippling shortfall in Nigeria's power infrastructure, IFC has made a major investment in private-sector power provider Geometric Power to help design, build, and run a large gas-fired plant.
IFC will invest $4 million in early-stage equity alongside additional equity financing from private equity investors and Geometric’s CEO. IFC will also work with the company to mobilize an additional $326 million in long-term debt financing from international and local lenders, including additional financing from IFC itself.
The project will provide more efficient and reliable power to Aba, an industrial town and commercial hub in southeastern Nigeria.
The project involves the design, construction, ownership, and operation of a 188-megawatt, gas-fired, open-cycle power plant, a distribution network that serves unregulated customers, and a gas pipeline to support the power plant.
"Insufficient power is a major barrier to Nigeria’s economic growth," said Professor Bart Nnaji, CEO of Geometric Power. "Working with IFC will enable us to provide a better and more reliable power supply at a lower cost, helping increase the productivity of Aba’s many businesses."
LARGEST COMMITMENT
Addressing infrastructure needs is a major pillar of IFC's strategy in Nigeria, where more than half the population lives on less than $1 per day. Nigeria is also IFC’s largest commitment portfolio in sub-Saharan, receiving $684 million in investments in FY07.
Geometric's new plant will create jobs, help address Nigeria’s power shortfalls, and support the growth of the businesses it serves.
It has the potential to be a model transaction because the plant would also be the first in the country to be financed entirely by the private sector without a government guarantee, since the opening of the sector to private investors in 2005.
"IFC's investment in this project reflects our commitment to the private sector's role in improving the quality and delivery of power in Nigeria," said Solomon Adegbie Quaynor, IFC Country Manager for Nigeria. "We intend to deepen and scale up our involvement in the country’s power sector in situations where federal and state government policies support private participation."
For more information contact:
Houtan Bassiri
Communications Officer
Johannesburg, South Africa
Tel: +27 11 731 3179
Email: hbassiri@ifc.org
