Home Economy Aba integrated power project to play a critical role in facilitating industrialisation, trade, Nigeria gets 60% of $30bn Afreximbank oil & gas funding

Aba integrated power project to play a critical role in facilitating industrialisation, trade, Nigeria gets 60% of $30bn Afreximbank oil & gas funding

by Business News Report

In the face of dwindling international funding for hydrocarbon projects in Africa, the African Export-Import Bank, AfreximBank, on Wednesday, said that it has become the largest financier of oil and gas projects on the continent. Meanwhile,Afreximbank said thatthe 141 MW Aba Integrated Power Project (Aba IPP), its financed project, was officially commissioned in Abia State by the Vice President of the Federal Republic of Nigeria, H.E Kashim Shettima. The bank in a statement said “a first of its kind in Nigeria, the Aba IPP is a pioneering initiative capable of generating and distributing 141 MW of its produced power across nine local government areas (LGAs) within the Aba ring-fenced zone. Adequate distribution of energy is a cornerstone for national development, playing a critical role in facilitating industrialisation and trade. Recognising the challenges in the sector such as inadequate liquidity, high level of debt, and a lack of profitability, Afreximbank continues to support energy projects on the continent and has committed in excess of US$ 4.6 billion to Africa’s power sector since inception. With approximately USD 900 million of funding in Nigeria, the Bank is one of the leading financiers in the Nigerian power sector. In 2021, Afreximbank signed a US$50 million term loan facility with Geometric Power Limited to support the completion of the generation and distribution infrastructure, commissioning of the gas supply pipeline and commencement of operations of the project.

On oil and Gas The bank said it has so far spent $30 billion to fund projects in the industry with Nigeria getting 60 per cent of the funding. Speaking at the National Oil Companies Forum at the ongoing Nigeria International Energy Summit, NIES, in Abuja, President, Afreximbank, Professor Benedict Oramah said Africa has to find innovative solutions to its huge energy deficit Represented by Mr. Haytham ElMaayergi, Executive Vice President, Global Trade Bank, Prof. Oramah lamented that it was incomprehensible that in a continent with abundant oil, gas, solar hydro resources, the bulk of the population still lacks access to reliable and affordable energy. He said that the continent lacks extensive traditional energy infrastructure, but stressed that this presents an opportunity for leapfrogging in a more efficient way to renewable technology. “Our aspiration in the area of energy security and energy transition will remain aspiration unless we have access to adequate funding resources that we control. With a lot of international banks withdrawing funding out of the oil and gas sector, the investment in the industry has become severely limited with the corresponding impact on exploration and production. Afreximbank has intervened in a big way, quickly becoming the largest financier of oil and gas deals in the continent. The support provided to the sector by the bank is in excess of 30 billion US dollars. Nigeria has been one of the largest beneficiaries accounting for almost 60 percent of the total funding of the sector. And it’s important to the point that afreximbank has been able to make those modest contributions in the oil and gas sector because the bank is predominantly African in ownership and control”, he stated.

He said that Afreximbank would be managing the proposed Africa Energy Bank to ensure its best chance of success. “The strategic goal of the Africa Energy Bank is to play a leadership role in shaping the energy landscape in Africa through strategic partnership with proven African and international financial institutions and investors and also to provide sustainable financing in this area of the oil and gas sector. The Africa energy bank will need considerable support to get off the ground. We will need support from member states to achieve the level of capitalisation that is adequate to support the energy sector”, he added.

On Aba Prof. Benedict Oramah, said “Afreximbank is proud to be part of this great milestone achievement in Nigeria. The 141MW Aba IPP underscores what can be achieved when public and private sector stakeholders join forces to impact humanity. As champions of trade and industrialisation initiatives in Africa, we believe that it is projects like this embedded IPP that will catalyse trade and economic development in Nigeria and across the region.”  The Aba IPP is unique as it is the only electricity company in Nigeria that is fully vertically integrated with embedded generation and distribution capabilities. This model ensures the Aba IPP can supply power directly to its immediate community, prioritising local needs and distributing surplus power to Nigeria’s national power grid. This ground-breaking approach ensures constant power supply in the ring-fenced area and  addressing the challenges associated with the national power grid. Furthermore, the integrated structure fosters value creation through improved cost management at various stages in the energy value chain: generation, distribution, and collection.

The Aba IPP is equipped with renowned world class infrastructure including three GE LM6000 Gas turbines, with a capacity to produce up to 47MW each. The power plant is also equipped with a 27km gas pipeline to ensure consistent fuel supply, three rehabilitated  distribution  substations, five new additional substations and 140km of 33kV/11kV lines using fibre optic cables for seamless data communication. Strategically positioned in the industrial South-Eastern Nigeria, the Aba metropolis is one of the most commercial areas in West Africa, renowned for its cottage and small-scale industries specialising in the craftsmanship of leather goods, fabrics and related services. In addition to increased power supply and reliability, the Aba IPP is expected to enhance industrialisation efforts and increase production of small and medium-scale enterprises, as well as local industries. According to Geometric power, over 370,000 direct and indirect jobs would be created during the operational phase of the project. In addition, there are significant indirect benefits for the supporting industries including the development of road infrastructure, improvement in local services including enhanced water supply, schools and healthcare facilities, a boost in agricultural productivity due to a more reliable power supply, as well as increased support for rural electrification programs and enhanced tourism and leisure opportunities.

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