World Bank, Seven Energy in $200m gas infrastructure deal
The World Bank and a local energy company, Seven Energy International Limited (Seven Energy), have sealed a gas infrastructure financing deal, the banks’s first engagement in Nigeria’s gas sector.
Under the deal, the Multilateral Investment Guarantee Agency, MIGA – the political risk insurance and credit enhancement arm of the Bank Group – would be providing a guarantee of $200 million against the risk of expropriation to Seven Energy’s wholly-owned subsidiary, Accugas Ltd.
A statement from the company obtained by our correspondent in Abuja noted that Seven Energy’s processing facility and pipelines have commenced delivering gas to three power stations and two manufacturing plants, and are expected to have a significant development impact in a country suffering from a severe energy shortage due to the lack of infrastructure to bring gas to the domestic market.
It noted that, “Most international oil and gas companies in Nigeria are focused on offshore oil, while gas is often considered a byproduct and re-injected, liquified for export, or flared.
“Yet, despite the country’s enormous natural gas reserves, only one third of power is supplied from the national grid. Those connected to the grid face multiple daily power cuts and 55 percent of the population has no energy access. In response, the Nigerian government created the Gas Master Plan in 2009 to increase the gas supply and jumpstart investments in gas infrastructure through market-based pricing, strengthened regulation, increased contract enforceability, and better-aligned incentives.”
The investment has a strong environmental profile, as Seven Energy’s operations will reduce gas flaring and displace more-polluting fuels such as diesel and biomass.
MIGA’s backing of Seven Energy forms part of new generation of jointly developed World Bank Group solutions. In addition to MIGA’s insurance, the World Bank supports the country’s sector reforms while the IFC itself and an IFC-managed fund have jointly invested in Seven Energy in Nigeria.