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Understanding the Role of Banks in the Privatization Process
Dr. David IgeAg. Managing Director
Gas Aggregation Company Nigeria Limited (GACN)
■ Gas Supply Availability
■ Commercial Arrangements for Gas to Power
■ Role of Financial Institutions
■ Gas Aggregation Company Nigeria Limited
■ Contact Details
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Table of Contents
The Gas Resource Base
Nigerian Gas Reserves BreakdownAssociated Gas = 97TCFNon-Associated Gas = 90TCFTotal (P1+P2) = 187TCF
Nigeria’s gas potential is enormous. Strategy is to leverage this gas resource significantly for economic growth, with Power Sector being a key part of that agenda
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The nation’s gas agenda is robust. It puts gas-to-power at the core, but also envisions an aggressive gas based industrial growth. This in turn will drive further growth of power demand.
National Aspiration for Gas
Mutually-Reinforcing Cycle of Growth (Gas-Power-Industry-Power-Gas)
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About 3bcf/d targeted at Power Sector with existing PHCN plants being cardinal base load consumers of the gas. Additional gas will come from other sources such as Independents etc.
Gas Availability to Power Sector
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3 sources of gas have been identified for potential investors in the Power sector.
Most dominant source in the short/medium term is the DSO
Sources of Gas for Potential Investors
■ Gas Supply Availability
■ Commercial Arrangements for Gas to Power
■ Role of Financial Institutions
■ Gas Aggregation Company Nigeria Limited
■ Contact Details
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Table of Contents
Commercial Arrangements for Gas to Power
Access to gas supply by power plant developers All existing PHCN plants have a comprehensive gas supply plan
Framework for gas assures long run availability for subsequent expansions
Bankable Gas Supply Agreements Pricing Framework
Securitization mechanism for commodity payment default
Fairly standardized terms, enable speedy close-out of negotiations
Gas Transportation Contract based Gas Transportation services
Finalization of the Gas Transportation Network Code
Development of integrated Gas Transportation Network
Redefined the Commercial Framework for domestic gas supply
to assure long run sustainability of supply
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■ Gas Supply Availability
■ Commercial Arrangements for Gas to Power
■ Role of Financial Institutions
■ Gas Aggregation Company Nigeria Limited
■ Contact Details
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Table of Contents
Role of Financial Institutions
Funding Access to long term funds
Structured long term debt
Working Capital requirements
Collaboration on loan syndication
Securitization
Understanding transactions of each market segment Power generation, Transmission and distribution (LV Lines, Transformers,
metering)
Financial institutions are crucial to the development of the power
sector
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■ Gas Supply Availability
■ Commercial Arrangements for Gas to Power
■ Role of Financial Institutions
■ Gas Aggregation Company Nigeria Limited
■ Contact Details
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Table of Contents
Role of GACN in Domestic Gas Market
Was created to manage Domestic Gas Supply obligations volumes
Focal point for Gas Buyers to access DGSO volumes for domestic market
use
Core activities
Coordinate process for wholesale gas supply from Producers to eligible Buyers
Ensuring a balanced growth of all critical sectors of the economy: Power, Gas
Based Industries and Local Distribution Companies
Conduct due diligence assessment on eligible Gas Buyers
Allocate available gas from the DSO to credible buyers successful on assessment
Facilitate the expeditious execution of the gas supply and gas transportation between
the buyer, seller and transporter respectively
Operational since Jan 2010
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Address: 1B, Malcolm Fraser Street, Asokoro District, Abuja, Nigeria
Telephone: +234 (9) 8759045
Email: [email protected]
Contact Persons:
- Management – Tolulope LUKANMBI
email: [email protected]
- Management – Solomon MAKINDE
email: [email protected]
Contact Details
THANK YOU
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Back Up Slides
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DSO supply plan comprises existing, many ongoing gas projects and a few major new gas development projects which are about to take off.
70% of this short/medium term plan is targeted at the Power Sector (about 3bcf/d by 2015)
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DSO Sources of Gas for Potential Investors
Breakdown of Gas Supply Plan Major New Gas Supply Projects
To assure sustainability of gas supply, a revised transitional pricing structure is in place for gas to Power. Aspiration as market develops is ‘willing buyer willing seller’ prices.
Transitional Gas Pricing
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• ELPS-A loping to 600mmcf/d capacity ongoing and on track for end Q1 2011
• Will enable additional supplies from Escravos axis
Ob/Ob
[1] ELPS Expansion to 2bcf/d• ELPS-C capacity is 1000mmcf/d. • Expansion to 2000mmcf/d by 2012
will enable growth of supply to Western Power plants
[2]. Ob/Ob – Oben Link Pipeline will bridge the East and West.
Excess gas availability in East. Tendering process almost concluded for
pipeline
[3]. Link to Eastern Network 2 projects included here – the Northern
Option pipe link (NOPL) and the Ob/Ob CPF to NOPL
Will enable dry gas specification and capacity boost to over 300mmcf/d to east
[3]. Link to Eastern Network 2 projects included here – the Northern
Option pipe link (NOPL) and the Ob/Ob CPF to NOPL
Will enable dry gas specification and capacity boost to over 300mmcf/d to east
[4] Offshore Oso to QIT link • Enable additional 300mmcf/d from Exxon
by end 2013• Links Oso to QIT in Akwa Ibom
[5]. QIT-Ajaokuta-Kano Line Over 1000km line to evacuate gas
from Exxon to eastern and northern power plants
Gas can also be fed from the
existing Oben- Ajaokuta pipeline
to the North through the Ajaokuta-
Kano Pipeline
Gas Infrastructure Programme for Flexible Supply
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Securitization: World Bank PRG Structure
Indemnity Agreement IDA
FGN (Ministry of Finance)
L/C(Commercial) Bank
PHCN / Genco(joint buyers)
L/C
Gu
aran
tee
Agr
eem
ent
Standby
L/C
L/C Reimbursem
ent
& Credit Agreement
Gas Seller
GSA
Project Agreement PRG
Contractual Agreements with no regular Payment flows
Payment flows in the event of a Breach of the Power Purchase Agreement
Contractual Agreements & regular Project Payment flows
Source: World Bank Presentation
PRG Revolving Standby L/C Facility
