1. Understanding the Role of Banks in the Privatization Process Dr
Understanding the Role of Banks in the Privatization Process Dr. David Ige Ag. Managing Director Gas Aggregation Company Nigeria Limited (GACN)

2. Table of Contents Gas Supply Availability
Commercial Arrangements for Gas to Power
Role of Financial Institutions
Gas Aggregation Company Nigeria Limited
Contact Details 2 2

3. The Gas Resource Base
Nigerian Gas Reserves Breakdown
Associated Gas = 97TCF
Non-Associated Gas = 90TCF
Total (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

4. National Aspiration for Gas
Mutually-Reinforcing Cycle of Growth (Gas-Power-Industry-Power-Gas)
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.

5. Gas Availability to Power Sector
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. 5 5

6. Sources of Gas for Potential Investors
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 6

7. Table of Contents Gas Supply Availability
Commercial Arrangements for Gas to Power
Role of Financial Institutions
Gas Aggregation Company Nigeria Limited
Contact Details 7 7

8. 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

9. Table of Contents Gas Supply Availability
Commercial Arrangements for Gas to Power
Role of Financial Institutions
Gas Aggregation Company Nigeria Limited
Contact Details 9 9

10. 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 10

11. Table of Contents Gas Supply Availability
Commercial Arrangements for Gas to Power
Role of Financial Institutions
Gas Aggregation Company Nigeria Limited
Contact Details 11 11

12. 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

13. Contact Details
Address: 1B, Malcolm Fraser Street, Asokoro District, Abuja, Nigeria Telephone: +234 (9) Contact Persons: - Management – Tolulope LUKANMBI - Management – Solomon MAKINDE

14. THANK YOU

15. Back Up Slides 15

16. DSO Sources of Gas for Potential Investors
Breakdown of Gas Supply Plan
Major New Gas Supply Projects
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) 16 16

17. Transitional Gas Pricing
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. 17 17

18. Gas Infrastructure Programme for Flexible Supply
[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
[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
[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
ELPS-A loping to 600mmcf/d capacity ongoing and on track for end Q1 2011
Will enable additional supplies from Escravos axis
Ob/Ob
[4] Offshore Oso to QIT link
Enable additional 300mmcf/d from Exxon by end 2013
Links Oso to QIT in Akwa Ibom 18

19. Securitization: World Bank PRG Structure
Nigeria Power & Gas Sectors June 2008
Securitization: World Bank PRG Structure
PRG Revolving Standby L/C Facility
Indemnity Agreement
FGN
(Ministry of Finance)
IDA
PHCN / Genco
(joint buyers)
L/C Reimbursement
& Credit Agreement
L/C Guarantee
Agreement
GSA
Standby
L/C
Gas Seller
L/C
(Commercial) Bank
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 19