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

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Presentation on theme: "Understanding the Role of Banks in the Privatization Process Dr. David Ige Ag. Managing Director Gas Aggregation Company Nigeria Limited (GACN)"— Presentation transcript:

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

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

3 The Gas Resource Base Nigerian Gas Reserves Breakdown Associated Gas = 97TCF Non-Associated Gas = 90TCF Total (P1+P2) = 187TCF Nigerias 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 3

4 4 The nations 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)

5 5 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

6 6 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

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

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 FrameworkFramework 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 NetworkNetwork Redefined the Commercial Framework for domestic gas supply to assure long run sustainability of supply 8

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

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

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

14 THANK YOU 14

15 Back Up Slides 15

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

17 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 17

18 ELPS-A loping to 600mmcf/d capacity ongoing and on track for end Q ELPS-A loping to 600mmcf/d capacity ongoing and on track for end Q Will enable additional supplies from Escravos axis Will enable additional supplies from Escravos axis ELPS-A loping to 600mmcf/d capacity ongoing and on track for end Q ELPS-A loping to 600mmcf/d capacity ongoing and on track for end Q Will enable additional supplies from Escravos axis Will enable additional supplies from Escravos axis Ob/Ob Ob/Ob [1] ELPS Expansion to 2bcf/d [1] ELPS Expansion to 2bcf/d ELPS-C capacity is 1000mmcf/d. ELPS-C capacity is 1000mmcf/d. Expansion to 2000mmcf/d by 2012 will enable growth of supply to Western Power plants Expansion to 2000mmcf/d by 2012 will enable growth of supply to Western Power plants [1] ELPS Expansion to 2bcf/d [1] ELPS Expansion to 2bcf/d ELPS-C capacity is 1000mmcf/d. ELPS-C capacity is 1000mmcf/d. Expansion to 2000mmcf/d by 2012 will enable growth of supply to Western Power plants Expansion to 2000mmcf/d by 2012 will enable growth of supply to Western Power plants [2]. Ob/Ob – Oben Link [2]. Ob/Ob – Oben Link Pipeline will bridge the East and West. Excess gas availability in East. Pipeline will bridge the East and West. Excess gas availability in East. Tendering process almost concluded for pipeline Tendering process almost concluded for pipeline [2]. Ob/Ob – Oben Link [2]. Ob/Ob – Oben Link Pipeline will bridge the East and West. Excess gas availability in East. Pipeline will bridge the East and West. Excess gas availability in East. Tendering process almost concluded for pipeline Tendering process almost concluded for pipeline [3]. Link to Eastern Network [3]. Link to Eastern Network 2 projects included here – the Northern Option pipe link (NOPL) and the Ob/Ob CPF to NOPL 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 Will enable dry gas specification and capacity boost to over 300mmcf/d to east [3]. Link to Eastern Network [3]. Link to Eastern Network 2 projects included here – the Northern Option pipe link (NOPL) and the Ob/Ob CPF to NOPL 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 Will enable dry gas specification and capacity boost to over 300mmcf/d to east [3]. Link to Eastern Network [3]. Link to Eastern Network 2 projects included here – the Northern Option pipe link (NOPL) and the Ob/Ob CPF to NOPL 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 Will enable dry gas specification and capacity boost to over 300mmcf/d to east [3]. Link to Eastern Network [3]. Link to Eastern Network 2 projects included here – the Northern Option pipe link (NOPL) and the Ob/Ob CPF to NOPL 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 Will enable dry gas specification and capacity boost to over 300mmcf/d to east [4] Offshore Oso to QIT link [4] Offshore Oso to QIT link Enable additional 300mmcf/d from Exxon by end 2013 Enable additional 300mmcf/d from Exxon by end 2013 Links Oso to QIT in Akwa Ibom Links Oso to QIT in Akwa Ibom [4] Offshore Oso to QIT link [4] Offshore Oso to QIT link Enable additional 300mmcf/d from Exxon by end 2013 Enable additional 300mmcf/d from Exxon by end 2013 Links Oso to QIT in Akwa Ibom Links Oso to QIT in Akwa Ibom [5]. QIT-Ajaokuta-Kano Line [5]. QIT-Ajaokuta-Kano Line Over 1000km line to evacuate gas from Exxon to eastern and northern power plants 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 can also be fed from the existing Oben- Ajaokuta pipeline to the North through the Ajaokuta- Kano Pipeline [5]. QIT-Ajaokuta-Kano Line [5]. QIT-Ajaokuta-Kano Line Over 1000km line to evacuate gas from Exxon to eastern and northern power plants 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 can also be fed from the existing Oben- Ajaokuta pipeline to the North through the Ajaokuta- Kano Pipeline Gas Infrastructure Programme for Flexible Supply 18

19 Securitization: World Bank PRG Structure Indemnity Agreement IDA FGN (Ministry of Finance) L/C (Commercial) Bank PHCN / Genco (joint buyers) L/C Guarantee Agreement Standby L/C L/C Reimbursement & 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


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