Transcript Understanding the Role of Banks in the Privatisation Process

Understanding the Role of Banks in
the Privatization Process
Dr. David Ige
Ag. Managing Director
Gas Aggregation Company Nigeria Limited (GACN)
Table of Contents
■ Gas Supply Availability
■ Commercial Arrangements for Gas to Power
■ Role of Financial Institutions
■ Gas Aggregation Company Nigeria Limited
■ Contact Details
2
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
3
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.
4
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
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
Table of Contents
■ Gas Supply Availability
■ Commercial Arrangements for Gas to Power
■ Role of Financial Institutions
■ Gas Aggregation Company Nigeria Limited
■ Contact Details
7
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
8
Table of Contents
■ Gas Supply Availability
■ Commercial Arrangements for Gas to Power
■ Role of Financial Institutions
■ Gas Aggregation Company Nigeria Limited
■ Contact Details
9
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
Table of Contents
■ Gas Supply Availability
■ Commercial Arrangements for Gas to Power
■ Role of Financial Institutions
■ Gas Aggregation Company Nigeria Limited
■ Contact Details
11
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
Contact Details
Address:
Telephone:
Email:
1B, Malcolm Fraser Street, Asokoro District, Abuja, Nigeria
+234 (9) 8759045
[email protected]
Contact Persons:
- Management – Tolulope LUKANMBI
email: [email protected]
- Management – Solomon MAKINDE
email: [email protected]
13
THANK YOU
14
Back Up Slides
15
DSO Sources of Gas for Potential Investors
Major New Gas Supply Projects
Breakdown of Gas Supply Plan


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
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
Gas Infrastructure Programme for Flexible
Supply
 [2]. Ob/Ob – Oben Link
 Pipeline will bridge the East and West.
Excess gas availability in East.
 Tendering process almost concluded for
pipeline
 [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 AjaokutaKano Pipeline
[3].
Link
Eastern
Network
 [3]
. Link
to to
Eastern
Network
 22projects
here
– the
Northern
projectsincluded
included
here
– the
Northern
Option
andand
the the
Ob/Ob
Optionpipe
pipelink
link(NOPL)
(NOPL)
Ob/Ob
CPF
CPFtotoNOPL
NOPL
 Will
enable
gas
specification
andand
Will enabledrydry
gas
specification
capacity
to to
over
300mmcf/d
to east
capacityboost
boost
over
300mmcf/d
to
 [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
east
Ob/Ob
 [4] Offshore Oso to QIT link
• Enable additional 300mmcf/d from Exxon
by end 2013
• Links Oso to QIT in Akwa Ibom
• ELPS-A loping to 600mmcf/d capacity
ongoing and on track for end Q1 2011
• Will enable additional supplies from
Escravos axis
18
Securitization: World Bank PRG Structure
PRG Revolving Standby L/C Facility
Indemnity
Agreement
FGN
(Ministry of Finance)
IDA
PHCN / Genco
GSA
Standby
Gas Seller
L/C
L/C
(Commercial) Bank
L/C Guarantee
Agreement
(joint buyers)
Project Agreement
PRG
Contractual Agreements with no regular Payment flows
Contractual Agreements & regular Project Payment flows
Payment flows in the event of a Breach of the Power Purchase Agreement
Source: World Bank Presentation