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AFC Co-Arranges USD 215 million Financing for Transcorp’s Ughelli Power Plc

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The Africa Finance Corporation (AFC) in conjunction with United Bank of Africa Plc, as co-arrangers, First City Monument Bank (FCMB) and Fidelity Bank as co-financiers, has provided a USD 215 million debt financing facility for the acquisition of Ughelli Power Plc. The aggregate commitment of AFC for the acquisition is USD55 million.

Nigeria commenced restructuring and reform of its electricity sector in 2000 with the issuance of the National Electric Power Policy (NEPP) to unbundle the sector and establish a regulator, with a mandate to create and develop a competitive electricity market. The provisions of the NEPP were subsequently enacted in the Electric Power Sector Reform Act 2005 (EPSR Act), providing the key legal and regulatory framework for the reform, including the establishment of the Nigeria Electricity Regulatory Commission, paving the way for private sector participation in the power sector. Ughelli Power Plc is one of six power generation limited liability companies established under the provisions of the EPSR Act following the unbundling of the vertically integrated PHCN.

Ughelli Power Plc is a gas fired thermal power plant acquired by Transnational Corporation of Nigeria Plc (Transcorp) in the first round of the Federal Government of Nigeria’s privatisation of power generation assets formerly owned by the Power Holding Company of Nigeria (PHCN). Ughelli Power Plc was incorporated in 2005, is situated in Delta State and has an installed capacity of approximately 900MW. It currently generates approximately 8% of the total electricity within the Nigerian national grid.

Transcorp is the lead sponsor in the Transcorp Ughelli Power consortium, which will be purchasing 100% of the shares in Ughelli Power Plc. Transcorp, incorporated in 2004, is a diversified conglomerate with strategic investments and core interests in the hospitality, agribusiness and energy sectors.

AFC, a multilateral finance institution, was established in 2007 and has a current capital base of US$1.2 billion. It was established to be the catalyst for private sector infrastructure investment across Africa. AFC fills a critical void in providing project structuring expertise and risk capital to address Africa’s infrastructure development needs, and is increasingly being seen as the benchmark institution for private sector investment in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications.

Andrew Alli, President and Chief Executive Officer of the Africa Finance Corporation, stated: “AFC’s long term vision is to help address Africa’s infrastructure deficit and ensure sustainable economic growth for the continent. Growth of the Nigerian economy cannot be fully realised without an efficient and functioning power sector. Power is one of AFC’s high priority sectors for investment, and arguably Africa’s most significant need.

To this end AFC stands as both an advocate and support of privatisation of the power sector in Nigeria, and has partnered with the US Government through USAID in the USD7 billion US Presidential “Power Africa Initiative” to accelerate investment in Africa’s power sector over the next five years and increase access to clean, geothermal, hydro, wind and solar energy. AFC’s investment in Ughelli power will contribute towards reducing Nigeria’s chronic power deficit, foster economic growth and create employment.

AFC was created to address the infrastructure investment deficit and is privileged to be providing an African private sector investment solution, to drive economic growth and industrial development in Nigeria.”

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