Firing Up the Afam Power Plants: Power Africa Support Brings $344 Million Power Transaction to Financial Close in Nigeria
Clustered in the Rivers State of Nigeria are the Afam power plants, a group of gas-fired thermal power generating facilities with a combined installed capacity of 987.2 megawatts (MW), enough to power more than 600,000 homes.
In 2013, the Federal Government of Nigeria agreed to sell the Afam power plants through a share acquisition, but following a three-year delay in the sale process, the purchasing company withdrew from the agreement.
Subsequently, in 2017, when the National Council on Privatization approved a 100 percent share acquisition sale of the Afam Electricity Generation Company, the Nigeria Bureau of Public Enterprises engaged Power Africa to provide technical advisory support to evaluate submitted proposals, select a preferred bidder, and ensure that the transaction was a success.
“By acting as an independent facilitator and advisor to this transaction, we were able to provide inputs on leading international practice, evaluate the Performance Agreement to ensure that implementation commitments and milestones were accurately captured, and that any potential gaps were highlighted,” explained David Rogers, Deputy Director, Economic Growth and Environment Office, USAID/Nigeria.
Following extensive review, Transcorp Power Consortium emerged as the preferred bidder to purchase the Afam Electricity Generation Company for a bid price of 105.3 billion naira, or $344 million. Power Africa continued to support the Nigeria Bureau of Public Enterprises and Transcorp in facilitating the transaction to financial close.
“Power Africa was instrumental in providing ongoing support to the Bureau for the Afam privatization transaction,” shared Yunana Malo, Director of Energy at the Bureau of Public Enterprises. “The team provided insights, analysis, and knowledge that expedited the transaction to financial close and ensured that the Federal Government of Nigeria received full value from the transaction.”
Transcorp Power has committed to the commissioning, capacity recovery, and full rehabilitation of Afam Electricity Generation Company and has proposed to increase available capacity of Afam Power Plc., one of the power plants, from its current 110 MW capacity to 726 MW within five years following acquisition, and commission the 240 MW Afam Three Fast Power by the second year of acquisition.
“At Transcorp, the Nigerian power sector is one that is close to our hearts and is deeply aligned with our purpose of Improving lives and Transforming Nigeria,” Transcorp President and CEO, Valentine Ozigbo, explained. “As stated by our Chairman, Tony O. Elumelu, ‘If we fix power, we fix Nigeria.’ This sums up our interest in this sector. This investment reiterates our commitment to our strategic goal of contributing at least 25 percent of power generation in Nigeria.”
Transcorp and the Bureau of Public Enterprises held a signing ceremony on November 5, 2020, at the Presidential Villa, signaling the beginning of bright path forward for the Afam power plants.
“As a part of this administration’s commitment to accelerate reforms in the power sector, the National Council on Privatization, which I chair, had approved the share sale and purchase agreements for the privatization of Afam Power, and Afam Three Power Limited to Transcorp Power Consortium. At the [signing] event, I emphasized our dedication as a government to improve the private investment environment in the country. We will continue to work on Ease of Doing Business reforms to drive foreign investment, while also encouraging our local investors — a more reliable metric in measuring how well we are doing in this regard,” shared Vice President Yemi Osinbajo.
Power Africa continues to lead and support activities designed to strengthen Nigeria’s energy sector, including initiatives to increase electricity generation, build and enhance critical transmission infrastructure, and improve financial and operational performance at distribution utilities.
“We are very appreciative of the knowledge and experience Power Africa has brought to the Bureau,” stated Yunana Malo, Director of Energy at the Bureau of Public Enterprises.“ We look forward to continuing this relationship as we work together to improve the power sector for the social and economic growth of Nigeria.”