GTBank underwrites $170 million loan deal for privatisation of Kainji, Jebba power stations
Guaranty Trust Bank Plc (GTBank) is underwriting a $170million debt financing facility to be provided by the Africa Finance Corporation (AFC) for the acquisition of Jebba Power Station and Kainji Power Station by Mainstream Energy Solutions Limited (MESL).
On Friday, GTBank and MESL sealed about N27 billion medium term syndicated acquisition facility, for the purpose of part-financing the concession of the power stations, owned by Kainji Hydro Electric Plc.
The move, which was aimed at consolidating MESL's bid for the takeover of Kainji Hydro Electric, under the current privatization programme, would assist also in paying off the last installment for the power firm, which date was approaching.
The syndication was fully underwritten by GTBank, which also acted as mandated lead arranger on the transaction, while the Africa Finance Corporation acted as co-mandated lead arranger.
Kainji Hydro Electric is one of the 18 unbundled successor companies of the Power Holding Company of Nigeria Plc, which was awarded to MESL under the privatization process and incorporates the right to design, construct, operate and maintain the two power plants.
Commenting on the scheme, the President and Chief Executive Officer, AFC, Andrew Alli, said: '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.'
Alli, who was represented by the Executive Director and General Counsel, AFC, Adesegun Akin-Olugbade, added: 'To this end AFC has partnered with the United States government through the United States Agency for International Development in the $7 billion '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 Kanji power will contribute towards reducing Nigeria's chronic power deficit, foster economic growth and create employment.
The Chairman of MESL, Col. Sani Bello (rtd), said: 'This financing represents an important milestone for the company in its bid to play a key role in the power sector reform initiative of the Federal Government.
'We appreciate the support of Guaranty Trust Bank and Africa Finance Corporation for providing the required financing to support the company's vision to manage and restore the nation's foremost hydro power plants.
We must also acknowledge the significant contribution of the Federal Government of Nigeria, the Federal Ministry of Power, the National Council on Privatisation, the Bureau of Public Enterprises, and the regulatory agencies, who have together created an enabling environment for this acquisition.'
But the Chief Executive Officer of Guaranty Trust Bank, Segun Agbaje, said that the financing underpins the lenders' belief in, and support for the ambition and the long term growth of the MESL and by extension, the growth of the Nigeria's power sector to further catalyse the Nigerian economy.
He noted that pursuit of the company was clear and developmental, hence the financial institution's decision to contribute in its own small way by granting the facility, which agreement was signed at the weekend.