Seven Energy and its wholly-owned subsidiaries, Seven Energy Finance Limited and Accugas Ltd. announced that all the conditions precedent to the long-term Gas Sales Agreement (GSA) for the supply of gas by Accugas to the Calabar Nigerian Integrated Power Project (Calabar NIPP)have been satisfied. According to Seven, the start date of the Calabar GSA was September 22.
The Calabar GSA is supported by a World Bank Partial Risk Guarantee (PRG). The PRG, which has the backing of the government of Nigeria, is a financial instrument that will secure the supply of up to 131 Mmcf/d of natural gas under the Calabar GSA, thereby enabling the consistent generation of up to 561 MW of electricity to the national grid, representing around 15% of current power generation in Nigeria.
This arrangement, which guarantees payments to Accugas for gas supply, is backed by the government and the International Development Agency of the World Bank. It is the first of its kind for gas supply in Nigeria and is a demonstration of the Nigerian government’s commitment to increasing power supply in the country and stabilizing the ‘gas to power’ value chain.
To date, Accugas has been supplying gas to Calabar NIPP under an interim gas sales agreement, with average deliveries in 2017 to date of 45 Mmcf/d. The Calabar GSA includes a 90-business day grace period during which the PRG cannot be called upon.