Shiroro Hydroelectric Power Plant Receives N8.5 Billion Boost

Shiroro Hydroelectric Power Plant, Niger State, has received a N8.5 billion investment boost as its operators, North South Power Company Limited’s (NSP) issue Green Bond to optimize its output.

The 15-year tenured bond with 15.60% yield was issued under a 50billion Debt Issuance Programme.

It was made possible through the guarantee of InfraCredit, a ‘AAA’ rated infrastructure credit enhancement facility backed by the Nigeria Sovereign Investment Authority, GuarantCo.

NSP is the operator of a 30-year concession on the 600MW Shiroro Hydroelectric Power Plant. The NSIA said in Abuja, yesterday, that with InfraCredit’s guarantee, the Series 1 Green Bonds was accorded a ‘AAA’ credit rating by Agusto & Co. and Global Credit Ratings Co. and issued on 27th February 2019 as the first certified corporate green bond and the longest tenored (15-year) corporate bond issued in the Nigerian debt capital markets approved by the SEC.

The Series 1 Green Bonds was 160% subscribed with firm commitments from 15 institutional investors including eleven 11 pension funds and priced at 70 basis point spread.

According to the authority, the development of the Green Bond Framework and the pre-issuance verifications were obtained through technical assistance support from the African Local Currency Bond Fund, an initiative of KfW Development Bank. The Executive Vice Chairman and CEO of North South Power Company Limited, Engr. Olubunmi Peters, noted “the success of the bond issuance was a significant milestone in the company’s long-term corporate strategy, demonstrating its market leadership, innovation and commitment to the highest standards of environmental, social and corporate governance.

“With the completion of the Series 1 Guaranteed Green Infrastructure Bonds issuance, the company has established a long-envisioned link with a more sustainable long-term, local currency financing required to implement its ambitious strategic power generation expansion plan through the capital markets.”

According to the Chief Executive Officer of InfraCredit, Chinua Azubike, “Infrastructure assets like Shiroro Hydroelectric Power Plant generate social, environmental and economic impact, such as contributing to greenhouse gas emissions reduction, revitalising disenfranchised areas, improving access to services and creating employment. Shiroro Hydro is an extremely essential and resilient asset with a 30-year consistent production history. North South Power, with the acquisition of a 30-year concession in 2013, has demonstrated the competence and ability to deliver on its business targets from restoring capacity target to 600MW and a 45 percent increase in power generation”. Chinua Azubike further noted: “We believe that a sustainable and inclusive implementation of the eligible customer framework in a manner that generates economic benefits for all stakeholders will accelerate the industry’s strategic growth.

With the success of this first-in-kind transaction, InfraCredit has further demonstrated its pioneering commitment to promoting financial inclusion, by bringing North South Power, a first-time issuer to the domestic bond market; financial deepening, by extending bond tenors for corporates to 15 years while broadening the pension fund investor base; and financial innovation, by introducing ‘corporate green bonds’ a new fixed income instrument in the Nigerian corporate bond market”.

In his comments, Fund Manager, African Local Currency Bond Fund, James Doree said, “The first corporate green bond in Nigeria, issued by North South Power and supported by InfraCredit, sets a benchmark for the domestic and regional capital market. “North South Power’s ongoing investments in the Shiroro power station since 2013 have restored nameplate capacity, with minimal environmental impact, and NSP is now able to generate more than 2,000 GWh on an annual basis.”

Source: Vanguard