Nigeria, the largest economy in Sub-Saharan Africa with GDP of $405 billion and c.180 million people, has recorded remarkable growth (CAGR of 15%) since 2000). Nigeria’s aggregate electricity need has been estimated at c.180,000 Mega Watts (MW) to satisfy its domestic electricity demand.
With an installed capacity of about 11,000 MW, only an estimated 8,000MW of available capacity is operational. Of these, only between 3,000 MW to 4,500 MW are actually being generated due to unavailability of gas, breakdowns and grid constraints which has led to acute shortage of power across the country. Nigeria’s transmission grid is estimated to cover a maximum of 40% of the country.
As a result, Nigerian residents and businesses have turned to self-generation for power supply, generally powered by diesel or petrol generators. An estimated $14 billion is spent annually on inefficient power generation. As a result, power accounts for between 50% to 60% of production costs for manufacturers in Nigeria.
Recent survey of 300 Nigerian Companies reported that companies use diesel to generate electricity on an average of 80% of total working hours.
Notwithstanding the various reforms in the power sector, the sector still grapples with tariff rigidities and transmission and distribution inefficiencies. Customer satisfaction is expected to remain low with shortfalls in collections and the general inability of the grid-based power system to meet its contractual obligations.
The challenge has created a huge off-grid opportunity in the sector, estimated at a potential $9.2B annually. Market advantage is expected to remain with captive power solutions until the challenges hindering reliable and quality grid-based power supply is resolved.
Developing off-grid alternatives to achieve scale and commercial viability is expected to save $4.4B annually for Nigerian homes and businesses and improve access to cleaner power among 350 million people in Sub-Saharan Africa.
Project Highlight
Viathan Group develops and operates captive and embedded (off-grid) power solutions for governmental
Viathan Group develops and operates captive and embedded (off-grid) power solutions for governmental, commercial and residential off-takers across Nigeria, using natural gas as fuel with a combined generation capacity of 50MW.Viathan business model is focused on providing electricity to government-owned entities and facilities, corporates and residential clusters in Nigeria.
10
Billion Naira
Transaction Details
In the transaction, Viathan Group, a first-time issuer, established a NGN 50 billion Medium Term Note Programme and issued a NGN 10.0bn 16.0% Series 1 Senior Guaranteed Fixed Rate Bond (Viathan Bonds) under the programme, thereby successfully accessing the debt capital markets.
The Viathan Bonds is backed by irrevocable and unconditional guarantee of InfraCredit and is accorded ‘AAA’ long term national scale rating by GCR and Agusto & Co and approved by the Nigeria Securities and Exchange Commission. The Bonds is the first corporate infrastructure bonds issued in the Nigerian debt capital markets with a tenor of 10 years, thereby extending the yield curve for corporate debt issuances.
The success of the bond issue has implications for Viathan’s capacity expansion strategy; with 10-year funding at relatively lower borrowing cost, Viathan Group is better positioned to efficiently execute its capacity expansion plan in captive power generation and increase its diversification into gas processing. The Bonds proceeds is utilized to expand Viathan’s generation capacity by 7.5MW, construct a 104,800 scm/day Compressed Natural Gas (CNG) Plant and refinance short term bank debt.
Investor Distribution
Development Impact
