Experts: Nigeria’s Energy Projects Need Bankability, Not Just Capital
Peter Uzoho Nigeria’s next wave of energy investments will depend less on the availability of capital than on the ability to make projects bankable, energy experts have said, citing the
Energy experts in Nigeria have emphasized that the country's upcoming energy investments must prioritize bankability over mere capital. The Dangote Refinery serves as a prime example of how large-scale infrastructure can be privately financed without sovereign guarantees when the project is structurally sound. The refinery, with a capacity of 650,000 barrels per day, was built alongside critical infrastructure like a port, power plant, and roads. This approach addressed potential constraints that could have hindered the project's success.
Dr Lekan Aluko, CEO of Petrovision, highlighted the importance of addressing the technical and commercial liabilities of existing refineries. He stressed that investors would require comprehensive information on the condition of brownfield assets, the cost of rehabilitation, the necessary technology, implementation timeline, and economic competitiveness post-rehabilitation.
Aluko identified the key requirements for robust projects as strong governance, sufficient sponsor commitment, credible execution track record, and transparent risk management.
However, Aluko cautioned against applying the same financing model to state-owned refineries in Port Harcourt, Warri, and Kaduna. These refineries, with a combined nameplate capacity of 445,000 barrels per day, have undergone years of rehabilitation efforts. The Nigerian National Petroleum Company Limited (NNPC) is currently seeking technical and financial partners to restore these operations.
The experts extended the bankability challenge to the power sector, where inadequate grid reliability has led industrial operators to rely on captive power generation. Chidi Amudo, CEO of Mudozangi, emphasized the level of commitment required from investors in major infrastructure projects. He pointed out that prospective investors in the power sector remain concerned about the market's ability to guarantee payment for delivered electricity.
Dr Akindele Akintoye, Chairman of Platform Capital, stressed that the Nigerian business environment often demands infrastructure and systems beyond the immediate project scope. He referenced the Dangote Refinery's experience, illustrating how investors sometimes have to create the necessary ecosystem to make a major project viable.
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