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Portfolio/Accugas

USD 50m Debt Service Reserve Account (DSRA) guarantee for the USD 450m Accugas IV term loan facility. The DSRA guarantee freed up cash to enable Accugas to finish the construction of a new pipeline and increase the supply of domestic gas to Nigeria’s power sector.

Accugas
Energy
Nigeria

Overview

Date

December 2016

Country

Nigeria

GuarantCo Guaranteed Amount

USD 50 million

Total Transaction Size

USD 50 million

Beneficiaries & Financing Partners

Five Nigerian banks

GuarantCo Benefits

This is the first time the DSRA guarantee has been deployed in Nigeria and provides a more efficient method of financing the DSRA than trapping cash.  By releasing the cash, Accugas was able to complete the construction of its pipeline and it also provided much needed dollars to ensure timely debt service to the local banks. The transaction involved five local Nigerian banks and these have all seen how GuarantCo has structured the transaction which should help build capacity.  GuarantCo is now exploring other options with the company to help optimise if financing.

Development Benefits

Accugas is the sole supplier of gas to over 1GW of power generation and to the UNICEM cement plant which produces over 5 million tonnes of cement per annum.  It is therefore a significant core infrastructure requirement for Nigeria and supports a stable gas supply network in the Niger Delta region, which is critical for helping Nigeria return to economic growth.

Domestic gas for electricity generation is a priority sector for Nigeria. Only 9% of Nigeria’s gas production is currently being used for power generation, which is less than the amount being flared and about 1/5th of the amount being exported. This is largely due to the lack of gas processing and transportation infrastructure. 

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