Independent Power Plant
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COODSynergyn Oil Independent Power Plant (CSIPP)
COODSYNERGYN (the Promoter) initiated in 2014 the setting up of a gas-fired Independent Power Producer (IPP) Project to be located in the western region of Nigeria (the Project). The targeted generation capacity of the Project is 255MW under open-cycle with an option to increase capacity in second phase and/or be converted to a combined cycle if required at a later stage. The Project is also designed to integrate renewable energy generation from solar panels in combination with thermal generation units.
The Plant, promoted by COODSYNERGYN IPP board will be sited in Ijebu-Ode, Ogun State with easy access to good roads for the delivery and installation of the plant. The location of the plant is in close proximity to the Escravos Lagos Pipeline System (ELPS) allowing for easy access to gas. The plant site is also located close to a 330kV substation with sufficient capacity to accommodate the evacuation of produced electricity to the national grid, in an area of fast growing and already sizable unmet electricity demand.
The COODSYNERGYN IPP Project is jointly developed by COODSynergyn Oil West Africa and by Wärtsilä Development and Financial Services (WDFS) (together the Sponsors). WDFS is the development arm of Wärtsilä with decades of experience of developing gas to power IPPs worldwide and in Nigeria, especially in Ogun and Lagos States.
To fast-track the development of the project, the Promoter has secured access to Wärtsilä reciprocating gas engine-generator sets. It is expected that use of these engines will minimize project development time, will provide the generation flexibility much needed in the context of Nigeria Power Sector and will deliver very high efficiency as demonstrated by sizable plants already under operations in Nigeria supplied by Wartsila to renowned companies.
The project is now at the developmental stage to secure the PPA with long-term off-takers and subsequently aiming for financial closure. It is foreseen that the plant will sell power to Nigerian Distribution Companies (DISCOs) under a 20-year Power Purchase Agreement (PPA) in Ogun State targeting unserved demand from energy-intensive industrial and commercial companies in collaboration with local Distribution Company (IBEDC). The possibility to sell electricity in bulk to other Discos is also under in-depth review.
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Project Fundamentals
Project Site and ESIA
The project site is located in the Shagamu Local Government area of Ogun State along the Ijebu-Ode – Benin Express Way. The site has been acquired, and an Environmental and Social Impact Assessment (ESIA) is being wrapped-up. A temporary approval has been granted by the Federal Ministry of Environment. When selecting the site, consideration was given to proximity and access to gas supply and transmission lines with the capacity to absorb the power to be generated by the Plant without a need to upgrade the transmission line.
Gas Supply
The site location is in close proximity to the Escravos Lagos Pipeline System (ELPS) to facilitate access to gas supply. The Gas Aggregation Company Nigeria (GACN) has been approached for allocation of gas through the Domestic Supply Obligation (DSO) of candidate gas suppliers. Discussions and negotiations with gas suppliers are at an advanced stage.
Consents and Permitting
The required licenses and permits from the regulator are being processed, with current focus on completion of the condition's precedent.
Grid Connection
The site location is in proximity to a 330kV substation for easy evacuation of generated power to the transmission grid. A minimum substation capacity of 330kV is required, with capacity to accommodate the power to be generated. An Evacuation study has been completed under guidance of the Transmission Company of Nigeria (TCN) which issued provisional acceptance to connect.
Power Plant Equipment
The project has secured access to 14 (fourteen) new Wärtsilä 50SG reciprocating gas engine-generator sets with a combined capacity to generate circa 255MW of power. It is expected that this will optimize the project development time once the initial project development activities are completed.
Power Purchase Agreement(s)
The project initiated discussions on long-term Power Purchase Agreements (PPAs) with Nigerian Distribution Companies (DISCOs) on long-term supply of electricity to credit-worthy off-takers located in Ogun State in close coordination with IBEDC and with other DISCOs looking to source long-term bulk electricity.
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Project Outline
Project Development and Project Company
COODSynergyn and Wärtsilä Development & Financial Services are jointly developing the Project. As tangible demonstration of the Sponsors’ commitment to the Project, a Joint Development Agreement has been signed, Project Company COODSynergyn IPP has been incorporated and the land for the Project has been secured.
Project Costs and Funding Strategy
The project costs will be funded by a mix of debt and equity financing from various sources mobilized both locally in Nigeria and from abroad.
The Equity (to represent between 25 and 30% of the Project total costs) will be injected by the Sponsors and Strategic Partners.
The Debt (to amount to between 70 and 75% of the Project total costs) is expected to be a mix of commercial bank loans, DFIs debt and local Nigerian funding.
Power Plant turnkey and Operations & Maintenance
The Sponsors have also appointed Wärtsilä as the provider of the Engineering, Procurement & Construction (EPC) and the Operations & Maintenance services (O&M).
Wärtsilä – Overview
Wärtsilä is a world leader in modern, highly efficient, and dynamic reciprocating engines and hybrid solutions, with an installed base of thermal plants of 77 GW in 170 countries. Wärtsilä provides customers with fast track EPC deliveries and long-term operation and maintenance agreements, ensuring the optimal performance of their power plants.
Wärtsilä has installed more than 7 GW in Africa, and in Nigeria, Wärtsilä has an installed base of more than 500 MW, serviced by a dedicated organization with more than 1,000 employees.
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Our Approach
Based on our experience with similar greenfield projects, we have categorized the activities that are required to complete the development of the Project as shown in the illustration below.
1. Pre- Construction Development
Set the foundations of the Project
(implement robust Joint Development Agreement, define lean and comprehensive Development Budget, establish detailed Project Development Plan, incorporate Project Company, develop detailed Financial Model matching DFIs and other lenders requirements, set-up experienced Project Team and solid Governance, prepare Project Information…)
COMPLETED
Confirm the merits of the Project and perform the pre-feasibility study
(secure land ideally located, conduct grid evacuation study and obtain provisional acceptance to connect from TCN, complete ESIA study meeting the requirement of the Federal Ministry of Environment as well as IFC Standards requirement, firm-up a long-term gas supply arrangement, obtain Generation Licence from NERC…)
IN PROCESS
Negotiate key contracts and establish project financing including relevant credit enhancement
(negotiate EPC and O&M contracts, negotiate Gas Supply Arrangement, negotiate PPA/PCOA, define project financing structure, approach financiers and negotiate financing contracts…)
IN PROCESS
2. Construction
Complete all necessary tasks required before EPC Contract can be fully effective
(obtain relevant permits and authorizations, make down-payment, obtain blessing from independent engineer as required by Lenders and the Promoter)
Construction
Wärtsilä will deliver the Power Plant under full EPC, guaranteeing the timely construction of the Power Plant and high standards.
3. Operations and Optimization
Operation & Maintenance
Wärtsilä will provide O&M service to the Project under long-term arrangement giving comfort to all Project stakeholders.
(Drawdown of working capital funding; Fund reserve accounts movements; Commence Operation and sale of power generated; Commence principal repayment and interest service)
Further Optimization
(Optimise capital structure via possible refinancing to exploit the lower risk profile of the project at this phase)
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Indicative Project Financing and Contract Structure
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Indicative Layout Of The Plant
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