Seven Energy International Limited, an indigenous Nigerian integrated gas company, has secured a $495 million loan from a consortium of Nigerian and international bank to boost gas supply in the country.
The loan is provided by: First Bank, Ecobank, United Bank for Africa, Union Bank, FCMB, FBN Bank UK and Union Bank UK, the financial adviser on the deal disclosed on Wednesday.
Seven Energy informed few days ago that it was set to boost gas supply small and medium enterprises (SMEs) in Port Harcourt and Aba areas in Rivers and Abia States, respectively.
The company plans to buy gas fields along with the related infrastructure and pipelines so it can sell gas into the domestic market for use in power generation and industrial consumption.
Demand for gas in Nigeria is expected to rise to three million standard cubic feet (scuf) per day by 2017 as gas-fired power plants ramp up generation, industry officials say. Gas demand has risen to 1.2 billion scuf per day four times the 300 million of six years ago.
In order to end decades of blackouts which have hampered economic growth, Nigeria privatised its electricity sector 18 months ago. However, most of the plants sold were gas-fired and operating below capacity due to inadequate gas supply.
Part of the new debt will also be used to refinance existing loans and fund working capital.
Last year, the oil and gas company secured $255 million from equity investors, including Singapore state investor Temasek Holdings, to help build up its gas business.
Seven Energy has continued to champion an industrial gas revolution through the development and production of natural gas, and, critically, its commercialisation through investment in processing and distribution infrastructure, where the company has invested over $1 billion in the south east region of the Niger Delta in the last five years through its subsidiary, Accugas Limited.
The Managing Director of Accugas, Steve Tierney, explained that the company intends to boost gas supply SMEs because it recognises the significant contribution of SMEs to job creation and income growth.