China Eximbank provides $114.89 million seller's credit for Phase 1 of 335MW Papalanto Gas-fired Turbine Power Plant Project (Linked to Project ID#173)

On March 27, 2002, Nigeria’s Federal Ministry of Power and Steel awarded an EPC contract to SEPCO III for Phase 1 of the 335MW Papalanto Gas-fired Turbine Power Plant Project. On the same day, Shandong No. 3 Electric Power Construction Corporation (SEPCO III) signed a $114.89 million supplier credit agreement with the Government of Nigeria for Phase 1 of the Papalanto Gas-fired Turbine Power Plant Project. The loan carried the following borrowing terms: a 12 year maturity, a 6 year grace period, and a 6% interest rate. It was reportedly collateralized with the proceeds from oil sales. In order to finance its supplier credit agreement with the Government of Nigeria, SEPCO III secured an export seller’s credit from China Eximbank that covered approximately 65% of the total cost of the project. Phase 1 of Papalanto Gas-fired Turbine Power Plant Project involved the construction of a 8×41.87 MW gas turbine power power plant in Abeokuta within Ogun State (coordinates: 6° 53' 51" N 3° 12' 25.5600" E). Construction began on September 27, 2004. A project company (special purpose vehicle) called Olorunsogo Power Plc was later established to manage the power plant. Then, on May 27, 2007, the power plant was officially commissioned and began adding electricity to the national grid. On March 26, 2008, all eight units of the Papalanto Power Station completed trial operations and began generating electricity. It was originally envisaged that, upon completion, the power project would operate commercially and the proceeds from the sales of electricity would be used for the repayment of the supplier credit. However, implementation delays, gas supply limitations, and insufficient funding at the Power Holding Company of Nigeria (PHCN) resulted in an accumulation of unpaid invoices to SEPCO III. The Government of Nigeria eventually defaulted on its repayment obligations under the supplier credit agreement. However, Nigeria’s Debt Management Office (DMO) later assumed responsibility for these obligations in 2010. Nigeria’s National Council on Privatisation (NCP) later approved a debt-for-equity swap in which SEPCO-Pacific Partners provided an equity contribution for the power plant and the Government of Nigeria would transfer ownership of Olorunsogo Power Plc to SEPCO-Pacific Partners.

Additional details

1. This project is also known as the Papalanto 8×41.87 MW Gas Turbine Power Plant Project or Phase 1 of the Olorunsogo Power Plant Project. The Chinese project title is 尼日利亚Papalanto 8×42MW燃机电站工程 or 的奥贡州（Ogun）电厂Papalanto or 尼日利亚帕帕兰多项目. 2. Nigeria National Petroleum Company, as Nigeria's primary state-owned oil company, is likely the agency accountable for providing the collateralized oil sales.

Number of official sources

17

Number of total sources

31