Efforts to guarantee stable electricity supply may have received the desired boost as Savannah Petroleum Plc, has announced that Accugas has entered into a new interruptible gas sales agreement (“IGSA”) with First Independent Power Limited (“FIPL”) for the provision of gas sales to the FIPL Afam power plant (“FIPL Afam”).
FIPL is an affiliate company of Sahara Group, a leading international energy and infrastructure conglomerate with operations in over 42 countries across Africa, the Middle East, Europe and Asia.
Afam has a current power generation capacity of 180MW. The FIPL IGSA envisages the supply of gas (produced by Uquo, with a maximum daily nominated quantity of 35 mmscfd or approximately 5.8 mmboed) by Accugas to FIPL Afam in order to augment its existing gas supply on an interruptible basis for an initial term of one year with the ability to extend upon mutual agreement.
Securing an additional gas supplier to the FIPL Afam plant is another demonstration of FIPL’s commitment to its vision of being a stable power generation significantly contributing to the national grid.
Accugas currently sells to three customers, Calabar Nigerian National Integrated Power Plant, National Integrated Power Project (a Niger Delta Power Holding Company-owned power station), the Mfamosing Cement Plant (located in Cross River State, owned by Lafarge Africa Plc) and Ibom Power (a power station owned by Akwa Ibom State), for an aggregate maintenance-adjusted 2020 take or pay volume of 141.4 mmscfd.
The commercial terms of the FIPL IGSA are expected to augment the weighted average profitability of the Accugas portfolio while Accugas’ sales volumes, revenues and cash flows are expected to increase with no incremental capital expenditure.
Accugas continues to make good progress in relation to gas supply to several other potential new customers and further updates will be provided in due course.
Commenting on the deal, CEO of Savannah Petroleum Andrew Knott said: “I am delighted to announce the IGSA with FIPL, representing the first new gas sales agreement that the Accugas business has signed in over five years, and we look forward to partnering with the Sahara Group, who have notable experience with energy and infrastructure projects in Africa.
“We are confident that this will be the first of several new gas sales agreements signed over the course of 2020 and, through Accugas, we aim to be seen as the gas supplier of choice to the power sector in Nigeria.”
Group Managing Director, Sahara Power Group, Mr. Kola Adesina said: “We are delighted to be working with Accugas on this project. It is another demonstration of our commitment to bringing energy to life by facilitating economic activities through our power business. We remain resolute in our vision to enhance access to sustainable energy in Nigeria and ultimately, across Africa.”