World Bank gives $1billion in risk financing for African gas

The World Bank has set aside more than $1billion in risk financing to back the use of flared gas from oilfields across Africa to generate power.

About two thirds of people do not have electricity in sub-Saharan Africa and the continent is hopeful new gas finds along the east coast can boost power projects. Power shortages are a big impediment to economic growth, and many businesses provide their own power using costly diesel generators.

Anita George, senior director of energy at the bank, said about 700-billion kilowatt hours of power,  equivalent to 80, 000 MW running for the whole year, could be produced from all the gas flared routinely around the world.

Nigeria, Africa’s top oil producer and worst flarer of gas found when extracting oil on the continent, received its first partial risk guarantee from the bank of $145 million in 2013 to support the country’s gas-to-power industry.

Under the ten-year deal, Chevron Nigeria will supply the gas-fired Egbin plant near Lagos to generate electricty in a bid to increase supply in the populous nation where around three quarters of the country’s power comes from gas.

The bank’s guarantees cover private lenders against the risk of a power utility failing to honor its financial obligations. Another two Nigerian projects will bring the total risk financing to $400 million.

“In Nigeria, we have a whole pipeline of gas-to-power projects being developed,” George said.

Flaring around 14.7-billion cubic metres (bcm) of gas annually, Nigeria is ranked second on the global list of worst flaring nations behind Russia, bank officials said.

Nigeria has signaled its intention to curb flaring, which sends tonnes of the greenhouse gas carbon dioxide into the atmosphere, at its oilfields. However, policies that outlaw the practice have yet to be passed by the national assembly.

Besides Nigeria, the bank was also looking at gas projects in Cameroon, Mauritania and Ghana.