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Financial Times : February 4, 2003
By Emeka Ugwuanyi

NLNG Gets N30 Bn Export Guarantee for Expansion

Export Credits Guarantee Department (ECGD) of Britain has given financial backing to the NLNG Plus project saying it will reduce Nigeria's flared gas by 86 million cubic metres when it comes on stream.

The credit agency has signed an agreement to provide guarantees worth L133 million about (N29.53 billion) for the expansion of the Liquefied Natural Gas Plant at Bonny in Rivers State.

The agreement according to a statement from the British High Commission in Nigeria , was signed last week. The expansion project involves trains 4 & 5 of the Nigeria Liquefied Natural Gas Limited and known as NLNG Plus project.

ECGD observed that what informed its involvement in the project is its viability and economic value adding that it will not only provide jobs to many Nigerians, attract hard currency to the country but will drastically reduce the nation's flared gas and help Nigeria meet the Kyoto targets of complete flares down by 2008.

It stated "The expansion will add two new LNG production trains to the three already in place. This means that more than 86 million cubic metres of gas currently being flared into the atmosphere every day during the production of oil - creating fires bright enough to be seen by satellite from space - will now be converted to Liquefied Natural Gas (LNG) for use as fuel and sold."

The statement explained that ECGD is providing cover for UK process engineering company - MW Kellogg Limited to ensure that there is significant British involvement in the NLNG's over L1.24 billion project. BNP Paribas arranged the financing on behalf of ECGD, it said.

Commenting on the project, the British International Trade Minister, Baroness Symons noted , "NLNG Plus will make a major contribution to the reduction of gas flaring and will help Nigeria meet its Kyoto undertaking to halt the practice by 2008. The project will also generate substantial hard currency income for Nigeria, while improving the country's infrastructure through works associated with the plant expansion and job creation."

Symons commended NLNG's community relations saying the company "is taking steps to ensure that local communities share in the benefits of the operation, including a scheme that allows towns near the plant to receive free water and electricity."

"During the process of approving this guarantee, ECGD carried out a thorough and far-reaching scrutiny of the environmental and social attached to this project and is satisfied that the highest standards have been met. This is a sound financial judgement going hand in hand with ECGD business principles," he said.

Meanwhile, the statement declared that "the loan is the largest-ever project finance deal in Sub-Saharan Africa, with L384 million of the total L632 million financing facilities supported by four Export Credit Agencies (ECAs) - ECGD, US Exim, SACE, and Gerling NCM. ECGD has also been working with the African Development Bank, which is providing L62 million to NLNG Plus." Nigerian banks also contributed L99 million into the project which is said to be a big boost for the nation's banking industry.

The two trains (4&5), according to the statement, will transport gas to Europe for use in generating electricity, which will help to replace the coal-powered power stations common in the continent, and consequently help the European countries to meet their Kyoto undertakings. The import will also help Europe diversify its energy supplies, most importantly given the run-down of North Sea supplies.

ECGD, it would be noted, provides insurance against non-payment to UK exporters, arranges finance packages for buyers of UK goods by guaranteeing bank loans and "overseas investment insurance" facility. This facility gives UK investors up to 15 years insurance against political risks.

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