Project description
This summary covers an application by Konexa Power Holdings PCC (trading as Konexa) of Mauritius for its equity, shareholder loan, and/or quasi-equity investments in KONEXA NBP 2 LIMITED, a project that provides electricity services to Commercial and Industrial offtakers (the NBP2 Project) and KONEXA SOLAR 2 LIMITED, a solar renewable generation project (the Solar Project) in the Federal Republic of Nigeria (collectively, the Project). The investor seeks cover for up to USD 74.3 million against the risks of transfer restriction, expropriation and war and civil disturbance (including temporary loss of income) for a guarantee period of up to 15 years.
Located in Enugu and Lagos States in Nigeria, the NBP2 Project consists of the ownership, financing, construction, operation, and maintenance of distributed energy and storage systems to be installed within the two Nigerian Breweries sites, and other associated equipment and buildings, and the financing, construction, rehabilitation, upgrade, extension, operation, and maintenance of new and existing electricity lines, substations, and other related interconnection infrastructure.
Located in Niger States in Nigeria, the Solar Project consists of the ownership, financing, construction, operation, and maintenance of a solar power plant, storage systems and interconnection equipment with a capacity of about 40MWp and 6.8MW battery energy storage systems. Under a Trading License Konexa will purchase electricity from the solar power plant and wheel electricity through the grid to Nigerian Breweries in Enugu and Lagos States.
This Summary of Proposed Guarantee does not include the existing Konexa C&I Project (NBP1 Project) in Kaduna State, which was previously disclosed in December 2021 and March 2024.
The Project is expected to deliver an average of 70 GWh annually from new renewable energy resources (the solar power plant) to Nigerian Breweries displacing the existing fossil fuel-based energy systems. Nigerian Breweries is a subsidiary of Heineken and has been a market leader in Nigeria in pursuing renewable energy solutions. The Project will help accelerate the company’s transition to renewable energy while increasing electricity reliability.
MIGA’s risk exposure under the guarantee will be shared with the IDA Private Sector Window (PSW). For more information on the IDA PSW, please access the IDA Private Sector Window website here. The PSW involvement will be via a shared first loss facility that will assist in spreading the risk and result in a reduced cost of the guarantee for the project enterprise. The Project meets the minimum concessionality principle. The amount of subsidy is estimated to be less than – 1.90% of total project cost over the envisaged 15-year guarantee period under IDA19 for the NBP2 Project. It is estimated to be less than 1.23% of the total project cost over the envisaged 15-year guarantee period under IDA21 for the Solar Project.
Environmental Categorization
The Project is a category B under MIGA’s Policy on Environmental and Social Sustainability(2013). Click here for the Project’s Environmental and Social Review Summary.
Development Impact
The Project’s primary development impact stems from its contribution to the government objectives of increasing private sector participation to achieve better reliability, improve the distribution of clean electricity, and bring more customers to the grid. By increasing the supply of renewable energy generation (solar) and displacing fossil-fuel (diesel) based generation, the Project is expected to result in a reduction of around 56 thousand tons of carbon dioxide equivalent per year (tCO2e/year) based on replacement of diesel generation.
In addition, the Project’s innovative business model of generating renewable power and wheeling it through the grid to predetermined offtakers demonstrates that foreign investors can invest in a sector marked by regulatory, operational and financial challenges. Nigeria’s power sector historically has not been financially viable as tariffs were heavily subsidized and suffered from reliability issues, thus discouraging outside investment. However, the Project’s integrated electricity distribution and solar renewable generation model, supported by cost reflective tariffs, and a willing buyer willing seller model, should demonstrate a financially viable approach for private sector participation in the power sector.
The Project is aligned with the WBG Gender Strategy 2024-2030 and its Implementation Plan and will receive a gender flag. Konexa has committed to a Gender Action Plan with interventions designed to increase female participation and representation in the energy sector through targeted recruitment and leadership initiatives.
The Project aligns with the World Bank Group’s (WBG) Country Partnership Framework FY2021-25 in Nigeria under its strategic objectives of promoting jobs and economic transformation and diversification, including increasing access to reliable and sustainable power for households and firms. The guarantee also supports the Maximizing Finance for Development principles, leveraging foreign direct investments in support of an innovative approach to catalyzing renewable energy and reducing the use of scarce public resources.
