South Korea’s property developer Kingline Power Ltd. said on Sunday that it has signed a power purchase agreement with state-owned Nigerian Bulk Electricity Trading Plc (NBET) in Abuja, the capital city of Nigeria, a move that will help raise $400 million in annual sales over a period of 20 years.

Under the agreement, Kingline Development Nigeria, an overseas subsidiary of Kingline Power, will build a 550 megawatt gas-fired power station in Ondo State with an aim to produce commercial power from 2020. Hyundai Engineering Co. will be in charge of power plant construction worth 378.3 billion won ($348 million) as well as field management and Korea Southern Power Co. of operations and maintenance.

Ondo State is an industrial city located 170 kilometers northeast of Lagos, the economic capital of Nigeria. Kingline will sell power produced at the gas-fuelled power station in Ondo to NBET over a period of 20 years. The developer expects to raise $400 million in annual sales - $8 billion over 20 years. After contract ends, Kingline will be able to sign an additional power purchase agreement with NBET or sell the residual value of the power plant to the local government.

Kingline plans to raise $150 million of project funds totaling $550 million via equity investment while the remaining funds via project financing. Funds will be secured by Kingline and its U.S.-based infrastructure investment partner and project financing will be led by Standard Chartered PLC. After Standard Chartered completes due diligence, multilateral organizations including World Bank and African Development Bank will issue warranty after examination.

By Chung Soon-woo and Lee Eun-joo

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