Savannah Energy (SAVE ) today announced that its 80%-owned subsidiary Accugas Limited has commenced gas sales to TransAfam Power Limited (TAPL) for its power plants in Nigeria.
Savannah first announced the agreement on 6 June. TAPL is a licensed power generation company based in Nigeria, and the core investor in the Afam Power Plc and Afam Three Fast Power plants located in Okoloma, Rivers State, Nigeria with total installed capacity of 966MW.
The gas sales agreement (GSA) will see that Accuas supply TAPL with up to 35 MMscfpd of gas on an interruptible basis for an initial term of three months, with the option to extend for a mutually agreed period.
TAPL's assets are connected to the Accugas network via the Nigerian Gas Company pipeline from Ikot Abasi. No further capital expenditure is required by Accugas to deliver gas to TAPL.
Investors reacted well to today's news, with Savannah shares up 4.5% in early trading.
Andrew Knott, CEO of Savannah, commented on today's news:
"I am delighted to report we have already begun first gas sales to TAPL, having signed an agreement at the beginning of this month. This will be the third customer we have commenced new gas supply to in the past month. We have now signed and operationalised GSAs with power plants comprising around 24% of the country's thermal generation capacity (up from 14% at the same time last year) demonstrating our dedication to the Nigerian industry and being the energy partner of choice."
We previously reported on Accugas commencing sales to First Independent Power Limited's (FIPL) Trans Amadi plant. That agreement saw FIPL purchase up to 65 MMscfpd and supply its Trans Amadi, Eleme, and Afam power plants. The three plants have a combined generation capacity of 391 MW.
Earlier this month Savannah published FY21 results, which showed revenue up 6.8% to £230m mainly due to higher gas prices, exceeding previous guidance. Roughly the same revenues are expected in FY22. Average gross daily production from the company's Nigerian operations was 14% higher year on year, and the average realised gas price of $4.19/standard cubic foot was 6% higher year on year.
Outlook
Savannah's 80%-owned Accugas has recorded growth in revenues from gas sales for each of the last five years, with an impressive realised CAGR of 15%. Today's news, combined with new acquisitions in Chad and Cameroon on track for Q322, indicate the company is positioned for continued growth.
Moreover, Savannah is growing its renewable energy division, with several new large-scale greenfield opportunities under review and negotiation in Chad and Niger. These opportunities can result in up to 750MW being generated by the Company.
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