Aug 5, 2025
Oil & Gas
Updates
On August 1st, I had the privilege of joining a fireside conversation hosted by The African Catalyst, where we explored the theme:
"De-Risking for Growth: The Critical Importance of Early-Stage Investment Readiness for Gas Projects in Africa."
Watch here
It was a timely and engaging discussion alongside industry peers, as we unpacked the nuances of how gas project developers can better align their ventures for successful financing from inception.
From Concept to Capital: What Investors Are Really Looking For?
One of the key questions raised was:
"How can project developers better structure feasibility studies, financial models, and legal frameworks to meet investor expectations from the onset?"
We often hear the adage, “the higher the risk, the higher the reward,” but in the world of infrastructure and energy financing especially for gas projects, the reality is more sobering. Many opportunities, while technically interesting, are simply too risky for institutional capital. Whether it's senior debt, mezzanine financing, or private equity, capital only flows to opportunities that demonstrate readiness, clarity, and credibility.
To attract funding, developers must move beyond vision and into bankable execution. This begins with an investor-focused mindset translating technical feasibility into commercial viability and risk-adjusted returns. It requires crafting investment documentation that not only tells a compelling story but also stands up to due diligence.
At the core, every feasibility study, financial model, and legal structure should address three fundamental investor questions:
Is the opportunity real?
– Is there verified demand? Are permits, licenses, and offtake agreements in place? Is the resource secured and the market validated?
Can we win?
– Does the project have a clear route to market, competitive advantage, and a delivery team with proven capacity?
Is it worth it?
– Are the projected returns commensurate with the risks? Is the capital structure sound and attractive to financiers?
When developers answer these questions with precision and evidence, they shift from storytelling to investment-grade structuring. Capital providers don’t fund ideas, they back teams that can manage risk, execute efficiently, and generate sustainable returns.
Another critical discussion point was:
"What practical de-risking instruments are most effective at the early stages of gas projects in Nigeria?"
In the current investment landscape, blended finance has become one of the most effective strategies to de-risk early-stage projects and catalyze private investment especially in capital-intensive sectors like gas. By combining concessional or catalytic capital with commercial funding, blended finance bridges the gap between perceived risk and actual viability.
Key instruments include:
Partial Risk Guarantees (PRGs):
These mitigate sovereign, regulatory, or policy-related risks especially critical in projects involving state-owned offtakers or PPP frameworks.
Partial Credit Guarantees (PCGs):
These enhance the credit profile of a transaction, reducing the risk of non-payment and enabling projects to access longer-term or lower-cost financing.
First-Loss Guarantees and Concessional Capital:
Provided by DFIs or donor-backed funds, these mechanisms absorb initial losses, making the deal more attractive for commercial lenders.
Technical Assistance and Feasibility Support:
Grants for project preparation, legal structuring, and environmental studies can significantly reduce early-stage costs and speed up investor readiness.
In Nigeria, these tools are increasingly being deployed by institutions such as InfraCredit, AfDB, SEFA, and NIRSAL to unlock capital for infrastructure, off-grid gas, LPG distribution, and small-scale LNG projects. Whether it’s InfraCredit’s credit enhancement for infrastructure bonds or AfDB’s blended financing for clean energy transition, these interventions are shaping a more investable gas sector.
As Africa navigates its energy transition and industrialization journey, gas will play a pivotal role both as a transition fuel and as an enabler of economic growth. But to mobilize the capital needed to build pipelines, processing facilities, LNG infrastructure, and power plants, early-stage investment readiness is no longer optional, it’s essential.
Developers must think like investors from Day One: structure deals that are resilient, transparent, and scalable. By leveraging blended finance and risk mitigation tools, and by adopting a disciplined, investor-oriented approach to project development, we can build a more dynamic, bankable, and future-proof gas sector for Africa.
