AfDB Approves US $30 Million Loan for Rehabilitation of Oku Iboku Paper Mill in Nigeria
Plans to resuscitate Oku Iboku Pulp and Paper Mill in Akwa Ibom and Cross River States in Southeastern Nigeria were concretized on Wednesday, February 26, 2014 in Tunis, where Executive Directors of the African Development Bank approved a US $30-million loan to finance the rehabilitation project.
The Oku Iboku Pulp and Paper Project (OKIPP) entails rehabilitation and upgrade of an integrated pulp and paper mill which makes newsprint and related papers in the two Nigerian states.
Sponsored by Negris Group, an indigenous engineering company servicing the energy and industrial sectors in Nigeria, the main assets consist of pulp and paper mills, a wood concession and a gas-fired power generation plant. The complex was established as a Government-owned company, shut down in the 1990s and acquired by Negris following a privatization process in 2008.
In line with the Bank’s Long Term Strategy, the project supports inclusive and green growth, by contributing to a better management and use of forestry resources and generating linkages with local economy. It is aligned with Nigeria’s newly approved Agricultural Transformation Agenda, the Bank’s Country Strategy Paper for Nigeria and the Bank’s Regional Integration Strategy for West Africa by contributing to the modernization of agriculture and infrastructure development, increasing intra-regional trade as well as promoting local entrepreneurship.
Ultimately, the project is expected to deliver annual savings on newsprint paper imports to Nigeria and tax revenues to both State and Federal Governments. In addition to its strong contribution to job creation in the region, OKIPP will develop pulp and paper technological skills through a planned transfer of specialized skills and development of SME linkages.
With an estimated total cost of US $200 million, the project will be financed on a 60:40 debt to equity ratio. The debt will be sourced from DFIs and Nigerian commercial banks. The Bank will provide a senior loan of US $30 million and is acting as the Mandated Lead Arranger.