Savannah Energy revises gas sales agreement with Lafarge Africa

Savannah Energy Plc says its Accugas subsidiary has entered into a revised ‘Gas Sales Agreement’ with Lafarge Africa Plc, part of the LafargeHolcim Group, for the supply of gas to its Mfamosing cement plant in Cross River State.

The company announced this in a statement made available to Financial Street on Monday.

The contract term with Lafarge was extended for a further five years to January 2037, giving a remaining contract life of 17 years.

The new agreement, according to the company, allows for an increase in the gas sales price from 2027, with additional United States-Consumer Price Index indexation from January 1, 2029.

Explaining that the revised structure also allows Lafarge to utilise its accumulated make-up gas balance of approximately $58m, it stated, “Lafarge’s commitments under the revised GSA will continue to be guaranteed by an international investment grade bank guarantee.

“Overall, the revised terms are expected to have a cumulative positive impact on Accugas’ cash flows over the short and medium term. Following the agreement, Accugas’ aggregate maintenance-adjusted take or pay volume will reduce from 141.4 MMscfpd to 131.8 MMscfpd.”

Commenting on the revised agreement, the Chief Executive Officer of Savannah Energy, Andrew Knott, said, “The deal with Lafarge Africa is also a significant ‘win-win’ for both parties; Accugas is receiving a higher effective gas price in the near-term years, accelerating near and medium term cashflows, our contract with a key customer is being extended for an additional five years and significant spare capacity is being freed up, which we can sell gas to other customers.

“All while Lafarge Africa is able to utilise its existing make-up gas balance. We are looking forward to 2021 with excitement as we continue to work with our stakeholders to develop and grow our business for the benefit of all.”

Ehime Alex
Ehime Alex
Ehime Alex reports the Capital Market, Energy, and ICT. He is a skilled webmaster and digital media enthusiast.

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