Indigenous Consortium to Build Power Plants

Fri, Feb 20, 2015

By publisher

5 MIN READ

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In its bid to increase power generation in the country, the federal government is partnering with indigenous power firms with foreign technical partners to build more power plants in the country and train Nigerians who will run the plants

|  By Anayo Ezugwu  |  Mar. 2, 2015 @ 01:00 GMT  |

THE federal government is working hard to generate more electricity to meet the power needs of the country. It is collaborating with indigenous power firms to build more power plants in the country to ramp up power generations to the national grid. Recently, the government through the ministry of power and the National Electricity Regulatory Commission, NERC, signed memorandum of understanding, MOU, with some companies and granted licences to help them build power plants.

The latest MOU the federal government signed with the consortium led by FirstGate Group will lead to the building of two separate 1,000 megawatts, MW, gas-firing and solar plants in the country. Chinedu Nebo, minister of power, after the signing ceremony said the government was doing everything within its power to bring more electricity that could be used by Nigerians.

Commending the FirstGate Group for the initiative and for working closely with the South-Koreans, who have developed solar energy technology well ahead of others, Nebo said South-Korea has developed solar energy to power a cluster of industries and trade zones. He added that the FirstGate would benefit immensely from the Asians in developing appropriate technology for battery storage systems and other Hi-tech uses from solar technology.

The minister warned FirstGate Group to make haste while the sun shines by executing the content of the agreement, stressing that the MoU if not realised soon would become dead. Stating that financing is key in the realization of the project, Nebo said that the two plants would cost about $2 billion. He also promised to get the ministry to hasten the process to enable the consortium to get license and permits and other things that will enable the project to start soon.

Speaking at the signing ceremony, Kelvin Asogwa, chief executive, FirstGate, promised that the project would assist in the realizing President Goodluck Jonathan’s power sector transformation which is cruising at a high speed. The consortium will train a total of 74,000 Nigerian youths in various technical trades overseas in countries such as South-Korea and Turkey.

According to Asogwa, partnership with overseas companies makes it possible for them to train Nigerians who will be engaged when the plant comes on stream”. The training which is tagged Tax-Holiday, is designed as part of the MoU for these countries to train Nigerian youths. Asogwa said the group has the financial muscle to enable the dream come true, adding that already it has acquired 27,000 hectares of land in Kogi State where the project will be cited.

On its part, the Nigerian Electricity Regulatory Commission, has issued on-grid generation licences to Zuma Energy Nigeria Limited to construct four units of 300 megawatts coal-to-power plants in Kogi State at a total cost of $5 billion. According to NERC, the firm was initially issued an on-grid licence on September 20, 2011, to enable it to operate a 1,200MW independent power plant.

Sam Amadi, chairman, NERC, however, said that on July 31, 2014, the company submitted an application for an amendment to enable it to assign the licence to four different Special Purpose Vehicles to build a 300MW plant each. “Following the completion of the application, the commission passed a resolution dated November 11, 2014, authorising the company to publish the statutory notices in line with the mandatory provisions of Section 70(2) of the EPSR Act. The commission on December 18, 2014, approved the recommendation to amend and assign licence No. NERC/LC/066 to the plants,” Amadi said.

Innocent Ezuma, chief executive officer, Zuma Energy Nigeria Limited, said: “By the reason of receiving these licences, we must hit the ground running. Very soon, we will see the approval of a tariff for the four SPVs that will enable us execute the Power Purchase Agreements and by the end of this year, the ground-breaking of the first unit of the Itobe 1 coal-to-power 300MW plant in Kogi State will be done,” he said.

Ezuma explained that it is for ease of implementation that the company decided on its recent action. According to him, “to build one megawatt coal power station, you will require about $3m. So, if you are building 1,200MW, you will require approximately $5bn, and this is a huge amount of money for any investor at this time when Nigeria is just beginning to tap into its coal resources. With the sub-division of these licences, it means that we can embark on two projects simultaneously at a time. The timeline for the construction of a coal-fired power plant is from two-and-half to three-and-half years.”

The equity for the plant had been over-subscribed by investors and the firm’s financial partners are aware of the huge capital outlay needed for the project. “Power plants are not funded solely. The development phase of a power plant is always funded by sponsors. But as I speak to you, Zuma Energy has invested huge sums of money in developing this plant up to this level solely. However, at the time of financial close, there will be other strategic equity investors and of course other financiers from the banking sector that will fund part of the project. But the equity of the project has been oversubscribed,” he said.

He also said that the technology adopted for the plants were environmentally-friendly as recommended by the World Bank. “Today, the latest technology in coal management is environmentally-friendly. The technology we are adopting does not have smoke and it does not have fire. And the emission standard is way below the World Bank standard,” Ezuma said.

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