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US Firm to Build $275m Power Plant in Kwara

Posted by By Mike Oduniyi on 2004/11/26 | Views: 2560 |

US Firm to Build $275m Power Plant in Kwara

Electricity generation in the country is set to receive another major boost as a US-based firm is set to partner with an indigenous company and the Kwara State Government to build a gas-fired Independent Power Plant (IPP) worth $275 million (N36.6 billion).

However, to bolster investors' confidence in setting up more of such private power plants across the country, the Federal Government has approved the direct sale of electricity from IPPs to industries. The arrangement will exclude the National Electric Power Authority (NEPA) from sales purchase negotiations.

THISDAY gathered that US-based Black and Veatch is partnering a Nigerian firm, Alliance Energy Limited (AEL) and the Kwara State government, to build the power plant that will generate 105 mega watts (MW) of electricity.

The proposed plant, according to the approval granted the project by the Ministry of Power and Steel, will be operated on the Generate, Transmit and Distribute (GTD) scheme.

It was furthered gathered that while AEL and the Kwara State government will provide funding for the project through a combination of equity and debt finance, Black and Veatch will provide the technical expertise as well as act as project consultants.

Officials working on the project said of the $275 million total cost of the project, construction of a gas pipeline that will run from Ajaokuta spur-line to the site of the plant in Ilorin, the Kwara State capital, will gulp $170 million and will be handled by the Nigerian Gas Company (NGC).

The power plant which is expected to be completed in 2006, will consume some 126 million standard cubic feet of gas per day at 27bar pressure.

"Investors are attracted to Kwara State because it is highly endowed with rich and fertile agricultural land and mineral resources," a source close to the project said.

He added the government recently awarded several hectares of land to Zimbabwean farmers and several factories are springing up, hence the need for constant power supply.

Speaking on the project, Governor Bukola Saraki of Kwara State, said his administration aimed to be the first state to attain uninterrupted power supply in the country.

"We are determined to ensure stable power supply in Kwara State as part of efforts to boost industrialisation and provide employment," said Saraki.

"Apart from the gas-fired power plant by Alliance Energy Ltd. the government will also explore opportunities to generate electricity from coal," he added while urging the IPP promoters to ensure that the plant is completed on schedule.

Also speaking to THISDAY on the IPP, the Executive Chairman of Alliance Energy Ltd., Mr. Wole Omoboriowo, said the project promoters were encouraged by recent government policy of involving private sector initiative in power generation, transmission and distribution.

"For any meaningful industrial growth to happen in any economy, there must be electricity. Power generation is paramount to industrial growth," said Omoboriowo.

"Kwara State in particular, has enormous potentials in that it is a growing, stable and evolving economy. You have a whole list of factories, industries which rely 24 hours on generators, so we identified opportunities there," he added.

The AEL IPP will be third major private sector power projects in the country, as the country struggles to raise electricity generation substantially and end frequent power cuts.

On-going IPPs are the Nigerian Agip Oil Company (NAOC) 450 mw thermal plant in Kwale, Delta State and also the gas-fired 726 mw by Siemens and ABB.

The Federal Government aims to raise power generation to 10,000 mw by 2005 from the present level of 3,000 mw through a combination of private and public sector investments.

To allay fears of private investors over recouping of their investment, the Federal Government has now directed that IPPs can now generate power to a cluster of industries or commercial customers, excluding NEPA from negotiations on the Power Purchase Agreements(PPAs).

Power and Steel Minister, Senator Liyel Imoke, who disclosed this yesterday at a stakeholders' workshop on Gas Flaring, said the power sector is currently undergoing reforms to restructure the fiscal, ownership, management and regulatory structures to attract maximum private sector participation and capital.

Imoke said National Power Policy approved by the Federal Executive Council, "mandated the use of natural gas as the choice fuel for power generation in order to reverse the current trend of extensive flaring of associated gas."

It would be recalled that some proposed IPPs including the 350 mw ExxonMobil project, had remained on the drawing board following disagreements between project promoters and NEPA over appropriate tariff to be charged that will cover investment cost.

NOTE: The following message was submitted to AllAfrica by Black & Veatch.

Black & Veatch is NOT partnering with Alliance Energy or Kwara State or has any kind of agreement or understanding to build a $275 m Power Plant in Kwara. We are only providing consulting services to Alliance to compare the options of building a gas-fired power plant and a coal-fired power plant at a designated site in Kwara.

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