Nigeria risks losing $1.7bn power investment – TCN MD

…As FG okays 540MW Kano electricity project The Managing Director of the Transition Company of Nigeria, TCN, Mr. Usman Gur Mohammed has said that Nigeria is at a verge of losing an investment of $1.7 billion due to the Federal Government’s reluctance to assume additional unhedged financial risk on the power sector given the current experience with Azuru and other players. This is even as the Federal Government has approved the Kano State government’s proposal of 540 megawatts Qua Iboe Power Plant (QIPP) for the re-industrialisation plan of the state. Minister of Finance, Mrs. Zainab Ahmed in a statement on Tuesday by her Special Adviser on media and communications, Mr. Paul Ella Abechi, said that the minister assured that the present administration would not renege on its part. The statement quoted the TCN MD as saying that Exxon-Mobil is also prepared to commit about $500 million to build a gas pipeline from its deep off-shore platforms to supply the gas needed for QIPP to operate. This the government said would bring the total Foreign Direct Investment (FDI) for the project alone to $1.7 billion. “QIPP has also assumed completion risk of a transmission line from Ikot-Abasi to Ikot-Ekpene to ensure supply of power to the national grid”, Mohammed said. The MD of TCN has further confirmed that, based on already approved funding from development partners, TCN will be technically competent to do this before QIPP starts generating power as the transmission lines from Shiroro to Kaduna and from Kaduna to Kano will be fully operational with enhanced capacity within two years from the commencement of the project. Meanwhile, the Minister of Finance, Mrs. Ahmed gave the Federal Government’s assurance on Tuesday, when she received the Kano State Governor, Dr. Abdullahi Umar Ganduje and his team in Abuja. “Let me assure you that it is not an issue of if this project will take place but when because we have a very huge power gap and it is more in the northern part than in the south. And when we see an opportunity like this, we have the responsibility to ensure it comes into fruition.” She said, “We are looking at this as a pilot project as this will help mitigate the Federal Government’s plan. The ability to provide a counter guarantee will help a long way to reduce the burden on the Federal Government. She added that it will help to improve the industrialisation plan, growth, employment generation for the state. I want to commit that the ministry of finance will put up our best efforts to make it a success. I hope at the end of the day it will be on record that during my tenure that I contributed to the industrialisation of Kano.” Earlier, Governor Ganduje in his opening remarks said his had been fully briefed of the meeting between the Ministry of Finance and the board of BlackRhino Group, which was chaired by the Emir of Kano, His Highness, Muhammad Sanusi II (Sarkin Kano), assured that the Kano State Government will provide protection against the financial risk of the power project. The governor noted that the project worth billions and billions of dollars and if completed will further the industrialisation drive of the state. He said, “We wish to express the strong interest of Kano State Government in purchasing the electricity generated by QIPP and providing protection to your Ministry against financial risk. The Kano State Government is committed to industrializing Kano as a critical component of its development plans. The shortage of electricity has been the principal factor hindering progress in this area. “To this end, we welcome the opportunity offered to us by QIPP to have guaranteed a stable supply of 540MW of electricity. We trust this will support the industrialisation of Kano and perhaps even neighbouring states (like Kaduna, Jigawa, and Katsina) which have significant and critical unmet requirements for electricity. “Honourable Minister, to show our commitment to the project, we shall set up Kano State Bulk Electricity Trading Company (KBET) which will buy all the power generated by QIPP from NBET in the form of a back-to-back Power Purchase Agreement (PPA). The Kano State Government will use the period during which QIPP is being developed to ensure the establishment of eligible customers in the form of industries as part of its Industrial plan and, if necessary, agree to supply neighbouring states which identify eligible customers. KBET will be assuming the risk of finding customers for this power and collecting tariffs. “We request you to kindly approve the request made by QIPP as the FG will not be assuming any risks before financial close”, he said.