QUA IBOE POWER PROJECT GETS $1.7bn FUNDING

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QUA IBOE POWER PROJECT
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Ifeanyi Onuba, Abuja

About $1.7bn will be invested by foreign investors in the Qua Iboe Power Project in Akwa Ibom State.

The Governor of Kano State, Abdullahi Ganduje, gave the figure when he led a delegation to meet the Minister of Finance, Mrs Zainab Ahmed, on Tuesday, in Abuja.

The purpose of the meeting was to seek the support of the Federal Government to enable Kano State to have access to the power supply from the project for its industrialisation programme.

In a proposal to the minister dated January 7, 2019, the governor highlighted the understanding reached with other partners in the project.

According to him, QIPP has secured a firm commitment of equity funding of $350m from Globeleq and project finance of $850m from the International Finance Corporation, African Development Bank and other partners for the construction of a thermal power plant located in Qua Iboe in Akwa Ibom State with a capacity of 540 megawatts.

He said the funding was conditional upon the guarantee of the finance ministry for a power purchase agreement to be executed between QIPP and the Nigerian Bulk Electricity Trading Company.

The guarantee, he said in the proposal, would be further backed by a partial risk guarantee issued by the world bank.

He said that Exxon-Mobil was also prepared to commit about $500m to build a gas pipeline from its deep offshore platforms to supply the gas needed for QIPP to operate, thus bringing total foreign direct investment for the project alone to $1.7bn.

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He said, “QIPP has also assumed completion risk of a transmission line from Ikot-Abasi to Ikot-Ekpene in order to ensure supply of power to the national grid.

“The Managing Director of the Transmission Company of Nigeria has given a firm assurance that once power is delivered to Ikot Ekpene, the TCN will be able to deliver an equivalent amount of power to Kano on a binding contractual basis for a fee.

“The TCN will assume full liability for power delivered to the grid and not transmitted as contracted.

“The MD of TCN has further confirmed that, based on already approved funding from development partners, the 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 project.”

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He added, “We further understand that the country is at risk of losing this huge investment of $1.7bn because of the reluctance of the Federal Government to assume additional unhedged financial risk on the power sector given the current experience with Azuru and other players.”

The finance minister, according to a statement issued by her Media Adviser, Paul Ella, gave the Federal Government’s assurance on the project.

She said, “Let me assure you that it is not an issue 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.”

“We are looking at this as a pilot project as this will help mitigate 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 the project would help to improve the industrialisation plan for the state.

Meanwhile, The Federal Government has approved a 540 megawatts power plant project for the Kano state government

NAN gathered that the project will be an investment in the Qua Iboe Power Plant (QIPP) located in Akwa Ibom state

– According to the minister of finance, project would improve the industrialisation plan, growth and employment generation for the state

The minister of finance, Zainab Ahmed, has reiterated the Federal Government’s support for Kano state government’s proposal to invest in the 540 megawatt Qua Iboe Power Plant (QIPP) located in Akwa Ibom state.

News Agency of Nigeria reports that according to the special adviser on media and communications, Paul Abechi, Ahmed gave the Federal Government’s assurance when she received Governor Abdullahi Ganduje of Kano state in Abuja.

Ahmed said that the project would improve the industrialisation plan, growth and employment generation for the state.

“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.

“It is for this reason that when we see an opportunity like this, we have the responsibility to ensure it comes into fruition.

“We are looking at this as a pilot project as this will help mitigate 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 said.

Earlier, Ganduje said that his government would provide protection against the financial risk of the power project by setting up the Kano state Bulk Electricity Trading Company (KBET).

“The Kano state government is committed to industrialising 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 guarantee 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.

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“We request you to kindly approve the request made by QIPP as the FG will not be assuming any risks before financial close.

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“On our part we are ready to start the process of setting up KBET through an Act of the State House of Assembly and once this is done, we will be in a position to provide the guarantee backing its obligations.

“We will also set up a steering committee and start engaging investors now that we can give them assurances of available electricity once QIPP comes on stream in three years.

“We consider this a win-win situation all round,” he said.

The governor said the visit was a follow up to a letter he recently sent to the Minister of Finance highlighting the understanding reached with other partners in the project.

According him, QIPP had secured firm commitment of equity funding of 350 million dollars from Globeleq and project Finance of 850 million dollars from IFC, OPiC and AfDB.

The letter reads in part, “This funding is conditional upon the guarantee of your Ministry for a power purchase agreement (PPA) to be executed between QIPP and the Nigeria Bulk Electricity Trading Company (NBET).

“Exxon-Mobil is also prepared to commit about 500 million dollars to build a gas pipeline from its deep off-shore platforms to supply the gas needed for QIPP to operate.

“The total Foreign Direct Investment (FDI) for this project amount to 1.7 billion dollars.

“QIPP has also assumed completion risk of a transmission line from Ikot-Abasi to Ikot-Ekpene in order to ensure supply of power to the national grid.

“The Transmission Company of Nigeria (TCN) has given firm assurance that, once power is delivered to Ikot Ekpene, TCN will be able to deliver an equivalent amount of power to Kano on a binding contractual basis for a fee.

“We further understand that, the country is at risk of losing this huge investment of 1.7 billion dollars.

“This is because of the reluctance of the Federal Government to assume additional unhedged financial risk on the power sector given the current experience with Azuru and other players,” it said.

Meanwhile, NAN previously reported that the Transmission Company of Nigeria (TCN) had earlier rolled out 116,659.8 megawatts in November 2018.

The move by the Federal Government was due to increase in electricity generation as the daily statistics operations obtained from Nigerian Electricity System Operator (SO), a section of the TCN, indicated that 116,659.8 mw was generated from Friday, November 2, to Friday, November 30.

It was gathered that the statistics was against the 107,864.8 megawatts generated in October indicating that power generation increased by 8,795 megawatts between October and November periods.

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