Qua lboe Power Plant (QIPP) and the Nigerian Bulk Electricity Trader (NBET) Thursday signed a $1.1 billion Power Purchase Agreement (PPA) for 540 Megawatts gas-fired power plant sited in Akwa Ibom State.
The project whose signing-ceremony was held in Abuja is expected to raise power generation by 540MW by 2021.
The Ikot Ekpene-Ikot Abasi transmission line of the National Integrated Power Projects (NIPPs) is ready to take power from the 540 gas-fired power plant.
Babatunde Fashola, Minister of Power, Works and Housing presided over the signing of a Power Purchase Agreement (PPA) between the new investors for the Qua lboe Power Plant Limited (“QIPP”) and the Nigerian Bulk Electricity Trader (‘NBET’).
Besides, the government also approved a Put/Call Option Agreement (PCOA) the NBET and Ministry of Finance agreed with the project’s investors – the Qua Iboe Power Plant Limited (QIPP) which is jointly owned by the Nigerian National Petroleum Corporation (NNPC), Black Rhino Group, and Dangote Group.
Fashola said that the pact was in line with the desire of the government to consistently grow Nigeria’s ability to provide stable electricity to its 180 million citizens, about 50 percent of who are yet to be connected to the country’s power grid.
Following from this, the NBET and QIPP stated that work on the project which is expected to cost about $1.1 billion to complete, would commence as soon as a financial closure is achieved within the second quarter of 2018.
The investors noted that Mobil Producing Nigeria (MPN) which initiated the power project with the NNPC as a fully equity funded structure, had sold its rights to develop it to the new investors – QIPP. MPN, however, has a 20-year gas sales agreement with the new investors to supply about 400 million standard cubic feet per day (mmscuf) of gas to the plant through an undersea gas line connected to its offshore oil production facility.
Similarly, the parties indicated that Nigerian law firm, Banwo and Ighodalo was its transaction advisers and that QIPP would when completed become the lowest cost thermal plant in Nigeria due to what they said was its efficient combined-cycle design and competitive gas price.
They stated that the plant will commence commercial operations in 2021, in addition to unlocking investments in power transmission infrastructure.
QIPP, they added has also decided to build a 58 kilometres long transmission line to evacuate its output.
Giving further details of the agreement reached, the Managing Director of NBET, Dr. Marilyn Amobi, explained that once the investors achieve a financial closure, they would be expected to commence construction and subsequently expedite works to commission the plant within 18 to 24 months.
Amobi noted that all the financial investments needed for the project would be provided by the shareholders and that all parties have agreed to its commercial and technical terms.
“This will now go to the NERC who will now vet it as the regulator to be sure that issues and contract elements that we agreed to are in line with what should be, then they will approve before it goes to the Bureau of Public Procurement and then to the Ministry of Justice.
“We are just starting that now because Mobil decided to have its shares go to Black Rhino, and then we had to review the documents again because the original project was fully equity funded but now the structure has changed and it will now be debt and equity,” said Amobi.
Muhammad Sanusi II, the Chairman of Black Rhino and Emir of Kano, said the conclusion of the PPA and PCOA processes would give promoters of the project the confidence to accelerate their final investment decision (FID).
Sanusi 11 said parties were ready to mobilise funds, adding: “Within the next months, we will achieve a financial closure to bring in about $1.2 billion worth of direct investment into Nigeria. QIPP will utilise Nigeria’s gas resources to increase our electricity generation capacity and reduce the cost of power.”
