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TMCNet:  Aba IPP - Beyond the Ground-Breaking Ceremony

[November 05, 2007]

Aba IPP - Beyond the Ground-Breaking Ceremony

(This Day (Nigeria) Via Thomson Dialog NewsEdge) When Paul Wolfowitz, the former World Bank president flew into Aba two years ago in company of the present managing director of the bank, Dr. Ngozi Okonjo-Iweala, for an interactive session with the Aba business community, it was evident that power outages were greatest impediment to the industrial take-off of the city. However, with the foundation-laying ceremony of an independent power plant last Thursday, things are looking up for the Enyimba City and environs. Roland Ogbonnaya writes. Additional report by Emmanuel Ugwuh.


Osisioma community in Aba, the leading commercial city in Abia State wore a carnival look last Thursday. There were various traditional dance groups as women and the youths came out with their best to be part of the day's event. One could see the joy on their faces as the event lasted.

Who will be in their shoes and would not be happy. They were for the first time witnessing the establishment of the first independent power plant (IPP) in their community and the entire Abia State. For the community and many residents of Abia State, the citing of the power plant in Aba, popularly known as Enyimba City cannot come at a better time than now.

Apart from being the leading commercial town in Abia, Enyimba City is one of the leading manufacturing centres in Nigeria. It also shares with Nnewi in Anambra State the distinction of being the home of indigenous technology. Aba has been for some years in a state of arrested development and the principal reason: poor electricity. Some sections of the city do not have electricity for days; and when power is eventually restored, the voltage is too insufficient to power a four feet fluorescent tube. As a result, many manufacturing companies have folded, while new investors shun the city.

So, the indigenes' joy knew no bound as the representative of President Umar Yar'Adua did the ground-breaking ceremony of the plant built by Geometric Power Limited and its partners in Osisioma. Yar'Adua, who was represented by the Minister of State for Energy and Gas, Mr. Emmanuel Odusina, said that he would not relent in his efforts to find lasting solution to the energy crisis in Nigeria by seeking the assistance of experts in the power sector anywhere in the world.

The President, who described the Aba Power Plant as a reference point in the ongoing power generation efforts in Nigeria, explained that his absence at the ceremony was because he was abroad in his "efforts to reach out to the international experts in the power sector for possible assistance and collaboration for the development of Nigeria's energy sector."

Paying glowing tributes to Prof. Barth Nnaji for his initiative and faith in his fatherland which motivated his establishing the Aba IPP, Yar'Adua called on other investors both local and foreign to borrow a leaf from Nnaji by investing in Nigeria's power sector brimming with wide opportunities provided by the reforms in the power sector. He specially urged Nigerians in the Diaspora to think home and like Nnaji bring their expertise and money to help Nigeria out of the energy doldrums.

"It is gratifying to know that while we are soliciting for assistance of foreign experts and investors our own men and women in the Diaspora as exemplified by Nnaji are responding positively to our call to be part of Nigeria's development.

The $250m project which we are here today to witness the foundation-laying ceremony is the first major investment by a Nigerian in Diaspora," the President said. He assured that institutional frameworks have been put in place to help genuine investors contribute positively in taking Nigeria to the level of meeting its energy needs both now and in the future.

Governor Theodore Orji of Abia State at the occasion commended Yar'Adua for declaring a state of emergency in the power sector. According to him "drastic situations call for drastic measures and no measure applied to our power sector will be deemed drastic. Orji, who was at the ceremony with his deputy, Comrade Chris Akomas and other top echelons of his cabinet, lamented the poor power situation in Nigeria, which has become a national embarrassment.

Like Yar'Adua, Orji lauded Nnaji for going beyond theorising on how Nigeria's energy sector could be revamped "to put his money where his mouth is" and chart a new course in private sector participation in power generation.

"I make bold to say that with the success this project will record, our industries, which are on the brink of extinction will be brought back to life. This project will also encourage new industries to spring up in Aba and all surrounding cities as cost of generating and sustaining electricity would be drastically reduced," he said.

Nnaji, who is the brain behind the project and chairman/chief executive officer of Geometric Power Limited (GPL), said the power plant when in full operation would generate 140MW of electricity well above the estimated energy needs of Aba, which is put at 110MW. He said that GPL has become the first indigenous company to build power plant without any assistance from government. He said that four brand new substations would be built as components of the Aba IPP "to make distribution quite robust." Nnaji assured that the power plant would not only guarantee uninterrupted power supply, but also make it affordable to all Nigerians.

The Special Adviser to the President on Energy, Chief Joseph Makoju, in a remark, said the present administration was committed to building more power plants across the nation. He explained that there were already eleven plants at various levels of completion. According to him, the Aba IPP happens to be the 12th of such power plants being built now in Nigeria with a special feature of being the only one wholly funded by the private sector.

In an interview with THISDAY in Aba, Nnaji explained that Geometric Power Limited is an indigenous private sector-driven power provider in Nigeria, whose goal is to construct and operate independent power plants (IPPs) for the generation, transmission and distribution of power to industrial clusters, commercial entities and the general public in Nigeria and sub-Saharan African countries.

As a pioneer IPP, he said GPL is desirous to complement the Nigerian Government's efforts to improve the power sector by helping to bridge the huge energy gap in a timely manner, and to alleviate the pains of several industrialists in the country. GPL's strategic partnership with the Bureau of Public Enterprises (BPE) in Nigeria will assist the BPE in achieving the objectives of the Electric Power Sector Reform Act (EPSRA). He emphasised that the objective of GPL Aba's model Independent Power Plant is to initiate the emergence of high reliability in power supply, especially for the industrial sector in Nigeria and sub-Saharan Africa. The GPL Aba project is therefore a pilot project that will revolutionalise the power sector in Nigeria.

According to investigation, he said that the average annual power supply in Aba is currently at 20 per cent of its total demand and as a result, the quality of power supply to industries is inadequate to meet their needs hence most businesses rely on privately generated power to run their machines and industrial equipment at very high costs. GPL's goal "is to provide reliable, affordable and efficient power supply to all its customers, especially the industrial clusters at Aba whose productivity and viability have been drastically affected over several years by the inadequacy of the public power supply system from Power holding Company of Nigeria (PHCN).

"This new power plant with a minimum installed capacity of 140MW being built by Geometric Power Limited is strategically located in Aba, the commercial capital city of Abia State, South Eastern part of Nigeria. Aba is convenient for this first industry-centered independent power plant because it already has gas pipeline and it has large cluster of sustainable industries that need reliable electric power. Several industries are poised to expand production capacity, and those which have shut down because of power supply problems are expected to come back on stream after the completion of this power plant.

"The plant is designed to provide a model for the emergence of high reliability in power supply especially for the industrial sector, and to drive positive economic growth in Nigeria and trade within sub-Saharan Africa. This privately owned power plant in Nigeria will serve the industrial and commercial customers, as well as residences," Nnaji stressed.

Geometric Power Limited is not working alone on this project. The company is collaborating with International Owners' Engineers and Equipment Suppliers to construct the power plant and distribution facilities in Aba. GPL's power plant will have gas-fired turbines and will be built for very high reliability by using three Gas Turbines. Each of the three turbines has a capacity of 47 megawatts in simple cycle at the Aba ambient conditions. Shell Nigeria Gas Limited is the natural gas supplier.

The project is financed by international investors led by International Finance Corporation.

It is strongly supported by several local and international organisations like the World Bank; Diamond Bank; European Investment Bank; Shell Nigeria Gas Company; Federal Ministry of Power and Steel in Nigeria; The Bureau of Public Enterprises (BPE) Nigeria; Owners of the major industries in Aba and the Aba Community in general. This project, investors claim has become a pace setting IPP whose model is expected to be replicated in other parts of Nigeria. With the Aba plant, GPL is expected to generate electrical power and sell to two primary groups:

The Aba industrial clusters, using a specially installed and designated high quality private distribution network, and Aba Power Limited which intends to rehabilitate and use the existing power distribution network of the public power supply system from PHCN to deliver power to the commercial and residential customers.

He said GPL will guarantee power supply to all of its industrial customers, and save the average manufacturing company more than 65 per cent of its current electricity production cost, as well as the hassles and high costs associated with running its own "stand-by" generating sets 80 per cent of the time.

Big manufacturing companies in Aba like the Dutch-owned Nigerian Breweries and the Irish-owned Guinness Brewery have long turned to numerous and expensive private generators which run round the clock, thus doing away with the inefficient state-run utility which until recently maintained the monopoly of electricity generation, transmission and distribution in the country. The industries have now signed memorandum of understanding (MoU) with Geometric Power Limited for power, hoping to reduce production costs by some 30 per cent once the private utility firm starts operation next year.

"My company is waiting anxiously for Geometric to build a plant in Aba," according to Mazi Sam Ohuabunwa, chief executive of the Lagos-based Neimeth Pharmaceuticals, who is also the president of the Nigerian Economic Summit Group, the nation's foremost business pressure group.

Chief Onwuka Kalu of the Onwuka Hi-Tek, an indigenous manufacturer of nails, machine tools and motor spare parts based in Aba and whose operations have been scaled down severely in the past decades as a result of power outages, recognises Geometric Power as providing "about the only ray of hope for our company's return to good profitability. Unless the electricity mess is addressed satisfactorily, the national economy cannot leapfrog.

"Inadequate electricity is one of the most critical problems we have been experiencing", complained Kalu. "In the last one year, we have spent over 20 million naira on a new set of generators to revive production. Still, we produce only skeletal services largely because of energy to power our heavy duty machines."

He is thrilled at the good news of a light at the end of the tunnel. Nnaji, one of the world's leading authorities in industrial engineering, is now working assiduously to end the energy crisis by building a 140 megawatt power generating station in Aba. "As a committed campaigner for indigenous technology, one is appalled at the power situation in Aba. Instead of just criticising the government relentlessly, I took up the gauntlet as an engineer and got cracking. Government is not in any way involved in this project.

"All I wanted-which is what I have got-was the permission to build an independent power station to serve the promising industries. Now commercial concerns and residential houses have been added to the list. For granting me this permission, I am grateful to the president, the Ministry of Power and Steel, and the National Electric Power Authority. I am also grateful to the Abia State Government for its enthusiasm and to our host community for being very development conscious."

It is therefore expected that the GPL Aba plant will greatly reduce the operating costs, and enhance the productivity of existing companies in addition to enabling new companies to emerge, he stressed.

Nnaji has considerable experience in independent power generation business. Former Vice President, Atiku Abubakar commissioned in December 2001, the 15 MW Abuja Emergency Power Project built by Geometric Power Renatech Ltd, a special purpose company, of which he was the chairman. The SPV provided the national headquarters of the Nigerian National Petroleum Corporation, Aso Rock, the International Conference Centre and other places with uninterrupted electricity till last March when the project ended.

Geometric Power is guaranteeing 90 per cent supply efficiency when the Aba project is completed in 2008. Why not 100 per cent guarantee? "It is technically improper for anyone in the world to make that kind of guarantee", explains the William Kepler professor of engineering at the University of Pittsburgh on a leave of absence from the University of Massachusetts as the first black Distinguished Professor of engineering in American history and Director of the Robotics and Automation Laboratory.

"Once in a while we may shut down supply for one hour to carry out scheduled maintenance. The off-takers, our customers, will, of course, be informed in advance. We are going to achieve 90 per cent efficiency, but we are deliberately guaranteeing the conservative 90 per cent efficiency level," he said.

Nnaji assured that the Aba project will be world class. The three turbines are coming from General Electric, the world's famous biggest electric company. Each turbine has a capacity of 35 megawatts in simple cycle at the Aba ambient conditions. Shell is providing the gas, but there is a provision in the power plant for diesel in case there is a disruption in gas supply.

Much of the financing is coming from the World Bank. Interestingly, Paul Nickson, who spent 17 years in the World Bank Group, with the last 13 years spent in the energy sector of the International Finance Corporation resigned recently to join Geometrics Power Limited so as to be personally involved as an operator in Nigeria's electricity sector.

"Very few professional challenges I have faced in all regions of the world have moved me as what I have seen in Nigeria," Nickson explained for his decision to immediately retire from IFC and join Geometrics Power Limited. "Here is the biggest black nation on the planet with fantastic people waiting to take a technological pride of place in the world. I see manufacturers, big and small, working admirably to make Nigeria the Taiwan of Africa, only to be held down by inadequate infrastructure. And four years ago when I met Aba Power Project promoters, I got infected by their energy, brilliance, enthusiasm and commitment to the transformation of their father land despite all odds. They want their nation to quickly join the league of fast industrialising countries."

KPMG is the financial adviser. The Paul Usoro chambers which is fast acquiring the reputation of being Nigeria's leading telecommunications and power law firm is the legal adviser. The Nigerian technical team of Geometric is led by Ben Caven widely regarded as probably NEPA's best design engineer ever. Caven was until 1999 NEPA's executive director in charge of engineering, transmission and generation.

Distributed by AllAfrica Global Media. (allafrica.com)

Copyright 2007 This Day (Nigeria) , Distributed by AllAfrica Global Media , Source: The Financial Times Limited

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