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NNPC shops for $15bn to build 4,000MW power plants

By on March 23, 2017

The Nigerian National Petroleum Corporation (NNPC) has disclosed that it will invest about $15 billion to build thermal power plants with a combined generation capacity of 4,000 megawatts (MW) across the country over the next 10 years.

It said three of the power plants with a combined output of 3,100MW would be built in Abuja, Kaduna and Kano, along the route of its Abuja-Kaduna-Kano (AKK) gas pipeline corridor currently under construction and from which gas supply to them would be guaranteed.

It also stated that as part of the business model for the construction and operation of the power plants, Incorporated Joint Venture (IJV) companies involving the NNPC, international power companies and other Nigerian investors, would be set up.
The IJVs, NNPC said, would be structured after the current business model used by the Nigerian Liquefied Natural Gas (NLNG) Limited.

According to a statement on Monday from the Group General Manager, Public Affairs Division of the corporation, Ndu Ughamadu, the Chief Operating Officer (COO), Gas and Power of NNPC, Saidu Mohammed, disclosed this plan at the 2017 retreat of his Autonomous Business Unit (ABU).

Mohammed, according to the statement, noted that the power plants would be independent power plants and the new thinking involved the extension of NNPC’s major gas pipeline infrastructure into a robust network to connect various parts of the country.

“Power generation is big business. As of today, NNPC has interest in two power plants, one in Okpai, Delta State, and the other in Afam, Rivers State, which were respectively built by our joint ventures with Nigerian Agip Oil Company (NAOC) and Shell Petroleum Development Company (SPDC).
“These two power plants collectively generate up to 1,000MW and they are the most reliable and cheapest source of power to the national grid in Nigeria today,” Mohammed said.

He added that plans were underway to commence Okpai Phase II power plant and that other joint venture power plants like Obite and Agura would also be progressed soon to boost power generation in the country.
Mohammed also stated that work on the Abuja-Kaduna-Kano gas line would progress as planned, adding: “The main base-loads to justify such infrastructure are power plants that would consume the gas and for that, we are planning to build about 2,000 to 3,100MW combined in these three cities.”

On the IJV model to be adopted for the plants, he said: “The partnership will involve players who will bring in their various capacities as operators, builders of power plants and as investors.

“NNPC will also bring its strength of being a dominant player in the Nigerian gas value chain.”
He stated that NNPC as a stakeholder in the gas value chain, has developed the capabilities in processing, transporting and marketing of gas for export and domestic utilisation and the nation’s gas resources have the potential of changing the economy for the better.
“If you generate enough power, the multiplier effect will revive most of the moribund industries across the country.

“NNPC intends to capture 50 per cent of the gas market in Nigeria by growing the Nigerian Gas Marketing Company (NGMC) from the 500 million standard cubic feet/day of gas that it is doing today to about 3 to 4 billion standard cubic feet/day in the next 10 years,” he explained.

On the cost implications, Mohammed said NNPC would require about $15 billion to realise these aspirations of his unit and discussions were already underway with investors across the globe to address Nigeria’s gas supply deficit by building on the already existing gas infrastructure.

Mohammed equally noted that in line with the country’s gas master plan, the NNPC would be producing gas with its joint venture partners, as well as partnering with other interested Nigerian investors to build gas treatment plants.

“We are going to unbundle the upstream sector by delineating the midstream so as to allow other players operate in it while NNPC as the operator of the pipeline network will continue to deliver gas to the downstream sector and ultimate consumers,” he stated.