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Chinese Firm & First Bank Sign $2.4 Billion Power Deal

17th Nov. '08

China's Shenzhen Energy Group plans to build a 3,000 megawatts (MW) power plant in a joint venture with Nigeria's First Bank at an estimated cost of $2.4 billion, the financial institution said on Friday. Shenzhen signed a preliminary agreement last month with First Bank as project financiers and advisers for the gas-powered plant, Nigeria's most profitable bank said. The Chinese firm had already applied for a licence from the Nigerian Electricity Regulatory Commission (NERC), the bank said in a statement, without giving a timeframe for completion. When finished, the plant should significantly improve Nigeria's generation capacity and help provide relief to the country's power crisis, considered one of the main brakes on economic development in Africa's top oil producer.

Nigeria has the capacity for around 3,500 MW, but power generation often plunges below 1,000 MW, largely due to poor maintenance of its aged power stations, corruption and mismanagement. The problems have become so severe that the nation goes without mains electricity for weeks, throwing those without private generators into darkness and heightening frustration among its 140 million people. President Umaru Yar'Adua, who took office in May 2007, has promised repeatedly to declare a state of emergency over the crisis. As yet, no such emergency has been declared. The federal government has said it will spend $5.37 billion of its windfall oil savings to develop the dilapidated power sector over the next few years.

Approval to spend was given last month by the 36 state governments, joint owners of the account. Yar'Adua's predecessor, Olusegun Obasanjo, set a series of targets for increased power generation and said his government invested billions of dollars, but there was no tangible improvement. Efforts to revamp the sector over the years through the promotion of independent power plants have attracted little foreign interest, with potential investors saying the government has not completed its deregulation started in 2005 with the setting up of the NERC. Prospective investors also said the sector was poorly run and that low tariffs made their investments unviable.

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May we be strengthened with the ability, willingness and capabilities to be good ambassadors of Nigeria contributing to its uplifting, rather than its detriment. - Cxsm