NNPC Shops for $15bn to Build 4,000MW Power Plants

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Chineme Okafor in Abuja

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.

  • Magnus0071mg

    Choice of location is political and will end up being unprofitable

  • Daniel Obior

    Why should NNPC that cannot run petrol stations efficiently, embark on another big project to waste more scarce resources and enrich themselves, politicians, government officials and their cronies? Why are most of the planned power stations in the north whereas all the gas to fire them will come from the south? Why would power be cheap when economic considerations take back stage to political ones, in the planning of our projects? This is yet another exercise doomed to fail, right from the start.

    • Kamalu

      My thoughts exactly. Same circus dance.

    • Jon West

      I worked in that political conundrum of an organization for 30 years and that confers on me the ability to make certain comments on this latest idiocy. NNPC has no intention of doing what it says it will do. This is purely jobs for the boys and the money is in consultancy and Estacode etc for running around , doing nothing , but pretending to be doing a lot- typical Sahelian raghead behaviour. The man making all these pronouncements is retiring next month and knows that this is another scam and a stupid one at that. But in this stupid scam, there are millions of dollars to be made.

      First of all, no investor will put his money on any project that requires the supply of Niger Delta gas to the North of Nigeria, because of the proven risk of such unjust projects. However, the Sahelian ragheads and their Afonja allies never seem to smell the coffee.

      Most of the gas for these 419 projects are from Asa North in Imo State and Gbaran Ubie in Bayelsa/Delta axis. I can safely confirm that no gas will be allowed to leave these places for anywhere else in Nigeria.

      Our Mumu Don Do for the Southeast and Southsouth!! . You cannot build a great Nigeria on the backs and resources of slaves as Ikemba Odumegwu Ojukwu opined. The time for that is over.

      Perhaps someday, a leader will come ,who will see the futility of this constant intent by the North and their southwest allies in crime, to dispossess others of their resources. They refuse to see the nexus between this injustice and the moribund status of the Kaduna refinery, Escravos-Lagos Gas Pipeleine, epileptic power for industry in the Southwest and the North and the sheer hopelessness of the idea of industrial development in Nigeria.

      Lest I forget, if you were at that press release, you would have had a good laugh at the idiocy of these people. All the NNPC staff on this project are from the North, a region that has no single oil and gas resource and technological and Human Resources capital, but like in politics, must superintend the exploitation of these resources, with third class management (remember people who scored 1 in exams where other are required to score 136) that must lord over the creme de la creme of Nigerian technological intelligentsia.
      Rumours of failure foretold. And the beat goes on an on and on.

      To hell with Nigeria!!

      • E don do Niaja

        What do you expect in our alliance without purpose? Expand Afam and Okpai to produce i billion megawatts if you want. These are real quoter system graduates I must attest. The beat really goes on for Nigeria.

      • Jon West!! I have always suspected that you are highly educated and experienced. Now I know your background.

  • Sarah

    In-principle the proposed projects could be lucrative as long as they get power purchase agreements at good rates from NBET, gas feedstock and are private sector operated like NLNG.
    However it will be economic INJUSTICE if at least similar investment is not delivered in the NIGER DELTA, and please don’t blame GEJ. Buhari & Kachikwu should ensure that they match investment elsewhere with infrastructure investment in the NIGER DELTA on a dollar-for-dollar basis. After all the region is the source of the capital being invested.
    That is how to avoid any semblance of neo-colonialism/slavery.

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  • El_Komo

    Gas is cheap, yes I agree with NNPC’s COO however more importantly, the infrastructure for moving it from point A to B is so vulnerable and its security risk in Nigeria is so high.

    I reckon this is another project doomed to failure from the start. There will be supply challenges as long as pipelines are involved which equals shortcomings in electricity supply.

  • Kamalu

    NNPC should first deliver on its core mandate which is the production and supplies of the energy (fuels/gas) needs of the country. Any other dream in the time being without accomplishing those core mandates should be regarded as white elephant and as a veritable means to feather individual nests.

  • iyibu

    This is just another NNPC front to scam the country.$15billion for 4000mw in a third world country like Nigeria truly ridiculous.There are far less cheaper options available if they care to research the sector.They can get 4000MW for less that $2billion.Nigerians wake up before NNPC start looting the country again.We must oppose this nonsense.

  • sannibello_27

    My brothers in NNPC..these areas have good and intense heat..there is nothing wrong in investing in Solar farms and wind turbines in the coastal areas too..gas relies on liquid evacuation via oil lines that are always vandalized for its condensates from Non associated gas wells.

  • $15 billion for a mere 4000MW!!! These people never ceases to amaze me. I guess they are after consultancy fees and other upfront deals. Contrary to what most people I strongly believe incompetence and mismanagement are more problematic than corruption for Nigeria. For purpose of comparism, check out Egypt’s own pans for power deficits using the same natural gas-powered plant.

    By Amr Emam, The Arab Weekly | March 20, 2017 at 9:16 AM

    CAIRO, March 20 (UPI) — The opening of three ma¬jor power plants in March was the latest in Egypt’s efforts to end its electric¬ity shortage crisis.
    “Huge work is being done in this country to end the problem,” said Gamal al-Qaluibi, a power engi¬neering professor at Cairo Universi¬ty. “In less than two years, the gov¬ernment managed to end electrical power shortages and even pave the road for surpluses.”
    When they are operating fully in 2018 as expected, the three electri¬cal power plants, one in the central province of Beni Suef and the oth¬ers in the new capital being built on the outskirts of Cairo, will produce 14,000 megawatts of electric¬ity every year.
    In 2013, Egypt produced 24,000 MW but 29,000 MW were needed to bring light to all households, make factory machines run, power equipment at hospitals and bring energy to farmland.
    The government was actively asking the public to economize on electricity consumption, turn off air conditioning and do without half of the light bulbs at home. However, consumption rationaliza¬tion did not reduce daily outages, which sometimes brought hospital equipment to a standstill.
    Instead of addressing the prob¬lem, then-President Muhammad Morsi blamed his opponents for deliberately cutting electricity to anger the public.
    When Abdel Fattah al-Sisi became president in mid-2014, he learnt the lesson from Morsi’s failure to deal with the crisis. Sisi’s plan to prevent the outages included the construc¬tion of eight massive power plants.
    The three power plants that opened in March were designed and constructed by the German electronics manufacturing giant Siemens at the cost of $6.4 billion. Each of the plants will produce 4,800 MW of electricity annually at peak operations.
    The plants are only a small item on Sisi’s plan to achieve electricity sufficiency in Egypt, the Electricity Ministry said.
    “Our plan includes a diversifica¬tion of electricity sources,” said Ayman Hamza, spokesman for the Electricity Ministry. “The plan aims to end electricity outages for good and secure needs for many years to come.”
    Sisi’s plan to end the outages in¬cludes exploitation of renewable energies. The government actively encouraged the private sector to establish its own solar and wind farms. It installed huge solar panels on the roofs of hundreds of gov¬ernment buildings and encourages Egyptians to create solar power plants on their home roofs. Some Egyptians sell electricity produced by their solar panels to the national grid.
    Egypt is expected to sign a con¬tract at the end of April for a nu¬clear power plant, which will be built in northwestern Egypt by a Russian company. The plant, which will include four nuclear reactors, each producing 1,200 MW of elec¬tricity by completion in 2022, will cost $30 billion.
    An electricity interconnectivity project is due to be completed be¬tween Egypt and Saudi Arabia in 2019.
    All these measures mean one thing: Electricity outages will be¬come a thing of the past, Hamza said.
    “A power cuts-free summer will start in our country in a matter of few weeks from now for the first time in almost a decade,” he said.
    Abundant electricity production, economists said, will help Egypt at¬tract international investment.
    Energy experts said, however, the electricity sufficiency should not blind Egyptians to the fact that fossil fuels are finite, which means that Egypt should increase its de¬pendency on renewable energy.
    Renewable energy contributes only 3 percent of total electrical power generated in Egypt now. The coun¬try has hopes to raise that figure to 20 percent by 2022.
    “According to specialized studies, fossil fuels will start running out a short time from now,” said Youssri Abu Shadi, an energy expert and a former International Atomic Ener¬gy Agency inspector. “This means that dependence on renewable en¬ergies is not optional for a country like Egypt.”
    This article originally appeared at The Arab Weekly.

  • yinka

    Why are you guys worrying yourselves with NNPC power generation statement? it is just a side show and not for real. It is another project for them to use their own companies as consultant and pocket money the fund.