Chineme Okafor in Abuja
Nigeria’s first project-financed independent power plant – the 459 megawatts (MW) capacity Azura-Edo power plant wednesday started generating electricity to the national grid, following the successful completion of the first-fire on one of its generation turbines – the 153MW GT-11, and subsequent synchronisation of same to the national grid by the Transmission Company of Nigerian (TCN).
Coming seven months ahead of its scheduled date of inaguration the testing and synchronisation of the second and third turbines of the gas powered generation plant would reportedly be completed between January and March 2018, at which time the plant would have reached its commercial operations.
“Earlier today (yesterday), Azura Power’s first turbine was synchronised to the national grid and began producing electricity for distribution across the country. This is a red-letter day for the country’s first large-scale, project-financed, independent power plant, and a testament to the work of the many government agencies that have helped to bring this project to life,” Azura, in a note shared with THISDAY in Abuja, said.
The company explained that: “Today’s event marks the start of a four-month period of intensive commissioning of the 459MW Azura-Edo IPP located in Benin City, Edo State. The plant is comprised of three Siemens turbines, each of which is capable of producing 153MW.
“The first turbine was synchronised to the national grid on December 20, 2017, and will undergo a battery of tests over the coming five weeks. Tests on the second turbine will begin at the end of January 2018, with the tests on the third turbine commencing at the beginning of March 2018. The inaguration process will then conclude at the end of April 2018 when the plant is scheduled to reach full commercial operations.”
It stated that during the four-month inauguration period, the plant would produce over 100,000 megawatt hours (MWH) of electricity which will be sold by the Nigerian Bulk Electricity Trading Plc (NBET) to the 11 electricity distribution companies (Discos).
According to Azura’s Deputy Managing Director, Mr. Edu Okeke, the inauguration process was on time to allow more power come to the national grid for Nigerians to celebrate the Christmas holiday.
“This festive season is one of the peak periods for electricity consumption in Nigeria and it is a source of real pride for Azura that we were able to bring our first turbine onto the grid before Christmas Day,” said Okeke.
Similarly, the General Manager, Origination, Contract Management and Administration, of NBET, Mr. Yesufu Alonge, told THISDAY that Azura’s coming on the grid was a significant milestone for the sector and the federal government’s plan for incremental power generation in the country.
Alonge said: “Azura, being the first Power Purchase Agreement (PPA) signed by NBET and getting to operations after over seven years from the beginning of engagement, is actually getting closer to fulfilling the purpose of the contract beteween Azura and NBET and a pride for the contracting parties.
“With the successful fire that led to the attainment of Full Speed No Load (FSNL) and subsequent synchronisation of one of the three units to the grid, it shows that the whole processes have succeeded so far and 459MW will be added to the national grid to meet the government’s policy of incremental power come April 2018 when the whole plant would have been fully inaugurated.”
He further stated the development meant that government has to make it a priority to ensure that the power gets to consumers in the country.
According to Azura, construction began on its site in January 2016 and was anticipated to reach completion in December 2018, seven months ahead of its scheduled completion date.
It attributed this to the high-level performance of its Engineering Procurement Construction (EPC) contractor comprising of Siemens and Julius Berger, and all the stakeholders involved in the project including the NBET, Nigerian Gas Company (NGC), TCN, Ministry of Power, Works and Housing, Ministry of Finance, and Edo State government.
“NBET, for example, has a team of engineers that have conducted intensive, monthly, on-site monitoring of the works since the first day of construction. NGC has partnered with Azura in the construction of the gas spur line that connects the Escravos Pipeline System to the power plant and in the construction of the pressure reducing and metering station. TCN has also worked assiduously with Azura in the construction of the on-site switchyard and the connection into the neighbouring Benin-North Switchyard,” Azura added.
It further stated that: “Today’s milestone also marks the historic completion of an industry chain where all the links are forged together through commercially negotiated contracts. Siemens and Julius Berger built the plant under the terms of the EPC contract.
“The gas that was used to generate today’s electricity was supplied by Seplat Plc and the Nigerian Petroleum Development Company (NPDC) in accordance with the Gas Supply and Purchase Agreement. NGC transported the gas to the site in line with the Gas Transportation Agreement.
“The electrons generated were then transmitted across the country’s high voltage network by TCN per the Grid Connection Agreement. These same electrons were then bought by NBET under the terms of the PPA and sold to the 11 Discos under the Vesting Contracts between NBET and the Discos. Hence, for consumers and investors alike, the catalytic power of this value chain was on full display wednesday.”
Azura, noted that the milestone was a boost in the confidence of its investors, adding that the debt financing for the $900 million project was provided by a consortium of 15 banks from nine different countries, including most of the European development finance institutions.
“The Azura-Edo IPP is also the first Nigerian power project to benefit from both the World Bank’s Partial Risk Guarantee structure and the political risk insurance supplied by the Multilateral Investment Guarantee Agency.
“For each of the banks that have invested in the Azura-Edo IPP, the project has become a litmus test of the government’s commitment to the sanctity of contract. In many emerging markets, one of the principal anxieties faced by project-financed IPP investors pertains to payment risk.
“The tangible evidence of this creditworthiness will be furnished in January 2018 when Azura submits its first invoice to NBET for the power produced during the commissioning of the first turbine. Even though the sums involved are relatively small, the symbolism of this will be noted by investors around the world and will, no doubt, help to boost the country’s credit rating during the first quarter of next year,” it added.