Coal fired 1,200 megawatts power plant takes off Q1 2013

The Federal Government has concluded plans for the take-off of a coal fired electricity power plant that will add 1,200 megawatts of electricity to the national grid in the first quarter of 2013, and also supply power to Ajaokuta Steel Complex in Kogi State. The plant will be sited in a community between Benue and Enugu states. The new plant is part of a public private partnership (PPP) arrangement with a Chinese firm, HTG Pacific and Nigerian consortium, ETA Zuma Holdings. The minister of solid minerals development, Mohammed Sanda, who said this in an exclusive interview with BusinessDay, said a memorandum of understanding (MoU) for the project would be signed mid January 2013. According to him, the firm has started delivering 25 megawatts of electricity to the Ajaokuta Steel Complex which already has mobilised an interim management team preparatory to full take-off. On the legal crisis rocking the Ajaokuta Steel plant, the minister said that the Federal Government was planning an out-of-court settlement with India’s Global Infrastructure Holding Limited (GIHL), whose sales/concessioning agreement on the Ajaokuta Steel Complex was terminated after it was discovered to have breached the initial agreement. It would be recalled that Ukrainian company, Vazhmashimpeks, in partnership with LLC Reprom of Ukraine, early in 2012, had presented a technical and commercial proposal for reactivation of metallurgical plant in Ajaoukuta to the government with a proposal to invest about $2.5 billion into the project. According to Sanda, “Ajaokuta already has a sole administrator and we have a huge machine workshop which is the biggest in sub-Saharan Africa; we have rolling mills that are now working in preparation for the full take-off, as well as all the necessary expertise on the ground. We have a power plant that is generating 25 megawatts of power, they have a capacity for 110, but they are ready to start off with 25 megawatts which will be sufficient for all their operation at the steel complex. “We are in discussion with the Ukrainians. Ajaokuta also has reactivated its training school which is capable of training technicians from the West African sub-region,” he said. He declared that “legal bottlenecks involving the Indians who initially took over the firm is stalling the full take-off of the plant. “It is a legal issue and the office of the Attorney General of the Federation has assured me that it is being handled”, he said. The Ajaokuta Steel project was established in September 1979 by the Federal Government to serve as a base for Nigeria’s industrialisation. The minister noted that the project was an integrated iron and steel complex, based on the conventional blast furnace (BF) route iron making and basic oxygen furnace (BOF) for steel making. But following poor management, asset stripping and heavy debt burden, the government revoked the sale/concession of Ajaokuta which it entered into in 2004 with GIHL. The Indian company was alleged to have pledged the assets as collateral in a loan it secured from some local banks put at over N350 billion. Chief executive officer of ETA, Zuma Holdings, the Nigerian partners working with the Chinese firm, Innocent Ezuma, who confirmed the development to BusinessDay, disclosed that the project would have taken off but for some bureaucratic bottlenecks. “Basically, the project is at an advanced stage of completion. The company has just concluded arrangements for technical agreement and by the mid of January 2013 an MoU will be signed. “We are now reviewing the finance and pricing. We actually have an MoU raised with a Chinese corporation and banks to invest about $1.5 billion. “The only challenge on the way of the consortium is the guarantee from the Nigerian Bulk Electricity Trading Company which is expected to sign the power purchase agreement. “We will need a sovereign guarantee, or guarantee from the African Development Bank (AfDB) to cover the losses for the power produced by the company. “We are not asking government to give us money, we are saying that we will produce the power, put it in the grid and improve electricity generation which will stimulate economic activities, but we will want to make sure that we are paid when we do that.” He disclosed that the firm has engaged about 750 Nigerian staff with a potential of additional 3,500 Nigerians to be employed with the mining of coal and full commencement of the power generation plant. He noted that the company’s lofty ideas have, however, suffered several setbacks due to bureaucratic bottlenecks. The Ukrainian ambassador to Nigeria, Valerii Vasyliev, who also spoke on the issue, disclosed that Ukrainian businessmen were eagerly waiting to take over the plant with their $2.5 billion investments as soon as all the legal issues were resolved. He disclosed that besides the projects in the metallurgical industry, Ukrainian investments could also be involved in the Nigerian mining sector for construction of the industrial enterprises, power generating and distributing facilities, gas pipeline construction, road and railway infrastructure development, sphere of civil engineering and other sectors of Nigerian economy.