By Tony Obiechina, ABUJA
The Federal Government has approved Kano State Government’s proposed 540 megawatt Qua Iboe Power Plant (QIPP) for the re-industrialisation of the state.
The Minister of Finance, Mrs Zainab Ahmed conveyed the Federal Government’s approval on Tuesday, when she received the Kano State Governor, Dr Abdullahi Umar Ganduje and his team in Abuja.
The Minister, in a statement by her Special Adviser on Media and Communications, Mr Paul Ella Abechi, said, “Let me assure you that it is not an issue of ‘if this project will take place but when’, because we have a very huge power gap and it is more in the northern part than in the south. And when we see an opportunity like this, we have the responsibility to ensure it comes into fruition.”
She said, “We are looking at this as a pilot project as this will help mitigate Federal Government’s plan. The ability to provide a counter guarantee will help a long way to reduce the burden on the Federal Government”.
She added that it will help to improve the industrialisation plan, growth, employment generation for the state.
“I want to make a commitment that the ministry of finance will put up our best efforts to make it a success. I hope at the end of the day it will be on record that during my tenure that I contributed to the industrialisation of Kano”, the Minister assured.
Earlier, Governor Ganduje while briefing the Minister about the project firm board BlackRhino Group, chaired by the Emir of Kano, Muhammad Sanusi II, assured that the Kano State Government will provide protection against the financial risk of the power project.
The governor noted that the the multi billion dollar project when completed will further accelerate the industrialisation drive of the state.
He said, “We wish to express the strong interest of Kano State Government in purchasing the electricity generated by QIPP and providing protection to your Ministry against financial risk. The Kano State Government is committed to industrializing of Kano as a critical component of its development plans. The shortage of electricity has been the principal factor hindering progress in this area.
“To this end, we welcome the opportunity offered to us by QIPP to have guaranteed stable supply of 540MW of electricity. We trust this will support the industrialisation of Kano and perhaps even neighbouring states (like Kaduna, Jigawa and Katsina) which have significant and critical unmet requirements for electricity.
” To show our commitment to the project, we shall set up Kano State Bulk Electricity Trading Company (KBET) which will buy all the power generated by QIPP from NBET in the form of a back-to-back Power Purchase Agreement (PPA). The Kano State Government will use the period during which QIPP is being developed to ensure the establishment of eligible customers in the form of industries as part of its Industrial plan and, if necessary, agree to supply neighbouring states which identify eligible customers. KBET will be assuming the risk of finding customers for this power and collecting tariffs.
“We request you to kindly approve the request made by QIPP as the FG will not be assuming any risks before financial close. On our part we are ready to start the process of setting up KBET through an Act of the State House of Assembly and once this is done, we will be in a position to provide the guarantee backing its obligations. We will also set up a steering committee and start engaging investors now that we can give them assurances of available electricity once QIPP comes on stream in three years. We consider this a win-win situation all round.
“It is our hope that you will expedite these approvals based on the understanding outlined in this letter. We are working closely with His Highness the Emir of Kano in his capacity as Chairman of BlackRhino Group (the promoters of QIPP) and Chairman of the Kano State Investments Advisory Council to use this project to return Kano to its status as the Industrial nerve-centre not just of northern Nigeria but the Sahel. We count on your support and cooperation to make a success of these truly transformational plans.
The governor had in a proposal to the Minister of Finance dated January 7, 2019 highlighted the understanding reached with other partners in the project.
According him, QIPP has secured firm commitment of equity funding of $350million from Globeleq and project Finance of$850 million from IFC, OPiC and AfDB for the construction of a thermal power plant located in Qua Iboe in Akwa Ibom State with a capacity of 540MW.
The letter reads in part, “This funding is conditional upon the guarantee of your Ministry for a power purchase agreement (PPA) to be executed between QIPP and the Nigeria Bulk Electricity Trading Company (NBET) and further backs by a Partial Risk Guarantee issued by the World Bank.
“Exxon-Mobil is also prepared to commit about $500 million to build a gas pipeline from its deep off-shore platforms to supply the gas needed for QIPP to operate, thus bringing total Foreign Direct Investment (FDI) for this project alone to $1.7 billion. QIPP has also assumed completion risk of a transmission line from Ikot-Abasi to Ikot-Ekpene in order to ensure supply of power to the national grid”.
