Nigeria: Eurobond funds pumped into gas infrastructure

Minister of Power Chinedu Nebo said on 16 August that N70.2 billion (US$450 million) from Nigeria's Eurobond has been allocated for gas-to-power infrastructure. The Eurobond was launched in early July and it raised US$1 billion. It was four times oversubscribed which reflected investor optimism about Nigeria's economic prospects, and it secured long-term capital for the government's plans to tackle rampant power shortages.

While Nigeria's abundant gas resources mean generation capacity could soar, with a target of 40,00MW by 2020, the weakness of the country's transmission infrastructure remains a serious bottleneck. The country's transmission grid has a current capacity of less than 6,000MW.

 

The government has secured an additional US$1.47 billion to upgrade the transmission infrastructure from other sources, including the World Bank, the African Development Bank and the China Export-Import Bank. To finance the Transmission Company of Nigeria an additional US$1.6 billion is expected to come from the sale of ten electrical plants under construction as part of the National Independent Power Project (NIPP).

 

The NIPP project was inaugurated in 2004 under President Olusegun Obasanjo to construct power plants throughout the country and sell them to private operators. This week, the Federal Government pre-qualified 82 consortia as bidders. To meet the standards, the groups were required to have three years' experience in operating a thermal plant of over 300MW as well as having a net worth of US$100-200 million. The list of preferred bidders is due to emerge in January 2014.

 

There is, however, a serious disconnect between government policy and implementation. To boost the power sector's development the Federal Government waives duties on the import of certain machinery and equipment. But the Independent Power Producers Association of Nigeria complains that administrative sluggishness creates long delays in the approval of the waivers.

 

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