About $1.7bn will be invested by foreign investors in the Qua Iboe Power Project in Akwa Ibom State.
The Governor of Kano State, Abdullahi Ganduje, gave the figure when he led a delegation to meet the Minister of Finance, Mrs Zainab Ahmed, on Tuesday, in Abuja.
The purpose of the meeting was to seek the support of the Federal Government to enable Kano State to have access to the power supply from the project for its industrialisation programme.
In a proposal to the minister dated January 7, 2019, the governor highlighted the understanding reached with other partners in the project.
According to him, QIPP has secured a firm commitment of equity funding of $350m from Globeleq and project finance of $850m from the International Finance Corporation, African Development Bank and other partners for the construction of a thermal power plant located in Qua Iboe in Akwa Ibom State with a capacity of 540 megawatts.
He said the funding was conditional upon the guarantee of the finance ministry for a power purchase agreement to be executed between QIPP and the Nigerian Bulk Electricity Trading Company.
The guarantee, he said in the proposal, would be further backed by a partial risk guarantee issued by the world bank.
He said that Exxon-Mobil was also prepared to commit about $500m to build a gas pipeline from its deep offshore platforms to supply the gas needed for QIPP to operate, thus bringing total foreign direct investment for the project alone to $1.7bn.
He said, “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.
“The Managing Director of the Transmission Company of Nigeria has given a firm assurance that once power is delivered to Ikot Ekpene, the TCN will be able to deliver an equivalent amount of power to Kano on a binding contractual basis for a fee.
“The TCN will assume full liability for power delivered to the grid and not transmitted as contracted.
“The MD of TCN has further confirmed that, based on already approved funding from development partners, the TCN will be technically competent to do this before QIPP starts generating power as the transmission lines from Shiroro to Kaduna and from Kaduna to Kano will be fully operational with enhanced capacity within two years from the commencement of project.”
He added, “We further understand that the country is at risk of losing this huge investment of $1.7bn because of the reluctance of the Federal Government to assume additional unhedged financial risk on the power sector given the current experience with Azuru and other players.”
The finance minister, according to a statement issued by her Media Adviser, Paul Ella, gave the Federal Government’s assurance on the project.
She said, “Let me assure you that it is not an issue 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.”
“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 the project would help to improve the industrialisation plan for the state.