Nigeria's multi-billion dollars gas project threatened by a shortage of funds

Nigeria’s first privately-financed independent power project, Qua Iboe Power Plant, is facing shortage of funds.

Emir of Kano, Muhammadu Sanusi II and Paul McGrath, Lead Country Manager, ExxonMobil during signing of QIPP in 2017
  • The $1.1 billion Qua Iboe Power Plant, located in Akwa Ibom is expected to add 540mw to national grid.
  • The delay put a setback to the power supply in Africa's biggest oil producer and exposes the government's inability to improve ease of doing business.
  • Government officials are in talks with the World Bank to raise funds.

Nigeria’s first privately-financed independent power project, Qua Iboe Power Plant, worth $1.1 billion to be jointly developed by the Black Rhino and the state-owned Nigerian National Petroleum Corporation (NNPC) is facing difficulties.

In an exclusive report by Reuters, the projected timeline of December 2018 is far from reach, according to NNPC.

The state oil firm said the Nigerian Bulk Electricity Trading Company (NBET), another state-owned firm, caused the delay in the takeover of the project over firm’s increasing liabilities.

“The continued delay relates to the current cashflow challenges at NBET, as highlighted by the Azura project,” a spokesman for NNPC told Reuters in an email conversation. “This concern is justified by the fact that NBET is yet to see an improvement in collections from DISCOs (distribution companies).”

Nigerian Bulk Electricity Trading Company (NBET) buys power from generators and passes it on to distributors who then collect money from customers and reimburse NBET.

Apart from Black Rhino, NNPC, Azura Power and Dangote Group were also stakeholders in the financing deal. Although Dangote said it had pulled out of the deal.

The $1.1 billion Qua Iboe Power Plant, located in Nigeria's south-south region, Akwa Ibom, is expected to contribute 540 megawatts to the national grid when completed.

With the delay, this put a setback to the power supply in Africa's biggest oil producer and exposes the government's inability to attract private investment and sustained business-friendly environment as contained in the economic recovery and growth plan of President Muhammadu Buhari-led government.

According to the report, government officials are in talks with the World Bank about long-term structural changes needed to trigger the release of a $1 billion loan to help pay for reforms.

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