19 November 2012

Nigeria: Katsina's 60 Megawatts Power Projects - Will They Come to Fruition?

Katsina — On Monday the 12th November 2012, Governor Ibrahim Shehu Shema of Katsina state flagged off the construction of a 30mw solar energy plant in Kankia town of Kankia local government area of the state.

The plant is estimated to cost 55 million euro, the equivalent to N13.7 billion, according to the Katsina state commissioner of resource development, Engineer Musa Nashuni. With the flagging off of Kankia 30mw energy project, Katsina state now has three energy plants underway, and expected to generate 60mw after completion.

The first was Rimi-Lamba 10mw wind-mill farm which was initiated by the late President Umaru Musa Yar'Adua when he was Governor of Katsina State. The project was later taken over by the federal government after late Yar'Adua had become President in 2007. The second project is the 20mw solar energy plant initiated by the incumbent administration.

But several years after, the 10mw project is yet to see the light of the day. The site Manager of Vergnet Engineering Company, Mr. J. C Jallon said company has completed its works and the plant is ready for commissioning but the company is waiting for two of its engineers who will come to Nigeria from France to inspect some equipment before the commissioning of the plant. He said visa issue has been the problem.

"We have applied for the visa for the officials to come to Nigeria but I don't know why the Nigerian Immigration officials are delaying us; I am going back to Abuja in respect of the issue because it they don't come to the site we cannot commission the plant," he said.

"I met with Governor Ibrahim Shema last week and I lodged my complaints to him and I am sure he will intervene. Our major constraint now is delay in getting the visa for our engineers and once this problem is addressed the plant can be commissioned," he added.

Both 30mw and 20mw energy plants were located in Kankia town of Kankia local government area of the state. They are located side by side. While the former was covers 70 hectares, the latter covers only 50 hectare. Both are being handled by German companies. While 30mw plant is being executed under Nigeria/German energy partnership, the 20mw is being constructed by German company.

According to the commissioner for resource development, Nashuni, plans are underway to establish another 10mw solar energy plant in Funtua zone to boost electricity supply in the area. He said the 20mw will gulp about 70 million US dollar equivalent to N11.2 billion, while the proposed 10mw funtua solar plant will cost over N5bn. Nashuni added that feasibility studies had already been conducted for the 20mw plant and the project would be completed within one year.

Daily Trust gathered that the idea for establishing Kankia solar plant was driven from Nigeria/German partnership. The concept of the partnership was to deploy German technology to generate electricity in Nigeria through renewable energy sources. After signing of agreement by the two countries, some states including Katsina were selected as beneficiaries.

It was under this agreement that Katsina state government signed a memorandum of understanding with Hellious Energy Group to develop the Kankia 30mw solar energy plant, Daily Trust learnt. The project is to be completed within 18 months.

Katsina State government as partner is required to provide land and facilitate acquiring of regulatory approvals from the various agencies of the federal government. The state was also at the liberty of investing up to 15 per cent of the total cost of the project.

After complying with contractual formalities, Katsina State government had provided 70 hectares of land and engaged the services of experts to conduct environmental impact assessment and feasibility studies on the proposed site. Alhaji Musa Nashuni, the state commissioner of resource development has told Daily Trust that Katsina state government had already contacted the federal ministry of environment and Nigerian Electricity Regulatory Commission (NERC) on the issue of approvals.

Daily Trust gathered that the 30mw solar plant was located in Kankia town so that the electricity to be generated from the plant can easily be connected to the national grid through the Power Holding Company of Nigeria (PHCN)'s sub-station, also located in Kankia town.

The sub-station supplies electricity to Daura and Katsina axis; therefore by connecting the plants to the sub-station it means that Katsina State will be the major beneficiary of the project.

The equity contribution of Katsina state

According to Engineer Nashuni, the project is going to be financed through equity and loans. He said Hellious Group will acquire loans from some European banks for the execution of the project apart from what the company and Katsina state government will invest.

According to the contractual agreement Katsina state government is investing 15 per cent of the N13.7 billion which is about N2bn, while the balance of the 85 per cent would be contributed by Hellious group and some European banks.

Katsina State government will benefit 15 per cent of the total profits generated from the sales of power while the remaining 85 per cent would be shared among other investors depending on their investments in the project. This sharing formula will be maintained for the period of 20-25 years when Hellious is expected to hand over the plant to Katsina State government.

The chairman, Hellious Energy, Mr. Richard Sellers, said at the flagging off ceremony of the project that when completed, the plant will be connected to the national grid for onward sale of the electricity generated from it to bulk traders at commercial rate.

Government has noted that apart from improving electricity supply to national grid, the plant will also boost economic activities not only in Katsina State but to neighbouring states like Kano where hundreds of industries were shut down due to epileptic power supply.

What the people say about the project.

A chieftain of the Congress for Progressive Change (CPC) in Katsina State, Alhaji Mustapha Muhammad Inuawa, said on paper the project is good but the problem lies on the sincerity of the parties involved, especially the commitment of the state government to ensure speedy completion of the project.

"We expect such project to undergo thorough study with regard to what Katsina state will benefit. My fear is that Katsina State may invest huge money in the project now but end up benefiting nothing courtesy of insincerity on the side of government," he said.

"The governor may decide to invest the N2bn now but after a year or so when things collapse, he may not be around to explain why or how. So I hope and pray that this project would be executed properly because the 10mw owned by the federal government was supposed to be commissioned a year or so ago but up till today it has not been commissioned. I hope the Kankia 30mw will not be handled in a similar way," he lamented.

A resident of Kankia, Mallam Aliyu Muhammad said he believed that when completed, the project will provide job opportunity to Kankia youths.

"Even those who have not acquired western education can work in the place as labourers in the plants," he observed.

For now, many observers believe that given the power situation in the country which has among other things taken the cost of doing business to prohibitive levels, the idea of the power plants is a noble one. Several billion dollars have been wasted by the Federal Government on power projects over the years without commensurate result. The question therefore is; will the Katsina experiment come to fruition?

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