Minister of Power, Barth Nnaji
In what appears to be the highest expression of investment support by a foreign investor for the country’s target to achieve 40,000 megawatts of electricity generation by 2020, the Federal Government and the General Electric (GE) Energy of the United States have signed a Memorandum of Understanding (MoU) for $10 billion power projects.
Under the MoU, which was signed at the weekend, the $10 billion would be invested in various power plants with combined capacity of 10,000mw, with GE taking 15 per cent equity in each of the power plants to be constructed.
The Minister of Power, Prof. Bart Nnaji, told journalists at the signing ceremony at the Nigerian High Commission in London, that GE only agreed to take up at least 15 per cent equity in each of the plants to be constructed, describing it as the highest expression of investment support for government’s target to achieve 40,000mw generation capacity by 2020.
According to him, GE’s willingness to work with the Federal Government on delivering 10,000mw is a show of confidence in President Goodluck Jonathan’s vision in the power sector.
“Even if the equity is one per cent, it is still significant because it will take us somewhere. And with 15per cent, Federal Government will provide the balance,” he said.
Nnaji, however, stated that government would not be involved in any of the projects, but would only provide guarantees for the private sector participants, adding that the local content would be huge because GE and any other foreign investor must have local partners.
He noted that the signing of the MoU came after GE had met with Jonathan in Abuja, following a series of general agreements for support in various sectors of the economy including power, transportation especially rail and health.
“What we are doing today is the culmination of a series of work done; some behind the scenes, and some in the open. With the meeting between President Goodluck Jonathan and the Chairman of GE last month in Abuja, there was a narrowing of areas of focus for the country and GE to collaborate on specific areas of focus. Accordingly, GE developed MoUs specific to the various sectors, and today, the MoU we are signing relates to power alone,” he said.
The minister, who acknowledged that $10 billion was very ambitious in view of the crisis at the international capital market, noted that with GE’s cash and government’s bank guarantees, the projects would become much more bankable, as investors could approach financial institutions to raise funds.
He said the relationship between the Federal Government and GE was a long term one, as the energy company had moved from just being a supplier of power equipment in Nigeria, to being an equity investor.
“The MoU creates a relationship that will allow GE to not just selling turbines to Nigeria, but also have equity participation in collaboration with the government and private sector,” he added.
Also speaking, GE’s President, Sub-Sahara Africa, Mr. Jay Wileman, said with the signing of the MoU, things could get rolling, as “now is the beginning of the real work of delivering power in Nigeria”.
He recalled that discussions with his company started in 2009, and stated that Nigeria required a different approach to meet its power needs leading to the ramp up of agreements.
With the MoU, he said Nigeria had become “the epicentre of GE’s focus and we will be bringing in our experience, and partners to demonstrate our capacity”.
Nigeria’s Acting High Commissioner in Britain, Ambassador O. Anozie, said the epoch making event complements President Jonathan’s reform agenda particularly in the area of power since power is a prerequisite for economic and national development.
GE’s President and Chief Executive Officer, responsible for East, West and Central Africa, Dr. Lazarus Angbazo, had told THISDAY in a recent interview that the Federal Government had done quite a decent job of the power reform process.
“That process has taken sometime but I think it has made tremendous progress and it has taken the right level of steps. To support this process, GE is working with a number of Independent Power Producers (IPPs) that are interested in investing in the sector. We are also working with some interested investors, who are bidding for the distribution and generation assets that are being privatised. So, we see a good number of opportunities in those areas,” he said.
Global Vice-Chairman of GE, Mr. John Rice, had also told THISDAY in a separate interview that the Federal Government power reform was moving in the right direction.
“When I speak with the leaders, I don’t have any reservation at all about their commitment. They understand the importance of electricity in this country; they understand the importance of job creation; they understand the importance of healthcare and creating better healthcare and managing it for everybody in the population,” he said.
