Shortage of cash threatens $1.1 billion power plant

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

The $1.1 billion power plant, located in Akwa Ibom, is expected to add 540megawatts (Mw) of electricity to the national grid.

The delay puts a setback to the power supply plans of  the Federal Government and ability to rejuvenate the comatose industries.

It was however gathered that government officials have started  talks with the World Bank to raise the needed cash.

The independent power project,valued at $1.1 billion is to be jointly developed by the Black Rhino and the state-run oil firm, the Nigerian National Petroleum Corporation (NNPC).

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 the firm’s increasing liabilities.

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

NBET buys power from electricity generating companies (GenCos)  and passes it on to electricity distribution companies (DisCos) 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.

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.