Nigeria’s US$1.3 billion 700-MW Zungeru hydroelectric project deals with challenges

700-MW Zungeru Hydroelectric Project

At one point, legal challenges from vested interests were slowing work at the 700-MW Zungeru hydroelectric project in Nigeria that was first begun in 2013, according to Minister of State for Power, Mohammed Wakil. However, the execution of an amended bill might allow the US$1.3 billion project to move forward.

At issue is the amount of revenue needed to fund the Hydroelectric Power Producing Areas Development Commission (HYPPADEC) Bill. The bill is an offshoot from the HYPPADEC Act the government of Nigeria ratified in 2010.

HYPPADEC, among other things, is responsible for curbing of the ecological problems facing communities brought on by the construction and activities related to hydroelectric power projects. HYPPADEC also establishes a governing council: management, advisory and monitoring committees.

Initially, HYPPADEC required project owners to pay 30% of revenue from the sale of energy to fund the bill.

An amended bill presented in April includes a 10% contribution of the total revenue accruable to the power firms and 25% of the ecological fund due to HYPPADEC states, while the federal government will contribute 50% of amount contributed by the benefiting states. It appears the amended bill will be implemented.

A schedule enumerating the length of time the bill must be funded is not readily available.

The Zungeru hydropower project will provide power generation, flood protection and water for irrigation. The project includes a roller-concrete compacted dam (90 meters in height and 1,090 meters in length), an intake tower and diversion tunnel, underground powerhouse, power transmission line and access road. Once complete, Zungeru will be the largest power station in Nigeria, according to developers.

The communities affected by the project include 88 wards in Shiroro, Rafi and Wushishi local government areas of Niger State.

REMP

Zungeru is one of several hydro projects that are part of Nigeria’s Renewable Energy Master Plan (REMP) proposed in 2006. REMP seeks to increase the supply of renewable electricity – including wind, solar, biomass and small hydro – from 13% of total electricity generation in 2015 to 23% in 2025 and 36% by 2030, according to the Nigerian government.

The government said additional hydro power plant (HPP) projects in various stages of development include 3,050-MW HPP, 360-MW Gurara II HPP, 38-MW Dadinkowa HPP, 40-MW Itisi HPP and 3,100-MW Mambilla HPP.

Nigeria’s population is more than 160 million people and published reports indicate the country’s 10 national integrated power projects only generate 4,000 MW of electricity. Additionally, as of 2013, power outages continue to be a daily occurrence. Officials think Zungeru will generate enough hydroelectric power to provide reliable energy to more than 400,000 homes.

Development

With its four 175 MW hydroelectric turbines, Zungeru is the largest power plant financing project in sub-Saharan Africa that uses the “concessional loans and preferential export buyer’s credit” of the Export-Import Bank of China (China Exim), according to the China National Engineering Electric Co. Ltd. (CNEEC)-Sinohydro consortium. Concessional loans and preferential export buyer’s credit are used as Chinese government official development aid to developing countries. China Exim is the only bank designated by the Chinese government to implement this type of financing.

CNEEC-Sinohydro partnered with the government of Nigeria in 2012 to construct the 700-MW Zungeru hydroelectric project on the middle and upper reaches of the Kaduna River near Zungeru, Niger, Nigeria. The project completion date was originally scheduled for 2017, but court actions preventing construction phases will push back the plant’s commissioning date.

Wakil said his government is concerned about the legal actions, “but was making an effort to ensure out of court settlement on all issues surrounding the project.”

China Exim is supplying about 75% of funding, while the Nigerian government is contributing the remaining 25%, or about US$309 million.
 

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