Nigerian gas-fired plant expansion threatened by debt

Ongoing generation and future expansion plans at Nigeria’s largest power plant are both under threat due to debt totalling N39bn ($20m), according to comments made this week by Kola Adesina, chair of Egbin Power, the plant’s owner.

Adesina told Nigerian media on Monday that the debt was due to failure by the government to finalize a power purchase agreement with the nation’s distribution companies, known as DISCOs. He said the debt had been accumulating since 2013 when the plant, formerly government-owned, was privatized and purchased by Egbin Power, a joint venture between Nigeria’s New Electricity Distribution Company and Korea Electric Power Corp (KEPCO).

The 1320 MW gas-fired plant, located in Lagos, recently achieved peak generation capacity of 1100 MW. However, this number fell by 40 per cent several weeks later due to inadequate gas supply, resulting in ongoing blackouts in three Nigerian states. Egbin Power does not have a gas supply agreement in place.

Adesina said his company has begun work on plans to raise the plant’s capacity to 2670 MW by 2019, with a feasibility study and Environmental Impact Assessment already underway. However, he noted that the process would face “serious challenges” due to the debt burden.

The expansion is set to cost around $1.3m.  

Adesina was quoted as saying that before the plant was privatized it “did not undergo any major overhaul, the six units were not functional and in particular unit six was not working for 10 years. But to date, we have rehabilitated all units and currently generating 1100 MW.”

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