A Review of the Nigerian Energy Industry

NERC splits Zuma’s coal licence into four

NERC Chairman, Dr. Sam Amadi*Firm to build 1,200Mw coal plant

Oscarline Onwuemenyi

17 February 2015, Sweetcrude, Abuja –
The Nigerian Electricity Regulatory Commission, NERC, has amended and separated into four different parts the statutory licence earlier granted to Zuma Energy Nigeria Ltd for the construction of a 1200 megawatts (MW) coal power plant at Itobe, Kogi State.

A statement from NERC obtained by our correspondent in Abuja, said by the amendment assigned four different licences to four new beneficiary Special Purpose Vehicles (SPVs), which will now take up the construction of the power plants in capacities 300MW respectively.

The companies, Itobe 1, 2, 3 and 4 Coal Power Plant Limited are still under the stable of Zuma Energy, however, they will each build 300MW capacities coal power plants within a defined timeframe and as well separately negotiate Power Purchase Agreements (PPAs) and tariff rates with the Nigerian Bulk Electricity Trading Plc and NERC.

The Chairman of NERC, Dr. Sam Amadi explained that Zuma had earlier applied to NERC for its licence ot build a 1200MW coal power plant to be amended.

According to him, the amendment would make for ease of construction, and therefore increase the speed of bringing the project to fruition.

On his own part, the Chief Executive Officer of Zuma Energy, Dr. Innocent Ezuma explained that upon its satisfaction of NERC’s statutory requirements for such amendment, the commission granted it the licences with which it will now build the plants.

He noted that the decision to seek an amendment on its earlier licence was majorly for ease of construction.

He said, “Basically it is for ease of implementation. As you may understand, to build 1MW coal power station you will require about $3 million. So, if you are building 1,200MW, you will require approximately $5 billion and this is a huge amount of money for any investor at this time when Nigeria is just beginning to tap into its coal resources.”

He added that, “With the sub-division of these licences, it means that we can embark on two projects simultaneously at a time. The time-line for the construction of a coal-fired power plant is between two and half to three and half years.

“And soon as we hit the ground running on the first one, we will immediately start the first, the second and third plants. It will be a rolling project. We will not wait for the first one to be completed before we commence the others.”

While explaining the next plan of the company for the SPVs, following the licencing, Ezuma noted that, “By the reason of receiving these licences we must hit the ground running. Very soon we will seek the approval of a tariff for the four SPVs that will enable me to execute PPA and by the end of this year, you will be invited to the ground-breaking of the first unit of the Itobe 1 coal-to-power 300MW plant in Kogi State.”

He equally spoke about the financial plans for the project as well as the technology it hopes to deploy at the plant.

“The equity for the plant had been over-subscribed by investors. Power plants are not funded solely. The development phase of a power plant is always funded by sponsors. But as I speak to you, Zuma Energy has invested huge sums of money to develop this plant up to this level solely.

“However, at the time of financial close, there will be other strategic equity investors and of course other financiers from the banking sector that will fund part of the project. But the equity of the project has been oversubscribed,” he said.

Ezuma stressed the environmentally friendly technology for modern day coal mining has made it one of the most viable sources of energy generation globally.

He said, “Today, the latest technology in coal management is environmentally friendly. The technology we are adopting does not have smoke and it does not have fire.

“The emission standard is way below the World Bank standard. So, what we are implementing in Nigeria is the latest clean, coal technology being built in America, Germany and other parts of Europe. Our coal is sweet and its sulphur content is very low, hence its emission is next to nothing.”

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