OpeOluwani Akintayo
Lagos — State oil firm, the Nigerian National Petroleum Corporation, NNPC has divulged its intention to make six of its Independent Power Plant Joint Ventures, IPP JVs more efficiently manage for profit maximisation through private investments.
In a document on its proposal to investors obtained by SweetcrudeReports, NNPC explained that the new move is in its “bid to becoming an energy company of the future”.
According to the Corporation, six of its IPP JVs; Abuja IPP, Kaduna IPP, Kano IPP, Agura and Obite, Afam VI (650MW), Okpai Phases I (450MW) and II (480MW) are already on the negotiation table.
The document also highlighted other sectors that had caught the state oil company’s interest. They include renewable energy, real estate, and healthcare.
Economic analysis for the IPPs
| Abuja | Kaduna | Kano IPP | Okpai II IPP | QIPP | Agura IPP | ||
| Project Structure | PPP in the form of BOO | PPP in the form of BOO | PPP in the form of BOO | PPP in the form of BOO | PPP in the form of BOO | ||
| Power plant capacity | MW | 1,350 | 900 | 1,350 | 480 | 540 | 750 |
| Total project cost | $’Mill | 1,770 | 1, 310 | 1,900 | 658 | 1,140 | 900 |
| 70% debt funding | $’Mill | 1,239 | 917 | 1,330 | 460.6 | 798 | 630 |
| 30% equity funding | $’Mill | 531 | 393 | 570 | 197.4 | 342 | 270 |
| GPIC equity(to be funded by GPIC) | $’Mill | 107 | 39.23 | 279.3 | – | – | – |
| Revenue (Life Time) | $’Mill | 16, 742 | 960 | 3,580 | 6,748 | 387 | 9,873 |
| Revenue (Avg. Annual) | $’Mill | 837 | 48 | 179 | 337.41 | 19.33 | 493.64 |
| NPV @6.5% | $’Mill | 2,648 | 264 | 1,055 | 658.12 | 52.98 | 759.62 |
| IRR | % | 25.36 | 18 | 19 | 18 | 11 | 18 |
| Payback period | Years | 7 | 10 | 10 | 5 | 8 | 6 |
| PPA period | Years after COD | 20 | 20 | 20 | 20 | 20 | 20 |
| Off-taker | NBET/AEDC/Others | NBET | NBET | NBET/EEDC | NBET | NBET | |
| Tariff (COD) | $kWh | 0.069 | 0.069 | 0.069 | 0.69 | 0.69 | 0.69 |
| Interest rate | % | LIBOR+3 | LIBOR+5 | 7 | 7 | 7 | 7 |
| WACC | % | 7 | 8 | 8 | 8 | 8 | 8 |
- Abuja IPP: Economics is based on Project Financing. Project IRR without financing is 17.89%.
- Kaduna IPP: Economics is based on GPIC Equity only Financing. Project financing IRR is 24%.
- Kano IPP: Economics is based on GPIC Equity only Financing. Project financing IRR is 25%. 49% equity is assumed for Kano IPP.
- NNPC 15% equity in QIPP is 100% Carried by Black Rhino but GPIC indicated that $1M is equity still required for QIPP
- QIPP Revenue/Economics is based on GPIC15% equity Financing while others are project-based. Equity IRR is 11% while project IRR is 15.2%
- Agura: GIPC 30% Equity funding amounts to $270M. Project IRR is 18%.
- GPIC Equity for Okpai II, QIPP, and Agura are not indicated by GPIC but that of QIPP is obtained as 15% • Okpai II: Located in Kwalle, Delta State is a 480mw plant Initiated by NAOC to increase Okpai capacity to 930mw. The project offers an IRR of 18% and payout of 5yrs. Off-take is NBET/EEDC. The project has been initiated. EPC contract is being executed and EIA in place. NERA license obtained.
Regarding the Abuja project, NNPC subsidiary, the Nigerian Gas and Power Investment Company, NGPIC said it may divest as much as 29% from its 49% equity (Abuja IPP Strategic Partners: GE/CMEC: NNPC 49% and GE/CMEC 51% Equity). The United States Trade and Development Agency, USTDA is currently conducting feasibility study on the project.
NGPIC said it is seeking credible investors to buy down NNPC stake to minority stake in the Afam VI (650MW), Okpai Phases I (450MW) and II (480MW) plants.
