By James Overly

As Governor Victor Attah and his state government commissioners began to develop their vision for the state of Akwa Ibom, they realized that, among the many obstacles they faced, there was one that affected nearly every element of the economy—the severe lack of reliable electric power.

The Nigerian Electric Power Authority (NEPA) had suffered from years of neglect. At the national level, corruption had siphoned large amounts of national grid development funds into politicians’ pockets.

"Neglect is the main reason," says Dr. Okon Ansa, Chairman of Ibom Power Company, Ltd., "that the national system is only 25-50 percent functional."

As always, the poor states of the Niger River delta, known as the "South-South" states, which includes Akwa Ibom, fared the worst. At one point, the national grid supplied only 3 megawatts of electricity—a quantity barely sufficient to meet the needs of a small village—to the state capital city of Uyo (population 130,000.)

Businesses suffered because the unreliable electric supply diverted revenues to buying and fueling expensive private generators. Power outages were daily occurrences for the people.

Moreover, without a reliable electrical supply, the myriad of infrastructure investments the Attah government envisioned would be stillborn. The science park with its state-of-the-art computer center, the planned refinery, the five-star hotel and championship golf course that is under construction, and the new international airport for which contracts have just been let, all require a reliable electricity supply.

In addition, extension of the state electrical grid to localities and rural villages was necessary to improve agricultural production. "We knew we couldn’t transform the state without power," Dr. Ansa said.

So Governor Attah and his commissioners took the decision to build an independent power plant. The creation of independent power plants was foreseen in national legislation, but it had never been done.
Governor Attah’s administrations, with the help of the World Bank, had to take the lead in developing the legal framework for the creation of a power plant, and negotiate the agreement that would stipulate how the independent power plant would relate to the national grid. That agreement was signed in 2002.

Work on the plant had begun in early 2001 with the laying of the cornerstone and the purchase of a 37.5-megawatt GE "Frame 6" gas turbine generator. A second Frame 6 turbine was purchased with bridge financing from the African Export-Import Bank and the UBA in early 2002.

While important project documents were signed in August 2002, including a power purchase agreement with NEPA, a Nigerian federal government guaranty, and a federal government support agreement, the early Chinese and American investor groups could not arrange the necessary financing.

"In late 2002," Dr. Ansa related, "the state government stepped in. With help from international consultants, the state raised the necessary funds." In August 2004, tenders were invited from 18 reputable companies for the first phase construction.
In January 2005, Group Five, a South Africa consortium, and GE were selected as EPC contractors.

"Both companies have indicated their intention to become major equity owners in the project." says Dr. Ansa. This step is internationally recognized as an important vote of confidence in its viability.
The initial output of 70 megawatts is due to come on-stream in August 2006.

The remaining 110 megawatts of Phase I are to come on-stream by the end of 2006. To achieve this output, GE’s Energy division announced earlier in December that it would supply a Frame 9E gas turbine generator and accessory equipment to the Ibom Power Company. The new GE Frame 9E and the two Frame 6B gas turbines will produce a total of 180 megawatts of power.

"Africa has tremendous potential and is a growth region for GE," says William Cooney, general manager of GE Energy’s thermal product line. "The Nigerian government plans to increase the country’s power generation capacity to 10,000 megawatts in the next two years, and we are positioned to help support that effort with our technology and global experience."

Negotiations for the second phase of the project to produce an additional 505 megawatts will commence before the end of 2006. Completion of Phase II of the project is targeted for December 2007. This promising project has not gone unnoticed among potential investors. Dr. Ansa says, "A number of credible power investor groups have already shown interest in Ibom Power Company Ltd, and discussions have commenced with a view to their acquiring substantial equity in the company."

Dr. Ansa estimates that at present usage levels, Akwa Ibom could consume perhaps 60-70 megawatts, and even the first phase could provide enough wattage to sell some to the national grid. However, he readily acknowledges that suppressed demand in Akwa Ibom will surely explode once a reliable electric supply is assured.

Nevertheless, even when that additional usage is taken into account, it is expected that total Akwa Ibom usage will be far below the planned final output of 685 megawatts.

The plant will be fueled by natural gas, currently being flared off as a waste by-product of oil production. A gas sales agreement is currently under negotiation with the petroleum companies operating in the state.