FG in $10 Billion Power Deal With General Electric

A MEMORANDUM of understanding (MoU) involving Federal Government and the General Electric (GE Energy) has been signed in London.

The deal covers a N175 billion (about $10 billion) investment in power plants with capacity to generate 10,000 megawatts.

Power Minister Prof. Barth Nnaji, who led a delegation to sign the agreement at the Nigerian High Commission in London, told reporters that the GE has interest in acquiring at least 15 per cent stake in power plan.

The development countered earlier reports that the British firm wanted to build a 10,000 megawatts capacity plant in Nigeria.

The investment could be sunk into existing plants or on new plants. But such investment will be after the conclusion of the privatisation of the power sector, The Nation learnt.

According to the minister, the GE’s move is the highest expression of investment support toward the govern-ment’s aspiration of achieving 40,000 megawatts generation by 2020.

He said: “To have a company willing to work with us on the delivery of 10,000MW is a show of confidence in Mr. President’s vision.

“Even if the equity is one per cent, it is still significant because it will take us somewhere. And with 15 per cent, Federal Government will provide the balance.”

He explained the government will not be involved in any of the projects, but will provide guarantees for the private sector participants.

He said: “The local content will be huge power because GE and any other foreign investor must have local partners.”

The minister said what the government and GE had signed after a meeting with President Goodluck Jonathan in Abuja, was a series of general agreements for support in various sectors of the economy including power, transportation, especially rail, and health.

He said: “What we are doing today is the culmination of a series of work done, some behind the scenes, and some in the open. With the meeting between President Goodluck Jonathan and the Chairman of GE last month in Abuja, there was a narrowing of areas of focus for the country and GE to collaborate on specific areas of focus.

“Accordingly, GE developed MoUs specific to the various sectors, and today, the MoU we are signing relates to power alone.”

Nnaji described the $10 billion as very ambitious in the face of the cash crunch at the international capital market and noted that with GE’s cash and government’s bank guarantees, the projects would become much more bankable, as investors can approach financial institutions to raise funds.

He noted that the relationship between the government and GE is a long term one, as the energy company has moved from just being a supplier of power equipments in the country, to being an equity investor.

“The MoU creates a relationship that will allow GE to not just sell turbines to Nigeria, but also have equity participation in collaboration with the government and private sector,” he said

GE’s President, Sub-Sahara Africa, Mr. Jay Wileman, said with the signing of the MoU, things can get rolling because now is the beginning of the real work of delivering power in the country.

He recalled the discussions with GE started in 2009, adding that with the MoU, Nigeria has become “the epicentre of GE’s focus and we will be bringing in our experience, and partners to demonstrate our capacity.”

Nigeria’s Acting High Commissioner in Britain, Ambassador, O. Anozie, said the epoch making event complements Mr. President’s reform agenda, particularly in the area of power which he identified as a prerequisite for economic and national development.

Source: The Nation Newspapers

3 COMMENTS

  1. Why is the FG still investing money on assets that is in the process of being sold? Should they force the new owners of the plant to Partner with GE: Hence their 15% equity ? What ever happened to the “free” market policy ? What if GE goes the way of Enron? NIGERIA JUST SOLD OUT TO A FOREIGN COMPANY, PERIOD. Very soon the FG will claim that they are subsidising the Energy sector. What a waste!