Delay in approving Mobil’s 500 megawatts IPP raises concerns

Delay by the Nigerian National Petroleum Corporation (NNPC) in giving approval for the construction of the 500 megawatts (MW) independent power project being undertaken by Mobil Producing Nigeria Unlimited has left the project stranded, throwing a spanner in the efforts by the Federal Government at ensuring stable power supply in the country.

BusinessDay was reliably informed that the necessary technical work was completed seven months ago and forwarded to the management of NNPC for its board’s approval, but the documents have been gathering dust on the corporation’s shelves while the country battles to improve power delivery beyond the current 3,000 megawatts daily generating capacity.

Mobil Producing Nigeria Unlimited (MPN), operator of the NNPC and MPN Joint Venture, has signed a Seller’s Representative Agreement (SRA) for the Qua Iboe Power Project, located at Mobil’s Qua Iboe terminal in Akwa Ibom State.

The proposed power project includes the construction of a 500 megawatts-capacity power plant as well as a 56-kilometre transmission line connecting the plant to the national grid at Ikot Abasi, also in the state.

The signing of the SRA was a critical part of the overall commercial framework that enables MPN to undertake power activities and facilitate the sale of power by it to the Nigerian Bulk Electricity Trading plc, for itself and on behalf of the NNPC.

Some power industry stakeholders who see the project by ExxonMobil as a tangible demonstration of the company’s commitment to Nigeria and support for the president’s priority of providing electricity to the country say it is disappointing that such a strategic and critical project has been left stranded for this long.

The Front End Engineering Design (FEED) and Environmental Impact Assessments (EIAs) for the project had been concluded, while commercial tenders for Engineering, Procurement and Construction (EPC) were near completion.

Mobil Producing Nigeria awarded the FEED contract for the project in September 2009 and performed the groundbreaking in March 2010.

FEED is the conceptual process of development and design for large industrial projects such as power plants. The power plant will provide 330kv export power to the national grid.

Some industry watchers linked the delay to a certain official in the exploration and production department of the NNPC who has now been relieved of his position.

It is alleged that the official had, shortly before he was relieved of his position, said at an interactive session with chief executives of oil companies at the recently concluded Nigeria Oil and Gas Conference and Exhibition in Abuja that no approval would be given to any project that did not have a ‘realistic’ budget, and wondered why projects in Nigeria were always costlier than what obtained elsewhere.

The said official further alleged that the oil companies were also in the habit of lumping projects together for approval, while he preferred that such projects be forwarded one at a time.

It was said that the official had further urged the oil companies to synergise their operations in order to reduce costs because of the urgent need for project optimisation.

Also speaking at the occasion, Mutiu Sunmonu, chairman and managing director, Shell, acknowledged that there were challenges but said they were being worked on in order to facilitate smooth operations in the industry.

Olusola Bello