Geogrid, MAN sign MoU for 10MW electricity to Ikeja industrial cluster
Geogrid LighTec Ltd, a privately-held independent power generation company has signed a Memorandum of Understanding (MoU) with the Manufacturers Association of Nigeria (MAN) to deliver 10MW of embedded generation within the Ikeja industrial cluster.
Geogrid plans to build a 30 megawatts hybrid power plant to be sited on a 4,500 square-meter space inside Cadbury Nigeria property but it is delivering 15MW in the first phase. Five megawatts would be generated for Cadbury.
Ibrahim Usman, chairman of MAN board of directors said the signing ceremony is part of efforts by manufacturers to take the bull by horns to resolve intractable power situation in the country for their members.
“As at today some companies spend as much as 40 percent of their cost on power and this obviously affects the competitiveness of our products. One of the biggest concern for the nation as a whole is the issue of diversification, to produce goods that are comparable to those imported, this cannot be done if we don’t have power at the right price, if we don’t produce goods that are not only good in terms of quality but also can be competitive in terms of pricing.
“If 40 percent of the cost of our production comes from electricity, you can imagine what will happen in terms of pricing where the same product will be produced elsewhere where they spend 7- 10 percent only on power, it is therefore very important for the Nigerian manufacturing concern to have power at reasonable cost, this why we are partnering with Geogrid to ensure that our cluster in Lagos gets electricity.
MAN is an advocacy group comprising of about 2400 members in Nigeria. The group registered a power company which interfaces with power producers to ensure members get supply at a cost that will keep them in business.
Emmanuel Ocholi, chairman of Geogrid said the company secured a license from the Nigerian Electricity Regulatory Commission (NERC) for 30MW of power to be situated in Cadbury for 10 years.
In March this year when the project was first proposed, BusinessDay gathered that Geogrid was proposing to build the plant at the cost of about $25million, the company did not confirm if the agreed amount after negotiations with MAN.
“The plan is billed to run 70 percent on gas and 30 percent on diesel to ensure that there is no down time, Dayo Sobitan, managing director of the company told BusinessDay at the time.
The company said the plant would rely on Gaslink for supply of gas and is also talking to offshore gas suppliers to complement the plan. The plant would deliver power either at 11KVA or 33KVA lines depending on transformers available to the customers. Geogrid’s value proposition is that customers would have the option of take and pay rather than the take or pay option.
On why the project had been delayed, Usman, explained that they were waiting on the eligible customer declaration by the minister of Power, Works and Housing and the Nigerian Electricity Regulatory Commission to finale the policy.
Ayodele Oni, energy lawyer and partner at Bloomfield law firm, who advised on the project, speaks on its significance: “It is significant because this is the first time the manufacturers as a body are going into an arrangement such as this and they are taking advantage of the eligible customer regulation which has kicked at the right time.”
ISAAC ANYAOGU