Geometric signs gas supply agreement with SPDC, Agip, Total, NNPC JV partners for Aba IPP

The city of Aba, the commercial hub of the South East, is inching closer to 24-hour uninterrupted power supply with the signing in Abuja of Gas Supply and Aggregation Agreement (GSAA) between Geometric Power Limited and the joint venture partners of Shell Petroleum Development Company (SPDC), AGIP, Total and Nigerian National Petroleum Corporation (NNPC) for the 141MW Aba Integrated Power Plant.

This landmark agreement is the first executed agreement for the power sector in Nigeria by the IOCs and the NNPC joint venture. Prior to this, two other gas supply agreement signed so far by the NNPC joint venture companies were for liquefied natural gas (LNG) and fertilizer projects.

“We understand that this is the third commercial GSAA being signed by the JV partners. One was for LNG, and the other was for fertilizer. This is the first one for power in Nigeria.
We had signed a Gas Supply Agreement for the Aba IPP in 2009, but because of the delays caused the “erroneous” sale of the Aba Ring-fence, the agreement lapsed and had to be renegotiated anew; especially with the establishment of the Gas Aggregation Company of Nigeria (GACN) which now issues Gas Purchase Order to gas off-takers in Nigeria. Although it has taken six years to negotiate this present agreement, we are delighted that all the parties have successfully concluded”, said Professor Bath Nnaji, Chairman, Geometric Power and former Minister of Power.

“This GSAA is possible because of the structure of the project where the JV partners can see that the project is bankable and will be able pay for the gas they will supply at commercial price reliably. We are confident that is structure will serve as a model for other gas to power projects in Nigeria since the various stakeholders can see how they will be able to recoup their investment in their projects. Furthermore, this structure will incentivise the gas suppliers to invest in gas production for the domestic market”, Nnaji added.

The agreement which was signed at the boardroom of the Honourable Minister of State for Petroleum Resources also had the presence of the oil and gas sector regulators, National Petroleum Investment Management Services (NAPIMS) and the Gas Aggregator Company of Nigeria (GACN) who midwifed the updated agreement between the parties over a 6-year period, thus, successfully transiting from the 2008 executed Gas Supply Agreement (GSA) for the Aba IPP into the current gas policy regime.

The former minister of power said that “this project is a model of how the entire power value chain can be incentivised.

The 141MW power plant (to be scaled to 188MW) is embedded in a ring-fenced electricity district of Aba comprising of 9 out of 17 Local Government Areas of Abia State and within over 4000 sq kilometres.

The project has its own gas pipeline of 27 kilometers.

Its electric distribution ring fence includes 7 substations of 2x15MVA each; hundreds of kilometres of overhead lines at 33Kv and 11KV networks along with other low voltage lines. This first class electric distribution infrastructure is intended to deliver guaranteed reliable supply of electricity to industries, commercial ventures and residential homes in the Aba metropolis”.

It will be recalled that on May 11, 2004, the Federal Government, the now defunct National Electric Power Authority (NEPA) and Geometric Power Limited (GPL) entered into and executed a Memorandum of Understanding (MOU) under which GPL was granted the exclusive right to construct a 3 x 35 MW open cycle gas turbine power plant and designated sub-stations in Aba, Abia State, which would generate electric power for distribution by Aba Power Limited (APL) to residential and commercial customers and to industrial clusters in a ring-fenced island in Aba.

The government, NEPA and Aba Power Limited (APL) executed a lease agreement on April 28, 2005 for the distribution of power to the ring-fenced residential and commercial consumers in Aba. By the terms of the agreement, NEPA assigned its right to distribute electric power in the ring-fenced area of Owerri-nta, Osisisoma, Ogbor Hill, Factory road and Port Harcourt road in Aba and also leased its distribution facilities within the contract area.

A supplementary agreement was made on August 31, 2006 between the Federal Government represented by the minister of power and steel, Transmission Company of Nigeria (TCN) and Enugu Distribution Company (EDC) and Geometric Power Limited.

EDC and TCN were substituted for NEPA as parties to the lease agreement of 2005 and assumed their respective obligations.

Unfortunately, during the privatization exercise by the Bureau for Public Enterprises (BPE), in what was described as “administrative error”, the Bureau did not take into consideration the pre-existing agreements on Aba ring-fence and thus, did not excise it from Enugu DISCO.

The $500 million Geometric/ Aba Power Plant has capacity to produce and distribute about 141 megawatts (MW) of electricity in its first phase, with new distribution lines, four new sub-stations and three rehabilitated sub-stations. Each plant is to produce 47 MW of power, supported by a 60 MVA per transformer. The power plant is to be powered by gas from Shell company flow station at Owaza in Ukwa West Local Government Area of Abia State.

The company has also laid a pipeline spanning 27 kilometers from the flow station to the power plant at Osisioma.

FRANK UZUEGBUNAM