The Federal Government on Tuesday expressed its commitment to ensuring that  Kano State Government’s proposal to invest in the 540 megawatt Qua Iboe Power Plant (QIPP) located in Akwa Ibom State will not go down the drain.

The Minister of Finance, Mrs Zainab Ahmed, through a statement by her Special Adviser on Media and Communications, Mr Paul Abechi, gave Federal Government’s assurance to ensure the success of the project when the state governor, Abdullahi Ganduje, visited her office in Abuja.

“It is for this reason that when we see an opportunity like this, we
have the responsibility to ensure it comes into fruition. We are
looking at this as a pilot project as this will help mitigate Federal
Government’s plan. The ability to provide a counter guarantee will
help a long way to reduce the burden on the Federal Government”,  she
added.

Earlier in his remarks, the Kano State governor promised that the
state government would provide cover against the financial risks
associated with the power project by setting up the Kano State Bulk
Electricity Trading Company (KBET).

Ganduje expressed his administration’s commitment to Kano State industrialisation as a key component of its development plans, identifying poor electricity as one of the militating factors on the drive to boost the state’s industrial capacity over the years.

The governor welcomed the opportunity availed by the QIPP to guarantee stable supply of electricity in the state.

He said: “We trust this will support the industrialisation of Kano and
perhaps even neighbouring states like Kaduna, Jigawa and Katsina which have significant and critical unmet requirements for electricity. We request you to kindly approve the request made by QIPP as the FG will not be assuming any risks before financial close.

“On our part we are ready to start the process of setting up KBET through an Act of the State House of Assembly and once this is done, we will be in a position to provide the guarantee backing its obligations.

“We will also set up a steering committee and start engaging investors now that we can give them assurances of available electricity once QIPP comes on stream in three years. We consider this a win-win situation all round”, Ganduje stressed.

According to him, the multi-billion dollar QIPP had secured firm
commitment of equity funding of $350 million from Globeleq and project finance of $850 million from IFC, OPiC and AfDB.

In an earlier letter forwarded by the state government to the minister on the project, the government had stated that the  funding of the project was “conditional upon the guarantee of your Ministry for a power purchase agreement (PPA) to be executed between QIPP and the Nigeria Bulk Electricity Trading Company (NBET).”

The letter reads further: “Exxon-Mobil is also prepared to commit about 500 million dollars to build a gas pipeline from its deep off-shore platforms to supply the gas needed for QIPP to operate.

“The total Foreign Direct Investment (FDI) for this project amount to 1.7 billion dollars. QIPP has also assumed completion risk of a transmission line from Ikot-Abasi to Ikot-Ekpene in order to ensure supply of power to the national grid.

“The Transmission Company of Nigeria (TCN) has given firm assurance that, once power is delivered to Ikot Ekpene, TCN will be able to deliver an equivalent amount of power to Kano on a binding contractual basis for a fee,” it added.