Transcorp suspends $1b power plan

(Bloomberg) Transnational Corp. of Nigeria Plc suspended plans to build one of the nation’s biggest power plants as a local gas shortage makes it difficult to obtain fuel and a downturn in Africa’s largest economy hinders efforts to raise funds for the project.
The company in 2014 said it would raise $1 billion to build a 1,000-megawatt gas-fired facility. Two years earlier, it bought the Ughelli plant in the hydrocarbon-rich Niger River delta from the government and more than doubled its output to 700 megawatts. Since then, attacks on pipelines by militant groups have cut gas supplies to stations and forced millions of Nigerians to either do without electricity or buy fuel for their own generators. Also, a dollar shortage blamed on a 15-month currency peg removed on June 20 has raised import prices and inflation, with the economy contracting in the first quarter.
“How do you make the investments when you are generating far below your current capacity due to gas problems,’’ Chief Executive Officer Emmanuel Nnorom said in a July 29 interview in Lagos, Nigeria’s commercial hub. Transcorp, whose interests range from agriculture to energy, is owed over 20 billion naira (64 million dollars) by state-owned Nigerian Bulk Electricity Trading Plc, for power generated and not yet paid for, he said. Officials at NBET were not immediately available for comment.
Niger Delta Minister Usani Usani said Wednesday the government is in talks with militants about ending the attacks on pipelines, but could not confirm whether the group which has claimed most assaults, the Niger Delta Avengers, were part of the discussions.
The partial sale of 17 former state-owned power utilities three years ago was meant to attract investment needed to expand the grid and end daily blackouts. Yet, private investors have been hampered by increasing debt owed by the government and the inability to obtain foreign exchange. Electricity firms under the umbrella body Electricity Generation Companies in Nigeria said last month they may be compelled to shut down because of the gas and currency shortages.
The scarcity of gas has reduced Nigeria’s power generation to less than half of the installed capacity of 6,000 megawatts, the lowest in a decade, even as the country holds the continent’s largest reserves of the fuel. The power shortage has contributed to the contraction of the economy which may shrink 1.8 per cent in 2016 according to the International Monetary Fund.