General Electric has signed a memorandum of understanding with Nigeria to invest $10 billion in new power plants, in which it will take a 10-15 per cent equity stake, a power ministry spokesman disclosed.
The spokesman said GE would join forces with the government and power partners after privatisation of Nigeria’s power sector, seen as dilapidated and woefully inadequate.
Nigeria has been seeking to build gas-fired stations that could tap its huge natural gas reserves. The spokesman declined to say what kind of power stations GE would invest in.
Its power sector only manages to supply the country’s 160 million people with the electricity equivalent to that required by a mid-sized European city.Nigeria last month again delayed the timeframe for selling state-owned power assets, dimming hopes of carrying out reforms any time soon.
It holds the world’s seventh-largest gas reserves, but a lack of power-generating capacity means the gas associated with oilfields is simply flared off by oil companies, while most of the rest remains underground.
President Goodluck Jonathan unveiled power privatisation plans 18 months ago as a flagship policy and pledged state power generation and distribution assets would be sold off last year.
Since then, his presidency has become distracted by a violent Islamist insurgency that has swept across the north, disputes over the allocation of government oil money, and controversy over reports he intends to run again in 2015.If he could fix Nigeria’s creaky power sector, which previous leaders have failed to do, it would unlock the huge potential of Africa’s second-biggest economy -many see power shortages as the main bottleneck to broad-based growth.
GDP growth was 7.68 per cent in the last quarter of 2011, official statistics showed, and much of this was from growth in the non-oil sector.
It would also revive his presidency and make him a hero for many Nigerians, regardless of their tribe or religion. Yet several deadlines to privatise it have come and gone.
Nigeria plans to award a management contract for transmitting electricity from power plants to substations, and privatise the bulk of six power generation plants and 11 distribution firms, which supply end-users.