Transcorp Plc said it has suspended plans to build one of the nation’s biggest power plant. The company’s inability to raise the capital also played a part.
The company cited the shortage of gas shortage and the economic downturn in Nigeria’s economy as one of its reasons for taking the painful decision.
Transcorp had 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.
However, 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.
Speaking to Bloomberg, Transcorp’s Chief Executive Officer Emmanuel Nnorom said.“How do you make the investments when you are generating far below your current capacity due to gas problems,’’
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, contributing to the contraction of the economy which may shrink 1.8 percent in 2016, according to the International Monetary Fund.
“My number one problem would be gas, owing to much capacity available that is not put to use,” Transcorp Power CEO Adeoye Fadeyibi said in the same interview. Ughelli’s generation slumped to 70 megawatts this year before rising to 300 megawatts, or less than half of what it’s capable of generating, he said.
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