News Column

Nigerian Firms, Others to Import Coal From South Africa for Power Generation

August 15, 2014

Ade Ogidan



AS a proactive measure against the lingering power supply crisis in the country, some industrialists and electricity generating companies have started initiating moves to import coal from South Africa. This is to enable them to switch over to coal-powered turbines for their respective operators.

The move was said to have been informed by the frustrations being experienced by the operators in getting gas to fuel their respective power plants.

Nigeria has been assessed to have about the largest gas reserves in the world, but the parlous supply infrastructure has compromised distribution to various plants requiring the commodity.

The nation's coal reserves remain largely unexploited, even after the Federal Government has sold out the blocs to prospective miners.

Leading the coal-import initiative from South Africa is Dangote Cement Plc, which has already placed an initial order of 30,000 tonnes of the commodity from the continent's second largest economy.

Already, the company has slated $250 million for power generating conversion , which would involve establishment of three plants at Dangote Cement's facilities at Obajana in Kogi State; Gboko in Benue State; and Ibeshe in Ogun State.

The Group Managing Director of Dangote Cement, Devakupar Edwin, explained yesterday that the company had to be proactive in resolving the lingering power supply crisis in the country, as "we cannot afford to compromise the objectives of promoting value addition and job creation in Nigeria."

Edwin stressed that "no business can survive in an atmosphere of energy crisis. If we don't have power and fuel, our operations would become endangered."

According to him, "Dangote Cement would be investing $250 million in coal-based power plants, due to increasing difficulties in getting gas supply to power our electricity generating plants. All our kilns will be powered by coal, with the new plants located in Obajana, Ibeshe and Gboko.

"Already, we are expecting the first shipment of 30,000 coal from South Africa, to power 60 megawatt power plants, with another 30 megawatt generating facility on standby."

Edwin, however, explained that the coal importation agenda was only scripted as a temporary measure, to forestall system collapse in their operations.

"We are aware of large coal deposits in Nigeria and the allocation of blocs to prospective miners. But we have to take urgent steps to safeguard our investments in the country, more so as exploitation of the commodity has not commenced on a scale that can sustain our operations.

"Currently, we don't have either gas or black oil (low pour fuel oil) to run our machines fully. We even had to resort to importation of black oil to do our business.

"We, however, have a plan to look inwards in respect of coal sourcing, as we expect the companies that have secured coal blocs to commence their respective mining operations in the country.

"We had hoped that the gas infrastructure challenges would be resolved, so that normal supplies can be resumed. But the reality on the ground now is that the crisis has persisted.

"The government would need to come to the aid of cement manufacturers as the operating environment is not encouraging at all. The cost of doing business is increasing. When a cement company is forced to be importing black oil to sustain production, how would it not affect its financial projection?"

Investigations by The Guardian revealed that some power generating companies (Gencos) have already started considering converting their plants to coal-fired turbines, with unabated crisis in securing gas to power their respective facilities.

Mostly affected by the gas paucity crisis are the Gencos that are located inland, which have not got the close proximity advantage to the gas supplying facilities, which are located in the Niger Delta region.

One of the operators who spoke with The Guardian on the condition of anonymity pointed out that lack of distribution facility had been the bane of several power generating plants that are not located close to the source of the commodity.

"Our plant is about 500 kilometres to the source of gas. Without infrastructure, especially pipeline to bring the gas to our plant, the need to resort to coal-powered turbines has become imperative.

"Unfortunately, the provision of gas supply infrastructure may not be feasible in the nearest future, due to the high capital requirement, security concerns, especially the fears that the pipeline vandals could feast on such facility. So, we are fine-tuning strategies to resort to coal to safeguard our investments' interests."

Only recently, the Minister of State for Power, Mohammed Wakil, disclosed that the government was disposed to developing alternative sources of energy, which abound in the country, which would include the exploitation of large deposits of coal for power in Gombe, Enugu and Kogi/Benue axis.

Coal mining began in Nigeria in 1916. Available data shows that the commodities are mainly of sub-bituminous type except for the Lafia-Obi bituminous cooking coal reserves.

The proven coal reserves so far in the country are about 639 million tones, while the inferred reserves are about 2.75 billion tones.

Last year, the Federal Government signed a Memorandum of Understanding with HTG/Pacific Energy Company Limited, with substantial technical partnership with Chinese experts, for a $3.7 billion coal-to-power project.

So far, the nation is still awaiting the execution of the project, which was scripted to provide an initial 1,200 mega watts power plant to be built at Enugu, using coal from the Ezima mine.


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Source: AllAfrica


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