Two wholly-owned subsidiaries of Seven Energy International Limited have commenced the full supply of gas to the 561-megawatt capacity Calabar Power plant built by the Niger Delta Power Holding Company (NDPHC), under the National Integrated Power Project (NIPP) at Ikot Nyong, near Calabar, Cross River State.
The two subsidiaries — Seven Energy Finance Limited and Accugas Limited — said in a statement Monday that Accugas Limited commenced the supply of gas to the power station after all the conditions precedent to the long-term Gas Sales Agreement (GSA) for the supply of gas to the plant have been satisfied. Calabar Power Station is one of the 10 medium-sized power plants built by the NDPHC to deliver 4, 2771 megawatts of electricity to the national grid.
The other NIPP power plants include the 451MW-capacity Ihovbor Power Plant in Benin, Edo State; the 451MW-capacity Sapele II Power Plant in Ogorode, Sapele in Delta State; and the 434MW-capacity Geregu II Power Station built in Ajaokuta, Kogi State. Others include: the 676MW-capacity Olosunsogo II Power Plant built in Olorunsogo in Ogun State; 451MW-capacity Omotosho II Power Plant in Okitipupa Local Government Area of Ondo State; 961MW-capacity Alaoji Power Plant in Abia State; 225MW-capacity Gbarain Power Plant in Gbarain Ubie, Bayelsa State; 338MW-capacity Egbema Power Plant located near Owerri in Imo State and the 225MW-capacity Omoku II Power Plant located near Port Harcourt in Rivers State.
However, the operations of the plants have been constrained by gas shortages. Seven Energy’s midstream gas infrastructure assets, focused in the southeast Niger Delta, include the 200 million standard cubic feet per day (mmscf/d) capacity Uquo gas processing facility and a gas pipeline network of 227 kilometers with distribution capacity of 600 mmscf/d.
The Calabar GSA is supported by a World Bank Partial Risk Guarantee (PRG), a federal government-backed financial instrument that will secure the supply of up to 131 mmscf/d of natural gas under the Calabar GSA to guarantee the consistent generation of up to 561 MW of electricity to the national grid, representing around 15 percent of current power generation in Nigeria. “This arrangement, which guarantees payments to Accugas for gas supply, is backed by the federal government of Nigeria and the International Development Agency of the World Bank. It is the first of its kind for gas supply in Nigeria and is a demonstration of the federal government’s commitment to increasing power supply in the country and stabilizing the ‘gas to power’ value chain,” the statement explained.
Before Accugas commenced the full supply of 131mmscf/d of gas to the Calabar Power Station, it had been supplying gas to the plant under an interim gas sales agreement, with average deliveries in 2017 to date of 45 mmscf/d.According to the statement, the Calabar GSA includes a 90-business day grace period during which the PRG cannot be called upon.
In a related development, there have been changes in the board of Seven Energy in order to strengthen the board with independent expertise and knowledge to guide the Group in evaluating and implementing its restructuring. Under the new changes, David Duggins, David Lovett, Oluseyi Bickersteth and Ken Igbokwe have been appointed independent non-executive directors; while the Group’s Chief Executive Officer, Manish Maheshwari, has also been appointed to the Board. Stephen Vineberg and Matthew Harwood have stepped down from the board as shareholder representatives of IDB Infrastructure Fund II and Petrofac respectively, with Satjeet Sahota replacing Stephen Vineburg.