Elektron Energy Development Strategies Limited (Elektron Energy) has partnered with Eko Electricity Distribution Plc. (EKEDP) to construct a 30-megawatts (MW) embedded natural gas-fired power plant worth $50 million in Lagos.
The Independent Power Plant (IPP) project is expected to supply uninterrupted electricity through dedicated 33kV and 11kV distribution networks exclusively to identified customers within the Victoria Island franchise area of Lagos State.
Regarded as the first of its kind because a natural gas IPP will be directly embedded into Disco’s distribution network for supply to identified end-user customers, the project has the potential to eradicate up to 1000 diesel generators within its coverage area, drastically reducing emissions and promoting a greener environment.
Speaking at the groundbreaking ceremony held on Victoria Island on Tuesday, July 11, Lagos State Governor Babajide Sanwo-Olu, through his representative, Olusola Shasore, the Permanent Secretary of the Ministry of Energy and Mineral Resources said: “We understand that reliable steady power builds commerce, commerce builds capital and capital brings industrialisation and industrialisation brings employment to our youths, which is our area of interest.
“We are available to whoever is interested in bringing power to the state because we have to do everything we really need to do for Lagos to have power as the economic hub of the country. We are in very interesting times with the New Electricity Act and it can be very good times for us if we are very collaborative. We believe that it is the private sector that would drive this achievement for us.”
The CEO of Elektron Energy, Mr. Tola Talabi, acknowledged the presence of dignitaries such as Tariye Gbadegesin, the Managing Director and Chief Executive Officer of ARM-Harith Infrastructure Investment Limited, the co-equity sponsors of the embedded IPP; the Board and Management of Elektron Energy including the Chief Operating Officer (COO), Mr Jide Onakoya; the Board and Management of Eko Disco; the Debt Providers: FBN Quest, Bank of Industry (BOI), Infra Credit; and the technical partners, Wartsila.
He said: “We are excited about this project because we believe it will mark a significant turning point in the Nigerian power sector. It would be the first time that an embedded power plant would be built in partnership with a distribution company. We expect to and we look forward to commissioning this project in 18 months’ time.”
Mr Talabi added that the journey to the project started eight years ago and it is proof of the removal of the regulatory and legislative roadblocks that existed years ago, labelling the project a major milestone and turning point in the Nigerian power sector.
Principal and Chief Financial Officer of Elektron Energy, Deen Solebo, said the project would cost $50 million, with a construction timeline of 18 months in addition to the potential to eradicate up to 1000 diesel generators within its coverage area.
“VI Power is meant to be a 30-megawatt power plant that we will build on this site and it will serve maximum-demand customers who are commercial off-takers that have intense electricity needs fundamentally. We signed a power purchase agreement with Eko Disco last year and a connection agreement which allows us to jointly manage with Eko Disco the distribution network in the Victoria Island power area and also to help regulate the billing and revenue collection from the customers,” he said.
Solebo noted that the site of the power project belongs to Eko Disco, adding that the partnership with the Disco is quite extensive. He said: “It effectively allows us to fulfil one of the Nigerian Electricity Regulatory Commission (NERC)’s policies of encouraging embedded generation power in the country. This is the first of its kind that has seen daylight in this country and we hope this can be an example of how you roll them forward.”
Solebo also said the project has two phases: a distribution aspect that involves more than five dedicated feeder networks which allow power to be taken directly to the customers and the building of the Independent Power Plant (IPP) itself.
Managing Director and Chief Executive Officer of ARM-Harith Infrastructure Investment Limited, the co-equity sponsors of the embedded IPP, Tariye Gbadegesin thanked the Board of Elektron Energy for releasing the initial capital, while commending Eko Disco for their foresight on the project.
Founded in 2011 and headquartered in Lagos, Elektron started as an energy trading outfit and morphed into an energy infrastructure platform company engaged in developing and operating prime energy infrastructure projects in West Africa, with a key focus in its home market, Nigeria. Elektron also considers strategic opportunities in complementary energy ventures that leverage the company’s expertise and relationships to yield outsize returns.
Elektron’s business model is based on a staged development plan to create value by combining its indigenous knowledge and execution capabilities in consultations with strategic, technical, regulatory and financing players.
The firm has devised comprehensive strategic roadmaps across the power, oil and gas infrastructure verticals; leading to a near-term project bank of four viable projects representing approximately $150 million of total assets. Elektron also owns Alausa Power Limited (“ALPL”), a special purpose vehicle that operates a leading 10.6MW IPP in Lagos State.
