May 9 (Bloomberg) -- Notore Power Ltd., a unit of Nigerian fertilizer producer, Notore Chemical Industries Ltd., plans to set up a $600 million power plant in the southern town of Onne, the company said.
The 500-megawatt plant will be built jointly with ContourGlobal LP, a New York-based investment company specializing in the electric-power industry, the Onne, Nigeria-based Notore said in an e-mailed statement. Financing will come from export credit agencies and development banks, with local lenders making up the balance, it said.
“The project is still at very early stages,” Ikponmwosa Izedonmwen, head of corporate finance said. Repayment of the loans and investments “will come solely from the cash flow of the project being funded, not from other assets of the project sponsors” under the terms in consideration. He declined to provide the names of lenders involved. ContourGlobal didn’t immediately respond to e-mails and a call seeking comment.
Blackouts are a daily occurrence in Nigeria, Africa’s most populous country with more than 160 million people. Electricity demand is almost double the supply of about 4,000 megawatts. Nigeria plans to boost electricity output to 10,000 megawatts by next year and double that by 2016, Power Minister Chinedu Nebo said on April 22. South Africa, with less than a third of Nigeria’s population, has the capacity to generate about 40,000 megawatts of power.
The government is offering incentives to investors, including five-year tax breaks and permission to charge higher electricity tariffs, according to the Abuja-based Bureau of Public Enterprises.
President Goodluck Jonathan said the West African country expects private investment of $10 billion in power over the next decade, according to a statement e-mailed late yesterday by his office. “Government alone cannot build the infrastructure that the country needs,” he was quoted as saying in the statement.
Notore has an agreement with Japan’s Mitsubishi Corp. to build a new plant at its Onne complex, according to its website. The company currently operates a fertilizer plant with capacity to produce 350,000 metric tons of ammonia a year, 500,000 tons of urea and 650,000 tons of a “bulk blend” of nitrogen, phosphorus and potassium, or NPK fertilizer.
Construction of the power plant will start in the second-half of next year and it is expected to be completed by the third quarter of 2016.
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