Who Is The Owner Of Zungeru Power Plant?

The Zungeru hydroelectric power plant is a major power project currently under construction in Nigeria. Located on the Kaduna River in the state of Niger, the Zungeru plant aims to add significant electricity generation capacity to Nigeria’s strained power grid.

With a planned installed capacity of 700 megawatts, the Zungeru facility will be the largest hydropower plant in Nigeria upon completion. It is considered a crucial part of efforts to reform Nigeria’s electricity sector and boost power supply across the country. The plant is expected to provide reliable, clean and affordable electricity to millions of Nigerian homes and businesses.

Build History

The Zungeru Hydropower Plant project was originally planned in 1982 but construction did not begin until 2013. The project stalled for many years due to lack of funding and political will. In May 2013, the federal government of Nigeria finally signed an agreement with China’s CNEEC to construct the plant. Groundbreaking took place in December 2013 (Two More Power Plants).

Major milestones in the construction include the completion of the coffer dam and diversion tunnel in 2016, allowing the river to be diverted in preparation for the dam construction. In 2018, installation of the first turbine began. Currently, the project is nearing completion with most major components operational or in advanced stages. The plant is expected to be commercially operational in the first half of 2023 (lmu pays technical visit to zungeru hydropower plant).

Plant Details

The Zungeru hydroelectric plant is located across the Kaduna River in Niger State, Nigeria. It has an installed capacity of 700 MW, making it the largest hydroelectric power plant in Nigeria. The plant utilizes conventional hydroelectric technology and includes a roller-compacted concrete dam, two power stations housing four 175 MW Francis turbine-generators, a spillway, and associated electrical and mechanical auxiliaries.

Ownership Structure

The Zungeru Hydroelectric Power Plant is currently owned by the Nigerian government through the Nigerian National Integrated Power Project (NIPP). The project was originally conceived and initiated by the government as part of efforts to reform and expand the country’s power sector.

While the plant is government-owned, its construction has involved several private partners and stakeholders. The main contractor carrying out construction is China National Electric Engineering Company (CNEEC), a Chinese state-owned enterprise. Funding for the project is provided by a consortium of banks including China Exim Bank.

There are also power purchase agreements in place with private power distribution companies in Nigeria to purchase electricity generated by the plant after completion. So while the asset itself is owned by the government, private sector partners are involved in various aspects of its financing, construction and eventual electricity off-take.

Financing

The Zungeru hydroelectric power plant was financed through a public-private partnership between the Nigerian government and a consortium of companies. The total cost of the project was around $1.3 billion USD.^[1]

In 2013, the Nigerian government signed a concession agreement with Mainstream Energy Solutions Limited (MESL) to build, operate and transfer the plant back to the government after 30 years. MESL is owned by a consortium of companies including Africa Finance Corporation (42.5%), Xi Technologies Limited (7.5%), and Mainstream Renewable Power Africa Holdings (50%).^[2]

To fund the project, MESL secured $486 million in debt financing from the China Exim Bank. The African Development Bank also provided a $438 million loan. The remainder of the $1.3 billion cost was funded through equity contributions from the consortium partners.^[1]

The project benefitted from the Nigerian government’s Nigerian Electricity Market Stabilization Facility which provided a guarantee to back the AfDB loan. This helped make the financing terms more favorable for the developers.^[3]

Securing financing for the large-scale project required coordination between multiple public and private partners. The government incentives and loan guarantees enabled the consortium to move forward with construction and operation of the 700MW hydroelectric plant.

^[1] https://nairametrics.com/2024/01/26/concessionaire-begins-operations-in-1-3-billion-zungeru-power-plant/
^[2] https://energycentral.com/news/mainstream-takes-over-13bn-zungeru-power-plant
^[3] https://punchng.com/fg-hands-over-zungeru-power-plant-to-concessionaire-2/

Challenges

The Zungeru hydroelectric power plant has faced numerous delays and challenges during its development. Construction on the $1.3 billion project first began in 2013 but stalled for several years due to funding issues. The project did not secure full financing until late 2018 when the China Export Import Bank agreed to provide $1.3 billion in loans for the plant’s construction and equipment (Source 1).

Even after financing was secured, the project continued to face delays. The initial completion date was set for 2020 but this was pushed back first to 2021 and then again to 2022. Reasons for the delays included supply chain and logistics issues caused by the Covid-19 pandemic as well as flooding at the construction site (Source 2).

Beyond delays, the project has also faced criticism over its environmental and social impacts. Some groups have raised concerns about the displacement of local communities by the dam and reservoir as well as the impacts on local wildlife. Managing these social and environmental issues has posed additional challenges for the project.

Future Plans

The Zungeru hydroelectric power plant is expected to be fully completed and operational in 2023, according to recent reports. The 700MW plant located in Niger state was originally scheduled for completion in 2013, but the project has faced multiple delays over the past decade.

Once operational, the $1.3 billion power plant will be owned and operated by Mainstream Energy Solutions Limited (MESL) under a concession agreement with the federal government. MESL was formally handed control of the plant in January 2023 to begin preparations for commencing operations (Punch). This marked a major milestone after 10 years of construction.

MESL plans to steadily increase generation capacity at Zungeru to the full 700MW after completing installation of the remaining two turbines. The power generated will feed into Nigeria’s national grid to help address the country’s electricity deficit. Government officials and project partners have touted the benefits Zungeru will provide by boosting power supply and supporting economic activities.

Impact

The Zungeru hydroelectric power plant will add 700 MW of power capacity to Nigeria’s national grid when fully operational, providing much-needed electricity in a country where nearly half the population lacks access to grid power.[1] This represents a significant addition, increasing Nigeria’s total grid capacity by over 10%.

The plant will mainly serve northern Nigeria, including the states of Niger, Kaduna, Kebbi, Zamfara and Kano where demand for electricity continues to rise. An important area that will benefit is the industrial centers around Kano. Bringing additional power to this economically vital region has been a priority for the government and will support continued commercial and industrial growth.

Significance

The Zungeru hydroelectric power plant holds great significance for Nigeria’s power goals and for the wider region. As noted in an article on Energy Central, the plant adds 702 MW of generating capacity to Nigeria’s national grid, helping the country work towards its aim of achieving 30,000 MW of electricity by 2030 (Mainstream takes over $1.3bn Zungeru Power Plant).

Located on the Kaduna River in Niger State, the Zungeru plant will provide much-needed stable and reliable power to the northern region of the country. An article in Punch notes that the plant is expected to add an average of 2.5 billion kWh annually to the grid. This will help support industrial and commercial activities in the area (FG hands over Zungeru power plant to concessionaire). Overall, the new capacity from Zungeru will be a major boost for Nigeria as it works to improve electrification and meet rising power demand.

Conclusion

To summarize, the Zungeru hydroelectric power plant is a major infrastructure project in Nigeria that has faced numerous delays and challenges. It is a 700MW hydropower facility being built on the Kaduna River in Niger State. Construction began in 2013 and was originally supposed to be completed in 2019, but it has faced setbacks due to funding constraints and the COVID-19 pandemic.

The Zungeru plant is being developed by a consortium of companies that includes China’s CNEEC and Sinohydro. The Nigerian government has a 25% stake in the project through the Nigerian National Power Company (NBET), while the remaining 75% is owned by the consortium. The project’s estimated cost is $1.3 billion and it has received financing from China’s Exim Bank as well as the African Development Bank.

Once operational, the Zungeru hydroelectric plant will provide much-needed power generation capacity for Nigeria’s strained national grid. It is expected to generate 2.4 billion kWh of electricity annually. The plant should help boost economic activity and improve electricity access, especially in northern Nigeria. Overcoming the construction delays and bringing the project online will be an important achievement for the companies involved and for the Nigerian government.