Geometric Power deal set to re-position Aba as ‘Japan of Africa’

Business watchers say Aba, the capital and manufacturing hub of Abia state, will likely see a scramble for land on the back of an expected influx of small, medium and large industries looking for cheaper and constant power supply, following the resolution of the long-drawn dispute between Geometric/Aba Power Limited and Interstate Electrics.

The business watchers say the expected long hours of uninterrupted power supply per day will create jobs, lower production cost and make local products more competitive in the local and international markets, shooting up the nation’s foreign exchange earnings.

They further say the big rush to Aba follows on an expected delivery of 12 to 18 hours of electricity supply per day, when Geometric, the beneficiary of the conflict resolution, kicks-off power generation in the area in four months, although the company promises about 23 hours power supply per day in the first instance.

“We will deliver uninterrupted power to Aba once we commence operations in a few months time,” said Bart Nnaji, chairman, Geometric Power/Aba Power Limited and former minister of Power. Nnaji added that  gas supply will not be an issue, as there is already an agreement in place with Shell Nigeria for guaranteed gas supply, through a 27-kilometer dedicated gas pipeline from the power plant to Shell’s flow station at Owaza.

Another benefit will be a reduction of rural-urban migration, as the area offers a huge growth in employment opportunities.

“If this arrangement provides steady power to Aba, the ingenuity of businessmen and manufacturers in that area will blossom.  This, to me, will turn Aba into the ‘Japan of Africa’,” said Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN) in a telephone interview with BusinessDay.

“One of the problems industries in Aba and other parts of the South-East have is steady power. They have the ingenuity; all they need is the enabling environment, like adequate and steady power,” Jacobs said.

With the Federal Government’s intervention, Geometric and Interstate signed an agreement carving out the ring fence from Enugu DISCO. 

Aba is renowned for the ingenuity and the industry of its people in handcrafts, including shoe-making, fashion and design, steel works and fabrications, textiles, pharmaceuticals, plastics, and cosmetics, amongst others.

Epileptic power supply over the years has whittled down the number of the industries operating in the city from 165 in 2005 to less than 30 currently, with attendant massive job losses.

According to analysts, the successful resolution of this dispute will provide between 12 and 18 hours of electricity, spiking the $200 million shoes and garment industry in the city.

This will further reduce the production costs of manufacturers of shoes, bags, belts trunk boxes and other industries in the city and state, which employ over 80,000 people, while enabling them to supply more of their products to the African market to earn foreign exchange.

Some analysts add that Aba will now have more industrial clusters, as more real sector businesses will likely spring up.

“With improved power supply, cost of maintenance will reduce. Also, when you are expanding, you don’t need to spend money to acquire bigger generators. The tendency is that you can now produce more at a cheaper rate, because one of the biggest and important inputs for every production is power,” said Julius Ndukuba, chief operating officer (COO) Starline Industries Limited, which manufactures pharmaceuticals, perfumes and packaging.

Nigeria’s businesses allot 30 to 40 percent of their expenditure on alternative power sources, according to the Lagos Chamber of Commerce and Industry (LCCI).  The business community says long hours of power supply will support small businesses in Aba, especially fashion designers and textile makers, who will be able to sew quality wear and export to Nigeria’s neighbours to earn foreign exchange and reduce forex scarcity in the country.

This will also lead to upsurge in other small businesses, thus creating jobs in the South-East region, which suffers huge unemployment crisis.

“Improved power supply will have great impact in commercial activities in Aba. The Aba business community is eagerly waiting for the day the Geometric plant will be turned on,” said Eleanya Okoroji, past president, Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA). According to Okoroji, constant power supply will resurrect dead industries and attract fresh ones.

The situation will likely have a multiplier effect on real estate developers in Aba, who have now foreseen an upsurge in the demand for land and rise in rents.

Akamnonu Azubuike, an Aba-based real estate and housing marketing consultant, said constant electricity would stimulate industrialisation in Aba, thereby spurring real estate activities, noting that several estate developers are already jostling to invest in Aba, which currently has a huge housing deficit.

Already in Aba, a plot of land in the Government Reserved Area (GRA) now goes for between N20 million and N30 million. In Umungasi and Abayi, it is a minimum of N4 million. In Ogbor Hill, the cost is between N2.5 million and N3 million, while in Osisioma it ranges between N2.5 million and N3 million.

This is particularly good news for the Abia State Government, as it will now raise more revenue in the form of taxes. Analysts say the development will challenge the state to provide more social services, as a significant growth in population is anticipated to stem from migration.

This will further task the state to create better security for businesses, build better drainages, rehabilitate roads, as well as provide water and health services.

Analysts further anticipate a sprouting of satellite towns to accommodate Aba land owners displaced in the rush for land, as well as migrants. “There is no doubt that some Abia people and indeed people from the region may be willing to come back home,” said Frank Umeh, president, CEO of a small-scale drug firm in Enugu State.

The deal to carve out Aba Ring Fence from Enugu DISCO is further seen by analysts as an affirmation of government’s respect for contract/concession agreements which will also reassure doubting investors and spur offshore financing sources for power sector projects. 

With this project, Nigeria’s power sector will also benefit as power originally consumed by Aba will be displaced and pushed into the national grid. 

With over $500 million investment in electricity infrastructure, Geometric Power Limited is guaranteeing at least 95 percent uninterrupted power supply in Aba, the commercial hub of Abia State and its environs.

So far, the company has completed three power plants with a combined capacity of about 141 megawatts of electricity in its first phase, built new distribution lines, four new substations and rehabilitated another three, previously used by the former Power Holding Company plc.

FRANK UZUEGBUNAM, GODFREY OFURUM & ODINAKA ANUDU