Globeleq’s recent acquisition of some power projects in Nigeria was informed by the huge Nigerian electricity market and the country’s rapid population growth rate.
The UK-based Globeleq recently acquired 74 percent of Cummins Nigeria Limited, a power generation company.
In addition to the attraction of investing in Nigeria are availability of gas to generate electricity and the fact that those who would be purchasing the power from Globeleq are consumers that have the capacity to buy.
Nigeria has struggled to attract foreign direct investment since the oil price crash in 2016, settling for less than $1 billion yearly since then, much lower than African peers – from Ghana to Egypt. The country’s huge population and infrastructure deficit however remain big attractions for investors despite challenges with the ease of doing business.
Globeleq’s mission is to “Power Africa’s Growth” and “as the largest economy and most populous country in sub-Saharan Africa, to achieve this mission, we need to be in Nigeria,” said Alex Douglas, managing director, head of Business Development for West Africa.
“The market fundamentals in Nigeria, including the large unmet electricity demand, are very strong hence, Globeleq has been involved in developing power projects in Nigeria for a number of years and in particular, is working on development of the QIPP power plant in Akwa Ibom,” Douglas said.
The company has also been pursuing solar projects in the country and we will continue to pursue renewable, suitable thermal, and hybrid opportunities to ensure we create sustainable energy businesses to support the country’s industrialisation agenda, he said.
In addition to the underlying strong market fundamentals in Nigeria, the CPGNL business, which is a subsidiary of GPSN, offers its customers a power generation solution without relying on the Nigerian power grid, which is in need of further investment to allow many customers access reliable, affordable and sustainable power from large-scale generation plants.
According to Globeleq, it partners with organisations that have complementary capabilities and operating skills, instead of duplicating its key expertise and experience.
The acquisition of Cummins Power Generation Nigeria Limited serves Globeleq’s ambition, as the company has its tentacles spread across industrial hubs of the South West where it serves them with uninterrupted power supply to carry on their business, an operation it will preserve.
Globeleq contributes approximately 1,400mw of electricity in Africa, with about 2,000mw of new power projects on the continent.
“The company develops, owns and operates power plants utilising various technologies across the African continent,” according to Douglas.
The entry of Globeleq into the GPSN business will also provide additional investment to develop and grow the existing pipeline of projects, drive operational excellence and set up the business towards a low carbon future, Douglas noted.
As regards the company’s interest in Ibom Power, the management of Ibom Power told BusinessDay that it indicated interest in 2007 to invest in Ibom Power Company, a generating firm wholly owned by the Akwa Ibom State government but the terms offered by it were not acceptable.
Despite this, it went ahead to purchase a golden share of Ibom Power Company, a symbolic indication of its interest and readiness to acquire shares in Ibom Power.
Ime Asibong, a lawyer and company secretary of Ibom Power who stated this in an interview, said the renewed interest of the company in the power sector was a welcome development, adding that it showed investors’ confidence in the Nigerian economy.
“Globeleg bought a golden share to indicate its interest in Ibom Power Company but it has since written to us and offered the golden share back that it was no longer interested,” Asibong said.
The company’s interest in the power sector is good for the country because the company will bring offshore funds into the country, he said, saying it is a good development for the country.
On the other hand, the GPSN, which has just sold its majority stake in CPGNL, has a portfolio of assets that serve commercial and industrial customers in Nigeria, including 12 operating plants, with an additional three plants in construction and more in its development pipeline.
At the moment, most of GPSN’s assets are located in the Southern region of Nigeria. The off-takers are important commercial and industrial customers, including Nigerian Bottling Company, 7UP Bottling Company, Nigerian Breweries, A&P Foods, and Powergas, just to mention a few.
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