India's BHEL to Build Three Coal-Fired Power Plants in Nigeria

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Researched by Industrial Info Resources (Sugar Land, Texas)--Indian public-sector power equipment manufacturer, Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi), will build three coal-fired power plants in Nigeria with a combined capacity of 3,500 megawatts (MW). Confirming this report, Emmanuel Egbogah, the special advisor to the Nigerian president on petroleum affairs, indicated that the country was open to other public-sector and private power developers' establishing power-generating facilities in the country. The move is also seen as India's aggressive attempt to counter China's increasing influence on Nigeria and other African nations.

Industry experts have indicated that with BHEL's power projects, India is following China's strategy of strengthening ties with Nigeria, gaining access to the country's abundant oil and gas reserves. After Libya, Nigeria has the largest hydrocarbon reserve in Africa. Presently, India imports nearly 15% of its crude oil requirements from Nigeria. Despite abundant oil and gas reserves, Nigeria's power sector is underdeveloped, and the country's150 million people face several hours of power outages daily. Egbogah indicated that Nigeria would require $10 billion every year to construct and augment power-generating facilities and transmission infrastructure. Earlier this year, Anand Sharma, India's Commerce and Industry Minister, extended India's support to build and operate power plants in Nigeria.

Last month, India and 12 African nations participated in "Namaste Africa," which focused on investments in the power, telecommunications, health care, pharmaceuticals and construction sectors in Nigeria and other African countries. The summit, organized by the Federation of Indian Chambers of Commerce and Industry (New Delhi), saw deals worth $1 billion signed by various companies.

In a related development, a consortium of companies, including Total SA (NYSE:TOT) (Paris, France), GAIL (India) Limited (BSE:532155) (New Delhi) and PTT Public Company Limited (SET:PTT) (Bangkok, Thailand), has submitted bids to participate in Nigeria's national gas master plan. The Nigerian government has shortlisted 16 companies for the next round. Conceived in 2007, the national gas master plan proposes to award projects in three packages, which will involve annual investments of $5 billion over a 10-year period.

Several Indian companies are also developing oil, gas and power projects in Nigeria. The Essar Group (Mumbai) is investing $2 billion to construct power-generating facilities with a total capacity of 2,000 MW. ONGC Mittal Energy Limited (Nicosia, Cyprus) is spending $6 billion on a 2,000-MW power plant and 180,000-barrel-per-day (BBL/d) refinery. The project will also include construction of a railway network connecting Nigeria's eastern and western regions.

India, which is the fifth-largest consumer of oil, imports nearly 78% of its requirement. By 2025, the country is likely to become the third-largest oil importer in the world after the U.S. and China. Strong bilateral trade relations with Nigeria and other African countries will become critical to ensure steady and sustained crude oil and gas supplies. Presently, India and the African nations share cordial ties and have bilateral trade valued at $39 billion. By 2012, Nigeria, which has oil reserves of 36.2 billion barrels, plans to augment its crude processing capacity from 2.7 million BBL/d to 4 million BBL/d. The country's liquefied natural gas (LNG) production capacity is about 22 million tons per year. Lack of power-generating and transmission infrastructure is adversely impacting Nigeria's growth. The value of the thwarted industrial and economic development is estimated to be about $130 billion.

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