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Benin - Lighting up Benin.

Summary: Genesis Energy's $190m project will build two gas-fired power stations to provide the equivalent of nearly one third of Benin's current electric power supply capacity.

Genesis Energy is a UK- headquartered oil, gas and power company. Led by the Nigerian en- trepreneur Akinwole Omobo- riowo II, its chief executive, it evolved from several businesses over 20 years (more recently the company Besse Oil).

Over the following years, Genesis Energy turned its at- tention to gas-to-power pro- jects, notably generating sta- tions in Nigeria at Calabar Free Port Zone and at Port Harcourt. The Calabar project com- menced in 2007 with electricity production and distribution to 70 commercial concerns, as well as coordinating revenue collec- tion over its 6.4km distribution network.

It had been running on heavy fuel oil, but Genesis Energy has installed new gas turbines and is building an underground spur pipeline to secure the delivery of gas from the Nigerian National Petroleum Corporation for 20 years. It has to be underground as an overground pipe could prove a fatal attraction to thieves who might mistake it for a crude oil pipeline and attempt to tap into it -- with horrific consequences.

Today, Omoboriowo says, power and gas drives every- thing that the company does. He has an almost messianic zeal as he outlines just why the gas-to-power projects are so im- portant to him, and to Africa. He sees the energy gap both as a huge challenge and an immense opportunity, and the deal he has struck with the government of Benin could prove a water- shed for the country.

What is so hugely attractive for the Benin government is the fact that it only involves a commitment to purchase the generated power. Genesis and its partners will take on the re- sponsibility for both the capi- tal expenditure and two plant operations.

Genesis Energy has agreed to build and develop two power plants in Benin. The smaller plant is located on the border with Nigeria at the port of Seme. It is a 100MW on-grid power plant using General Elec- tric units and a 20MW distrib- uted power plant using engines provided by the UK's Cummins Cogen, part of the US-based Cummins Group.

Virtual pipeline

The feedstock for this plant will be natural gas from neigh- bouring Nigeria. The gas trav- els along an innovative 'virtual pipeline' as pressurised gas is carried on trucks by road.

This makes the transporta- tion logistics much less expen- sive, especially as a pipeline would need to be buried as a security precaution.

The Calabar Free Trade Zone power station that Gen- esis developed has been a useful experience.

Similar in size to the Seme plant, the Calabar Free Zone power facility uses much the same technology as the Benin facility which Genesis Energy is now fast-tracking.

The other power plant that Genesis Energy is to build is at Maria Gleta, about 10 miles northwest of Cotonou, the commercial capital and principal port of Benin. It will add to the 85MW that is already generated there to.

In a fine example of the gov- ernment's "joined-up" think- ing, the idea is to develop the industrial hubs and manufac- turing assets that can utilise the reliable and affordable electric- ity.

And the objective is to have, within two to three years, no less than 80% of the plants' workforce Beninoise citizens.

Maria Gleta is a replica of an existing power plant that Gen- esis Energy developed in Port Harcourt, Nigeria, making it easier and faster to build.

And funding has also been easier as Genesis Energy can demonstrate its previous suc- cess.

Genesis Energy has anoth- er, third, partner in the Maria Gleta project in Engro, a major Pakistani conglomerate with worldwide interests, which will be providing equipment pro- curement and construction as well as operations and mainte- nance services.

In addition, United Capital (a subsidiary of UBA Bank) is arranging the debt with Genesis Energy and Engro.

The financing, negotiated over several weeks, is structured as a combination of debt and equity for a 360MW conces- sion. Omoboriowo praises the negotiation process that was ably supported by the African Development Bank.

The AfDB provided the Be- nin government with a tech- nical services support facility, which enabled the state to hire top European law firms and a financial advisory services firm.

Because the process is trans- parent and the entire manage- ment process has been executed so professionally, the project has attained investment grade sta- tus. The structure of the tariff was, of course, critical to the covenant of the agreement.

"We typically take on com- mercial money as bridge capital. Long-term capital is available but the requirements are tedi- ous and meeting those capital requirements that the DFIs need requires too much time," Omoboriowo says.

And time is critical, he in- sists. The objective is to light up Africa, one community at a time, and to complete that objective in the fastest possible time.

"That's our mission," he says, "but we are not going to do it all ourselves. We need both collab- oration and a unity of purpose."

The objective is to have, within two to three years, no less than 80% of the power plants' workforce Beninoise citizens.

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Publication:African Business (Al Bawaba (Middle East) Ltd.)
Geographic Code:6BENI
Date:Feb 29, 2016
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