Proton Energy, Partners Sign $250m Gas Supply Deal For 500MW Power Project

Proton Energy Limited has signed a deal with the Nigerian National Petroleum Company Ltd (NNPC), Shell Petroleum Development Company (SPDC), TotalEnergies, the Nigerian Agip Oil Company Limited (NAOC) and the Gas Aggregation Company Nigeria Limited (GACN) for the supply of natural gas for its 150 MW first phase of the Proton Delta Sunrise project.

The signing of the long-term gas supply aggregation agreement is a milestone in the development of the company’s 500 MW planned facilities which will be built in two phases. The first phase will deliver 150 MW of electricity to the national grid, while the second phase will add a further 350 MW.

According to the firm, it is expected that the first phase will reach commercial operations in 2025 and deliver the much needed reliable incremental power megawatts to the national grid.

Speaking at the event, the Executive Vice Chairman and Chief Executive Officer, Mr Oti Ikomi, noted that the deal has been in the works for years.

Ikomi noted that the project worth over $250 million would enhance industrialisation, business and job growth in the country as well as the host communities.

Nigeria currently scores low on major indices tracking the supply of reliable electricity to its population and the agreement is in line with government’s twin objectives of accelerating the development of a robust electricity sector and better utilising its gas endowment for the betterment of its citizen.

The successful implementation of the project, combined with other electricity value chain initiatives that are currently underway, will help to lay the foundations, in the medium term, for an era characterised by the supply of reliable and affordable electricity to the general populace.

Besides, it is expected that the project will dramatically improve standards of living, catalyse economic growth and help transition Nigeria into an upper middle income economy.

Ikomi stated that the project is an advanced Independent Power Plant (IPP) project which with the continued support of key regulatory and financial sector stakeholders, has the potential to reach Financial Close by the end of 2023.

“We thank our partners for their dedication towards executing this agreement and their contributions towards the development of a more robust domestic electricity market,” Ikomi stated.

He explained that although the agreement was executed in February, it was important to recognise the work, the amount of negotiation as well as the amount of time and what the project will do for Nigeria.

“This agreement is going to give us a multi-year supply of natural gas to the port on the sunrise project located in Sapele in Delta State. Gas is the most critical supply cost structure in developing a power plant. So we are very proud of this,” he added.

He also highlighted the role played by the African Development Bank (AfDB), Nigeria country office. Ikomi added that Proton Energy Limited will reach the close of a financing decision by the end of the year.

“We expect direct and indirect jobs to be over 10,000. Look at the multiplier effect on our nation. It will contribute to growth and development,” he added.

Also, the Chairman of Proton Energy, Mr Ike Osakwe, lauded the management of the firm for achieving the milestone.

“The board of Proton Energy commends the management of Proton Energy for diligently progressing the project over a number of years. We re-echo our gratitude to our gas supply partners Shell SPDC; NNPC, GACN, Total Energies and AGIP,” he said.

In his comments, Governor of Kebbi State, Abubakar Bagudu,who chaired the event, described the decision to make the huge investment even at a time the country was transitioning to a new administration as ‘brave’.

“This is a brave undertaking as you can very well imagine. It is not quite easy for one who is in a transition from one administration to the other to be a witness to this. But this says a lot, that there are courageous entrepreneurs out there who still believe that this country is a primary destination for investment. This is a statement of confidence in our economy,” he stated.

On the back of the Ukraine, Russia situation, he stated that Nigeria has come to appreciate that it can do more with gas, assuring that when sworn in, president-elect, Bola Tinubu will focus more on gas production.

Aside Bagudu, another member of the Presidential Transition Council and former Finance Commissioner in Lagos, Mr. Wale Edun, assured that Tinubu will pave the way for investment as well as boost security to ensure the growth of the oil and gas sector.

He expressed concern over the country’s failure to take advantage of the boom in the global oil and gas industry, stressing that the incoming administration will ramp up production.

Edun stated that although the energy sector is not where it should be at this time, the incoming government will make sure Nigeria optimises its revenue from the sector.

“We should really be in a boom , so it is the determination of the President-elect to create the environment, starting with improved security, to create the environment that will allow increased gas supply.

“He will ensure increased output of crude oil and petroleum products so that Nigeria can benefit from the current boom in the price of gas and the price of petroleum products and the price of crude oil around the world,” he said.

A Siemens of Germany Representative, John Roberts, explained that reliable power was desperately needed in Nigeria, stressing that cutting edge technology will be deployedro ensure low carbon emission.

“This particular project is close to my heart…I want everybody to know that I am not retiring until this project happens,” he said.

Other partners who spoke at the event included, Proton Energy’s Company Secretary, Lolade Mudashiru, the GACN boss, Soibiton Isokariari, General Counsel , NBET, Peter Ugbobine, as well as representatives of the partnering companies.