NIGER DELTA ENERGY CORRIDOR
A PRESENTATION ON
THE PROJECT CONCEPT AND IMPLEMENTATION
Weltek Limited & Techdev Energy Plc
The Niger Delta Energy Corridor (NDEC) is a Private Sector development initiative aimed at promoting industrialization in the Niger Delta for economic growth in Nigeria. The industrialization is also a means to resolve the critical national challenge of developing the Niger Delta mangrove swamp whose magnitude of problem is high and successive governments have not been able to contain its negative impact on the oil and gas industry. In the last two decades the region’s oil and gas industry has come under intense pressure by interrelated challenges of oil theft, environmental degradation, pipeline and infrastructure violation, militancy, and a shadow economy founded on illicit oil. These have been, in part, the result of years of neglect and lack of visible investment on infrastructure and economic opportunities in the region.
The response of the International Oil Companies (IOCs) that have operated in the region for over fifty years is to exit the region by divesting from onshore and near-shore assets. The divestiture has created new opportunities and excited indigenous oil and gas entrepreneurs, who have embraced the opportunity of operating the assets and providing leadership to continue with the usual business of the industry. In return, the entrepreneurs have also inherited the existential challenges encountered by the IOCs, without adequate preparation on the impact to their return on investment. This situation casts a gloomy long-term investment prediction in the region if adequate care is not taking to stamp out the menace that gave rise to the challenges.
Government’s intervention through the Amnesty program and security measures by the nation’s Arm Forces to protect oil and gas assets has achieved a fragile peace that offers ample windows of opportunities for more innovative thinking, new approaches and more inclusive strategies in forging business partnerships and relationships for sustainable economic growth in the region. Consequently, the Niger Delta Energy Corridor is hereby proposed as an industrial belt to process the regions’ vast hydrocarbon within a dedicated corridor, in other to create industrialization and a robust economic base in the region to improve the economy of the country and living conditions of the citizenry. The following presentation sheds light to the Corridor and the strategies for its implementation.
2.0 THE NIGER DELTA ENERGY CORRIDOR
2.1 Strategic Thinking
The Niger Delta Energy Corridor is proposed as an industrial belt where international, state-owned and private companies as well as services providers can locate and establish their hydrocarbon processing plants in the region. From past experiences, it is obvious that the business of the oil and gas from the region can no longer prosper with only exportation of the hydrocarbon raw materials and importation of finished products with subsidy from the government. Therefore processing the region’s vast hydrocarbon in a dedicated Corridor is an ambition that creates new opportunities, jobs, capacity development, eradication of fuel subsidy and home-grown stake in the future of business in the industry. This measure will create industrialization and a robust economic base in the region that expands businesses, improves the living conditions of the citizenry, and invariably finds a lasting solution to the challenges facing the industry.
The Corridor will have investments in power plants and transmission/distribution grids, which includes gas production, gas pipelines and associated infrastructure as well as facilities to capture associated gas to eliminate gas flaring. It will have refinery and petrochemical complexes, roads and railroad transportation and commercial expansion to industries, factories, and agriculture that will help to prevent unemployment of youths, as it will offer a legitimate source of income. It will also be capable of infusing into the society, new ideas and new levels of discipline and examples of managerial expertise that would improve the skills and efficiency of the people thereby assuring sustainable growth in the economy of the country. The Corridor will provide a self-sustaining conducive environment in the Niger Delta where, businesses, communities and individual values can thrive again.
2.2 LOCATION OF THE CORRIDOR
The Niger Delta Energy Corridor will be located along the coastal belt connecting the industries in the region including Tinapa in Cross River State; Oron Deep Seaport, Seven Energy Plant and Mobil Kwa Ibom Terminal in Akwa Ibom State; Bonny NLNG, Eleme Petrochemical complex, Soku Gas Plant and Ahoada Technology Park in Rivers State; Brass NLNG, Brass and Nembe oil Terminals, and Gbaran Ubie Gas Processing complex in Bayelsa State; Forcados and Escravos Terminals, and Ogidingbe Refinery and Petrochemical Complex in Delta State; Gelegele Terminal in Edo State; Olokola NLNG in Ondo State; and terminating at Lekki Free Zone and Deep Seaport in Lagos State. The Niger Delta Energy Corridor is therefore aimed at connecting industries, people and environment to achieve the much-desired industrialization of the country.
2.3 BRACED CITY
The Niger Delta Energy Corridor’s businesses will be anchored in “BRACED CITY.” The BRACED City (BRACED being an acronym for Bayelsa, Rivers, Akwa Ibom, Cross-River, Edo and Delta) as its growth-pole in providing a stable investment receptacle for the vast revenue from the oil and gas industry through world-class economic infrastructure related activities. The BRACED city, which would be owned by the BRACED States, is part of a comprehensive strategy to combat the phenomenon of business irritation in the region. It will establish an investment-friendly, modern, secure, dynamic, environment-friendly, socially inclusive, and economically robust city, driven by the oil & gas industry, which will create wealth and vast economic opportunities for the nation, individuals and investors. It will serve as the engine of the Niger Delta Energy Corridor to diversify the economy of the country, bring growth, and open the space for the pursuit of beneficial national aspirations. It will also present investment opportunities for the vast revenue from the industry, and create a life of endless opportunities and high productivity.
2.3.1 KEY FEATURES AND INFRASTRUCTURE
- Refinery and Petrochemical complexes
- Oil & gas trading system complete with trading post and export facility to reduce the transaction costs in the industry and increase profitability of the companies
- Main trunk pipelines for gas and oil to feed the trading post and industries from producing fields and support the development of the downstream sector – refineries and petrochemical complexes
- World class Intercontinental Airport with most modern facilities
- Highways and high speed Railroads connecting industries, people and environment including all major cities in the BRACED States, and Lagos to BRACED City
- 26Oil and Gas free trade zone
- Highly efficient and competitive deep-sea ports
- Desalination plant to support adequate water supply.
- Power plants and transmission grid stretching from the Corridor to ECOWAS
- High-end real estate development
- Hospitality, tourism and major international events centers
2.3.2 BRACED CITY STATUS
BRACED City will be an Incorporated Territory carved out of the Niger Delta Energy Corridor; independently administered under a Mayoral system of government and developed in a public-private partnership between the Federal Government, BRACED Commission and Investors. The city is proposed to be located centrally amongst the BRACED STATES and at the point of the nation’s deepest incursion into the Atlantic Ocean. Thus, it will cover territories in Bayelsa, Rivers and Delta States
- By the Governors of the six BRACED STATES at their second South-South Economic Summit held in Asaba, April 26 – 28, 2012 “as a project with potentials for connecting the people, industry and natural resources and creating jobs”. See Communiqué 28 April, 2012.
- Guardian Newspaper “… the proposed development of the Niger Delta Energy Corridor does not contravene any federal law and should therefore be implemented at full speed” See Guardian Newspaper Editorial Sunday, 20 May, 2012.
- 2014 National Conference approved the implementation of the Corridor. See Conference Report submitted to Mr. President August 21, 2014.
3.0 IMPLEMENTATION STRATEGIES
Techdev Energy Plc; an Energy and Infrastructure development company is the Promoter of the Niger Delta Energy Corridor in collaboration with BRACED Commission; an institution of BRACED States founded to promote economic cooperation and regional integration programs of the States in the Niger Delta.
3.2 PRELIMINARY TECHNICAL FEASIBILITY STUDY
The Promoter is embarking on the Preliminary Feasibility studies to develop a general framework covering preliminary design of the Corridor and its growth pole; the BRACED City preliminary Master Plan. This is intended to provide the preliminary budgetary estimates for various businesses and institutions in the Corridor that will be presented to government and investors for consideration.
3.3 PRELIMINARY LEGAL FRAMEWORK
The Niger Delta Energy Corridor crisscrosses various States, Local Government Areas and Communities whose development circumstances require legal frameworks around the vision of the Corridor for sustainable prosperities and economic integrations. A legal team of experts on energy and infrastructure are working on the frameworks that would be most convenient for governments, investors and various stakeholders as the basis for all the transactions envisaged in the Corridor.
3.4 FINANCIACING STRATEGY
The Niger Delta Energy Corridor will be implemented primarily through multiple private sector participation and financing. This may include investments in gas production concession from the natural gas reserves in the corridor estimated at 187 trillion cubic feet (2800sqkm), with economic potential estimated to be three times as substantial as the economic derivative from the crude oil. The Promoters will work with the relevant government agencies, institutional investors such as pension funds, and development agencies such as African Development Bank and the World Bank to identify uncommitted natural gas assets that could be offered to investors to attract major capital investments for various projects in the Corridor as part of the nation’s industrial Economic Transformation agenda. Public financing will also provide some shares of the funding, especially in the participation of relevant agencies of government such as BRACED Commission and Niger Delta Development Commission in providing hedge funds for preliminary activities such as prefeasibility studies and project management.
3.4.1 POWER AFRICA FUNDING INITIATIVE
The Niger Delta Energy Corridor considers power generation, transmission and distribution, as a priority project needed to kick-start all the activities in the Corridor. The Promoters have contacted the United States Agency for International Development (USAID), which has strategy for the implementation of Power Africa Initiative announced by the President. USAID’s Bureau for Africa, and other offices within USAID/Washington, and USAID Missions in priority Power Africa countries, are seeking to engage with interested parties to develop activities or projects that can pool funds, talent, and resources from USAID, other government agencies, and private sector partners to support the Power Africa Initiative.
Subsequently, the USAID’s call for expression of interest for Power Africa projects reveals that the Sub Sahara Africa needs $41 billion annually for energy development of the power sector. It identified that at the current spending levels from government, donors, and the private sector, the financing gap for the energy sector stands at roughly $23 billion annually. USAID is therefore interested in working with private sector partners, pension funds, other institutional investors, MDBs, IFIs, and donors to support mobilization of greater capital investments in viable power projects, conditioned on agreed partner country reform implementation. The Niger Delta Energy Corridor fits perfectly into this objective and so, the objective would be explored as a funding strategy. This therefore places the urgent need to involve the Federal Government in perspective.
3.4.2 OTHER SOURCES OF FUNDING
The project will consider other sources of funding such as NDDC subvention, allocation from State oil mineral, various government approved incentives from existing policies for energy and infrastructure, etc.
Mr. President, it is important to note that after decades of mistrust and frustration of Nigerians on the development impact of the oil and gas industry, the proposed Niger Delta Energy Corridor presents a historic chance to provide hope and opportunity through business, job creation, capacity building, and a homegrown stake in the future of the hydrocarbon industry. If the Corridor’s objectives are met, it will not only result in the construction of a new city and its related infrastructure, but also position the Corridor as a new beginning in harvesting the approval and emotional investment of communities, government, media, NGOs, and International communities.
Mr. President, this presentation is about a great change and industrial revolution that dovetails into your economic Transformation Agenda. It calls for a great sense of urgency to deal with the difficulties and challenges that would confront its implementation. We must remove as many obstacles as possible, and never let up until industrialization of the country through the Corridor is firmly rooted in our lives. This way, we will be able to reduce poverty, violence and restore peace and security in Nigeria.
Mr. President, we bring this project to your attention, in all humility, as we believe it will serve as one of your legacy projects. Our prayer is that you approve the recommendation of the 2014 National Conference and get the Federal Government to work with the promoters to bring this matter to fruition. In particular, we pray you to bring this project to the attention of relevant energy and infrastructure MDAs with the purpose of connecting to local and international financing and private equity institutions, so that it can have an accelerated implementation.