As Aba prepares for ‘Geometric’ economic growth

In reality, Aba is poised for astronomical economic growth and not just a geometric one as captured in the header, however, I couldn’t resist the pun, especially because the growth is being powered by Geometric Power Limited and it’s only fair that they are given the credit.

The history of Geometric Power Limited dates back to the year 2000 when Geometric Power Limited and Renatech International Limited established a joint venture to build the first indigenously owned private sector power plant in Nigeria with Cummins Power Generation of USA as their technical partner in the building of the 15-Megawatt Emergency Power Station in Abuja.

The power station came on stream in record time by the 7th of November 2001 and was commissioned by the then Vice President of Nigeria, Alhaji Atiku Abubakar on the 21st of December 2001. The power station provided uninterrupted power supply to Aso Rock, the federal secretariat, NNPC headquarters, Abuja central business district, and the International Conference Center (ICC) until the end of the EPP contract in March 2004 thus proving that it was possible to have uninterrupted power supply in Nigeria.

Following the Obasanjo administration’s push for improved power supply and the passing of the Power Sector Reform Act in 2005, Geometric Power Limited renewed its interest in investing in the Nigerian power sector and identified an opportunity in the industrial customers in Aba, Abia state of Nigeria.

The development of the Aba power plant is based on a commercial study and technical audit of the Aba region conducted by Geometric Power Limited in collaboration with the Power Holding Company of Nigeria (PHCN) in March 2006 which covered information on daily peak load for the Aba region, suppressed demand, list of shut down industries and forecast power consumption requirements of the various customer categories in Aba.

Aba was also recognized as a major industrial hub in the southeastern part of the country that was not realizing its full potential as a result of the poor power supply in the region. Industries such as spare parts and machinery manufacturing, paper products, soap, glass products, oil mills, breweries, water bottling, processed foods, small metal and wood fabrication industries, and garment and leather products industry were identified and all of which were producing far below their installed capacity to power supply shortages.

Based on the result of the studies and the huge impact that Aba could potentially have on the industrial development of Nigeria, the Obasanjo administration gave Geometric Power Limited a twenty-year concession to supply power to Aba and its environs under an integrated power arrangement which meant that Geometric Power could generate and distribute power in the region under the concession agreement.

Built at the cost of $800 million, the 188MW Aba Integrated Power Project is easily the biggest investment in the South East of Nigeria and is the only firm that is allowed to generate and distribute its power. The project also included building a dedicated 27-kilometer natural gas pipeline from Owaza in Ukwa West LGA to the Osisioma industrial layout in Aba where the power plant is.

With the start of operations of the Aba power plant, existing manufacturers will be able to increase their output by between 200 and 300% while at the same time lowering their cost of production. This is as foreign investors have started renewing interest in investing in Aba with Taiwan’s Maxxis Tyres within 24 hours of the power plant’s inauguration, announcing plans to build a full-scale manufacturing plant in the industrial city. Neimeth Pharmaceuticals has also announced plans to relocate their factory to Aba and we can be rest assured that many more manufacturers and foreign investors will follow suit to benefit from the reduced production cost in the city of Aba.

I am particularly excited about the opportunity being presented to garment and leather products manufacturers in Aba. Many people may not know but some of the imported clothes and leather products (shoes and bags) that we buy are actually made in Aba for foreign labels. With stable power supply, Aba garment and Leather products manufacturers will be able to claim a bigger share of this $1.5 trillion per annum industry and perhaps put Nigeria on the map of quality garments and leather product manufacturers.

While Geometric Power Limited already has plans to increase the power generation capacity of the Aba power plant to 1,000 MW in phase two of the project, I would like to encourage companies like Transcorp Power Plc, Geregu Power Plc, and other major power generation and distribution companies in the country to emulate the Geometric Power model and invest more in the value chain of our power sector. At the same time, the government should also encourage more investments in the power sector by giving more concessions to investors in the power industry.

Congratulations to the good people of Aba, the sky is their starting point with this development. I just pray that they don’t leave the rest of Nigeria behind in the dark ages.

Oshobi, a management consultant, development economist, and author writes from Lagos.