Business FG defends cost of Zungeru power project

In response to public outcry on the high cost of the contract for the Zungeru Hydroelectric Power Project, the Federal Government has come out to defend the cost. The government noted on Sunday that the N280 million would be spent to repair a power distribution centre that was destroyed during a protest in Ibadan last year.

According to a statement by the Ministry of Power, Prof Chinedu Nebo, “The selective benchmark pricing of three projects in Ethiopia, China and Brazil is over simplifying the complexity of three hydropower projects.

“It is important to note that the cost of such projects depends on the details of the design, topography, geo-technical conditions of the site and the availability of supporting infrastructure to deliver the project.”

“It should be noted that the cost of dams worldwide further depends on the specific social and environmental issues and ancillary structures that are to be provided along.”

Citing the 2012 worldwide survey of the cost of large hydropower projects by the International Renewable Energy Association, which indicated that the cost of $1.05m to $7.65m per megawatts of installed capacity, the ministry stressed, “The Zungeru project has a projected cost of energy at five US cents perkWHr, a very favourable figure when compared with the IRENA survey of a worldwide average cost of two to 19 cents for large hydropower.”

The ministry stated that the cost of the contract was not inflated, “The engineering procurement and construction cost of the Zungeru hydroelectric project approved by Federal Executive Council is $1,293m, including transmission lines and substations, indicating a cost of $1.847m per megawatt. It is obvious that the benchmark price per MW for the Zungeru project falls at the low end of the average world pricing.

“It is also to be noted that the Bureau of Public Procurement had, in its Due Process Review Report, indicated the average cost of similar large hydropower projects and accepted the competitively tendered price for the project.”
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