A state offtake agreement with an innovative small-scale private LNG venture in Nigeria may have been rescinded for no other reason than it was made under the previous government.
Greenville LNG signed a memorandum of understanding (MoU) with the ministry of power, under former president Goodluck Jonathan who was in power until 2015. The company cried foul November 2017 after hearing that the ministry had said it would use diesel to fuel the new 215 MW Kaduna plant, rather LNG from Greenville’s small-scale gas liquefaction unit. The ministry was the firm’s anchor customer.
Nigeria’s Senate set up an investigation the following month into why the contract was rescinded. On February 19, it emerged from the probe that the reason may simply have been that it stemmed from an agreement inked during the Jonathan administration.
Greenville LNG managing director Ritu Sahajwalla confirmed to NGW February 20 that it signed the MoU with the power ministry under the previous administration but insisted it should still be respected. Ministry officials however have said that an MoU is not a binding contract. NGW reported in December 2017 that it costs naira 79 (21.7 US cents) per kilowatt-hour to generate power from diesel, whereas (LNG) gas-fired electricity costs N37 (10.2 US cents) per kWh.
The Senate’s investigation is ongoing but a source within the Senate told NGW February 19 that Greenville had already imported 250 trucks to transport LNG to the Kaduna plant and that therefore discontinuation of the MoU would discourage future investment in small-scale LNG in Nigeria. The source added that it is common for ministries to rescind agreements by past administrations as a way of pursuing new business interests that may be more financially beneficial to those in power, and that hopefully the Senate would come up with a fair resolution.
However, it has not been confirmed if there was a competitive bidding process, prior to Greenville’s selection to supply LNG to the Kaduna plant in the first place.
Nigeria’s minister of state for petroleum Ibe Kachikwu attended the signing August 29 2017 of a gas sale aggregation agreement with Abuja-based Greenville agreed to buy 74mn ft3/d of feed gas for its $500mn mini-liquefaction facility at Rumuji, Rivers State.