AFRICANGLOBE – The Federal Government and General Electric (GE) Company of the United States Thursrday sealed a $1 billion (N158 billion) investment deal on the establishment of a new manufacturing and assembly facility in Calabar, the Cross River State capital.
The investment milestone also came on a day an indigenous power company, Geometric Power Limited signed a Joint Development Agreement (JDA) with US power firm, General Electric Company (GE) for the development of a 450 megawatts (MW) thermal power plant to be sited in Aba, Abia State.
Speaking on the $1 billion deal, the country’s Minister of Trade and Investment, Mr. Olusegun Aganga, who signed the Memorandum of Understanding (MoU) on behalf of the Federal Government, with the Global Chairman and Chief Executive Officer of General Electric, Mr. Jeff Immelt, signing on behalf of the company, said GE’s proposed investment in Nigeria was based on the country’s positive macroeconomic indicators.
It was gathered that the deal, which comprises $250 million capital expenditure and about $800 million incremental spending on local sourcing of goods and services, is expected to create 2,300 jobs and make Nigeria the regional hub for GE’s manufacturing service and innovation in Africa.
The deal will also support the company’s power generation, oil and gas production and exploration activities.
While noting that GE’s proposed investment in Nigeria was based on the country’s positive macroeconomic indicators, Aganga said: “This is the beginning of many more investments that will come from GE and we are committed to providing a conducing investment climate for both GE and other foreign investors. I want to congratulate GE for making the right decision by investing in Nigeria because our country has one of strongest macroeconomic environments with average Gross Domestic Product growth of seven per cent in the last 10 years.”
According to him, “GE’s size of investment, which is $250 million, for the outset, and $1 billion over the next five years, is significant in every respect. It is far more important because the investment is in critical areas of our economy, which is power infrastructure. This investment will support our Industrial Revolution Plan, which is based on the areas where we have competitive and comparative advantage.”
Continuing, the minister said: “There is no nation that has moved from being a poor nation to a rich one by exporting raw materials without a strong industrial base and efficient services sector. Nigeria has the raw materials and the market to become, not just number one in Africa, but among the top 10 globally. That is what our Industrial Revolution Plan seeks to achieve. It seeks to link those industries with industrial skills development and innovation.
“The days for exporting raw materials and jobs are gone. This is a new Nigeria, and a new Africa. I am delighted that GE is leading that effort on behalf of the globally investors. Again, this investment is going into the Free Trade Zone (FTZ), which is under my ministry. So, by investing in the Free Trade Zone, General Electric is supporting the Federal Government’s Policy for creating the FTZs, which is to industrialise the country, create jobs and generate wealth. Therefore, we are committed to making it far more efficient and supportive for foreign investors.”
Speaking during the event, Immelt said the new investment would also take care of additional investment in the service workshops in Port Harcourt and Onne and was at the point of execution.
He stated that the investment was a demonstration of the company’s confidence in the Nigerian economy.
He said: “The time is now and the place is Nigeria. The government of Nigeria has made significant progress in its economy within the last few years. GE, as a global infrastructure company, will be investing $1billion in Nigeria within the next five years, which will create about 2,300 jobs. We see a lot of opportunities in Nigeria. Where we are now is the point of execution.
“We are committed to playing our part in the sustainable growth of Nigeria and the positive impact this will have on Nigeria and the continent of Africa as a whole.”
Meanwhile, it was gathered that the JDA demonstrated GE’s commitment to partner indigenous power firms to grow Nigeria’s power generation capacity as well as brings to full realisation, earlier plans by the company to develop with Nigerian power companies up to 10,000MW of electricity in the country.
It was also gathered that the agreement was signed on behalf of GE by its Global Chairman and Chief Executive Officer (CEO), Mr. Jeff Immelt, while the immediate past Minister of Power, Prof. Barth Nnaji, signed for Geometric, which he founded to develop model power projects in Nigeria.
Geometrics is also on the verge of inaugurating its 140MW integrated power system in Aba.
It is understood that the 450MW plant to be built with GE would cost $500 million and both companies are expected to bring in their respective strengths to achieve synergy in reaching financial closure for the project as quickly as possible.
They are equally expected to within the JDA employ technologies from GE in the full realisation of the project.
Nnaji in an interview asked indigenous and foreign electricity firms operating in Nigeria to take advantage of immense opportunities provided by a series of MoU signed by the Nigerian government and international investors in the last one year to accelerate the development of the power sector.
He listed such MoUs from which international and indigenous firms could tap from as the MoU between the Federal Government and General Electric for the latter to participate in the building of brand new plants to generate 10,000MW as well as the agreement with the United States Export-Import (EXIM) Bank to provide $1.5 billion credit facility to firms using American goods and services.
Nigeria also signed MoUs with Siemens of Germany and Daewoo of South Korea to help establish power plants to generate 10,000MW each.
“By entering into a development partnership with General Electric, we have taken a concrete step to give a practical expression to the MoUs which international investors signed because of their growing confidence in the Nigerian economy, especially the ongoing power sector reform which President Goodluck Jonathan is pursuing religiously in the interest of all the Nigerian people. The plant will be ready in not more than three years,” Nnaji said.
While explaining the difference in GE’s roles in the establishment of the 140MW Aba power project which would be inaugurated in March and the new 450MW, Nnaji said: “GE supplied us the turbine and we chose GE because it is the best in the world, but this time GE will be deeply involved in the funding, the technologies, and deployment of human capital as well as ownership.”
Speaking further, he said: This is the kind of Foreign Direct Investment (FDI) which Nigeria needs, and this is why I want other players in the fast growing electricity business in Nigeria to start to take advantage of the tremendous investment opportunities unleashed by both the power sector reform and the MoUs to work for the rapid growth of our national economy by helping the sector to leapfrog; electricity is central to our national development.”
The former minister also decried Nigeria’s practice of investing abroad saying: “Capital flight does no one any good, return on investment in Nigeria is, frankly speaking, much higher than in most countries of the world. It does seem that many of our people do not seem to fully appreciate yet the great opportunities which perceptive, far-sighted and careful international investors have now identified in Nigeria.
“It speaks volumes that General Electric, a Fortune 500 company which was in 2011 ranked the sixth largest company in the US by gross revenue and is a big brand in energy, technology infrastructure, capital finance, consumer and industrial products, is now taking a radical interest in our country.”