The Federal Government has described as “unfair” insinuations that the contract awarded by the Ministry of Power for the Zungeru Hydroelectric Power Project was excessively high.

While responding to a recent newspaper publication which attempted a cost analysis of the contract and concluded that the contract price was unusually high compared to the cost of similar projects in other parts of the world, the ministry stated that “The selective benchmark pricing of three projects in Ethiopia, China and Brazil is over simplifying the complexity of three hydropower projects.”

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

It added that “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 (IRENA), which indicates that a cost of $1.05m to $7.65m per MW of installed capacity, the ministry stressed that “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 2 – 19 US cents for large hydropower.”

The ministry insisted that contrary to insinuations that the cost of the contract was over bloated, “The Engineering Procurement and Construction (EPC) cost of the Zungeru hydroelectric project approved by Federal Executive Council is $1,293million including transmission lines and substations indicating a cost of $1.847million per MW.

It is obvious that the benchmark price per MW for the Zungeru project falls at the low end of 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.”