The WGG principal target market for coal in Nigeria is the electricity generation sector. Currently, electricity supply in Nigeria is powered mainly by hydro and natural gas fired plants and these have been epileptic in recent times. Political disturbances in the Niger Delta region of Nigeria, poor pipelines infrastructure and receding rainfalls have contributed to severe reductions in electric power supply. There are a few liquid fuel fired power plants but these are not only very expensive but ineffective for mass market supply. These are the principal reasons for the WGG “Coal for Energy Project”.
WGG Ltd proposes to implement a coal fired Power plant of 2500MW in Kogi state starting with a 500MW capacity and then increasing systematically with time. It is believed that the coal projects will also present additional markets in this sector for other independent and State powered plants under implementation in Nigeria. The domestic market for Coal is secured by the high costs of coal imports from especially the nearest supply market – South Africa. Freight, Port Handling and other cumbersome logistics help also to protect the local coal market.
Capacity utilization in Nigeria’s industrial companies is currently below 50%. The principal cause is lack of power as power contributes over 50% of production costs. This has affected especially the cement manufacturing companies in Nigeria. WGG’s proposed “Coal4EnergyProject” primarily targets the supply of power coal to cement manufacturers and other industrials like steel plants that have remained largely idle due to lack of electric power.
Current exploration activities are going on to prove the commercial reserves of power coal in our Kogi and Enugu blocks. The industry requires security of supply, consistency and reliability to plan production and sales activities.
WGG proposes to leverage contacts with technical partners to assist industrial companies with huge appetites for electric power to consider self-generation as way out of the intractable power supply problem of Nigeria via the Coal4EnergyProject.
WGG proposes to develop a domestic market for coal as the power and industrials markets are developed. Via the Coal4EnergyProject, coal will be sold to merchants who will then retail it on to the householder end-users for use in domestic appliances.
Products for the domestic market will consist of a range of good quality graded coal briquette capable of being burnt in open fires for especially cooking in the northern states of Nigeria where deforestation has resulted to very drastic environmental problems including desert encroachment.
WGG proposes to develop a limited export market for our coal as a strategic tool to manage exchange rate risks to our foreign currency credit exposures. This policy stems from the projected overwhelming domestic demand for production.