LAGOS (Reuters) - Nigerian businessman Tony Elumelu is negotiating with several oil majors to buy two onshore oil and gas assets he will use to fire power plants that are part of his $2.5 billion investment pledge to U.S. President Barack Obama's Africa Power initiative.

"I just came back from Europe yesterday and we are talking very seriously with all of the oil majors to buy two big oil fields," Elumelu said in an interview at his office in Lagos.

Several oil majors, including Chevron, Royal Dutch Shell, Petrobras and ConocoPhillips are expected to this year divest multiple assets onshore or in the shallow waters of the Niger Delta, continuing a trend that started two years ago.

Elumelu, a former banker credited with transforming United Bank for Africa from an ailing local lender into a pan-African behemoth, is building, buying or renovating up to five power plants in Nigeria, through investment fund Heirs Holdings.

His plans are a key part of the government's move to get its decrepit power sector into private hands and end chronic power shortages seen as the main break on Africa's second biggest economy.

But investors are wary of potential problems such as the reliability of gas, the transmission of what they produce - which will remain in state hands - and ensuring payment for the power, as well as disruptive unions.

Elumelu already counts two oil blocks among his interests.

"Our two oil blocks have huge gas supply, which we intend to use to produce power. We have more than enough to supply our current plans," he said, but added that seeking a further two would enable him to have even more.

ASSURED DEMAND FOR POWER

When Obama unveiled a $7 billion Africa Power initiative this month, private sector leaders matched it with $9 billion of commitments. Elumelu pledged $2.5 billion.

Despite being the continent's top oil producer and holding the world's ninth largest gas reserves, Nigeria's power output is a tenth of South Africa's for a population triple the size.

"It's the one sector where demand is certainly assured. Everything you produce ... will be taken off you," he said, estimating it at 70,000 - 100,000 megawatts, against the 4,000 mw currently produced.

"The beauty of the privatisation is that once the private sector mentality is in the value chain, they will put pressure on the government to make sure it works," he said.

Heirs Holdings has about $300 million invested in Nigeria's power sector through its Transnational Corporation of Nigeria (Transcorp). Earlier this year it bought a Nigerian power plant and it is aiming to raise its output to 1,000 megawatts.

Elumelu said he was also planning to spend $700 million in refurbishing another power plant, and was bidding for at least one of 10 new gas fired plants that the government put up for auction last month.

Though most of his power investments would be in Nigeria, Elumelu said he was also looking at Tanzania, where he has already bought farmland, as a possible site for power projects.

http://news.yahoo.com/nigerias-elumelu-seeking-2-oil-blocks-power-plants-070141452.html

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