Nigeria has signed a $1.3billion deal with two Chinese state companies, China National Electrical Equipment Corporation (CNEEC) and Sinohydro Consortium, to build the Zungeru power plant.

The deal which was signed over the weekend will help to put an end to the chronic electrical power supply shortages that continues to slow growth in Africa’s second-biggest economy.

The plant, which is scheduled for completion by 2018, will help add 700 MegaWatts (MW) electricity to Nigeria’s current 4600MW.

The Zungeru power plant in Niger state (about 150km to federal capital, Abuja) was first conceived in 1982, but was abandoned due to lack of funds. Now, 75 percent of the fund needed for the project will be supplied by China’s Exim bank while Nigerian government will foot the rest of the bill.

“This project will create thousands of jobs for Nigerian engineers, technicians and artisans during the construction phase…. it will also boost the economy,” Nigeria Finance minister, Ngozi Okonjo-Iweala said at the signing of the deal.

President Jonathan and Chinese president, Xi Jinping had met in July 2013 over the signing of the accords between the governments to facilitate $1.1 billion in low interest loans for infrastructure projects in Nigeria.

According to Nigeria’s Finance Minister, Ngozi Okonjo-Iweala, the loan being finalised was part of the $3bn approved by China at interest rate of less than 3 percent.

Commenting on the deal, China’s Ambassador to Nigeria, Deng Boqing said: “The Zungeru power plant project was significant to Nigeria people because it will contribute greatly to economic growth, meeting the growing power demand as the West African nation ushers in a new period of industrialisation and urbanisation.”

Nigeria has suffered for perennial power shortage which has hampered economic activities. However, the country expects a $10 billion investment in the power sector in the next 10 years to boost generation and transmission in the sector.