The intention of the Nigerian National Petroleum Company Limited (NNPCL) to play in the power sector is not so outlandish. NNPCL is Nigeria’s oil and gas giant. Statistics show that some 81 per cent of Nigeria’s electricity is by thermal plants, powered by gas. Only 17.59 per cent electricity in Nigeria is by hydro.
With a core competence in oil and gas — and gas being the main driver of Nigeria’s electricity — NNPCL has clear synergy with electricity power generation, which it now eyes as a growth area. Indeed, the gas-NIPP plants linkage, and its clear economy of scale advantage, can’t be dismissed.
NIPP — National Integrated Power Project — a brainchild of the Olusegun Obasanjo Presidency, are all gas-driven. The Federal Government has put them all up for sale, in a privatisation binge. NNPCL has intimated the Bureau of Public Enterprises (BPE), the institutional hawker of the plants, of its intention to buy.
For sale are Afam IV Power Station, (Rivers), Alaoji Power Station (Abia), Calabar Power Station (Cross River), Egbema Power Station (Imo), Geregu II Power Station (Kogi), Ihovbor Power Station (Benin City, Edo), Olorunsogo II Power Station (Ogun), Omoku II Power Station (Rivers), Omotoso II Power Station (Okitipupa, Ondo), and Sapele Power Station (Delta).
All of these stations are powered by gas. NNPCL has supreme advantage in oil and gas. So, its bid should be a shoo-in? Not quite — and that doubt comes ironically from NNPCL’s supposed strength: the mess it has made of its current oil and gas core competence.
NNPCL’s laggardly state is so befuddling in comparison to its counterparts elsewhere — say Saudi Arabia Oil Company (ARAMCO), Malysia’s Petroliam Nasional Berhad (PETRONAS), and the Kuwait Petroleum Corporation (KPC), for instance.
This trio have engineered their countries’ transition from raw crude to massive oil wealth, with blue chip global investments to the bargain. Here, our NNPCL after eons still struggles to make routine local refining a reality.
Now, if NNPCL has fared not so well on a core national competence, why should its bid to play in power, another core national imperative, be taken seriously just because it has towering advantage in oil and gas? Indeed, the very thought of NNPCL annexing electricity power to its parlous oil and gas record silently rankles!
What would that be? The monopoly of the crippled? How competitive will the Nigerian economy be, with vital sectors — oil, gas and electricity — in the clamp of a body that has not shown much competence, not to talk of penetrating brilliance, in its present assignment, after too long a period?
That general Nigerian worry greeted the NNPCL bid. Yet, the investment pitch on the road, by Mallam Mele Kyari, NNPCL managing director, was rather arresting.
“As an oil company and enabler organisation, NNPCL is determined to boost power generation and supply to Nigerian homes,” he said in a media release after his management’s foray to BPE in Abuja. “This can be achieved through increased investment hence it has signed a contract with China Machinery Engineering Company and General Electric (GE) to provide 50 megawatts of electricity to Maiduguri.”
From this statement, NNPCL’s strategy appears playing the enabling company, which has the cash to recruit and buy core expertise to run its electricity business line, while it continues concentrating on its core oil and gas.
That makes sense. Still, what does the firm do with its cumulative negative and crippling image, no thanks to its poor record?
At the end, the buck stops on the table of the sales umpire: BPE. Nobody can tell NNPCL not to bid. It’s an open economy, so let it bid with the other interested firms, local and foreign. But it’s the onerous duty of BPE to vigorously vet every bid; and sell the plant to companies it adjudged likely the most competent.
Nigerians surely cannot afford an encore of the living mess of the electricity distribution companies (DisCos). This abiding mess issues from allegations that the old Power Holding Company of Nigeria (PHCN) was carved out to incompetents with neither the cash nor the technical savvy to run electricity distribution. It was a policy hors de combat that has birthed nothing but chaos and paralysis at the retail end of the electricity power market.
Nigeria — and Nigerians — cannot afford the repeat of this bitter tale in the electricity downstream sector in its generation upstream. Which is why BPE must take the NNPCL bid with extreme caution — without prejudice, of course, to the quality of the bid.
Whoever buys the NIPP plants, BPE must assure Nigerians it did its due diligence; and that we are not bracing for additional fiasco on the power front.