The Nation Newspaper

Tag: GENCOs

  • ‘Power firms’ listing ‘ll drive capitalisation to N36tr’

    ‘Power firms’ listing ‘ll drive capitalisation to N36tr’

    The 15 power generation companies (GENCOs) and distribution companies (DISCOs) have the capacity to push  market capitalisation from its current N12.68trillion to  between N33 trillion and N37trillion if they eventually approach the Nigeria Stock Exchange (NSE) for fund, the Managing Director, Bgl Securities Limited, Mr Sunday Adebola, has said.

    Speaking against the backdrop of the recommendation by the National Council on PrivatiSation (NPC) that the firms should approach the capital market for funds, among other strategies for growth, Adebola said the firms have potentials to bring the market capitalisation to N36 trillion.

    He said the listing and performance of Seplat Nigeria Limited on the NSE and London Stock Exchange (LSE) shows that indigenous oil companies can buoy the market capitalisation.

    He said Seplat is trading for over N500 per unit share on the floors of the exchange, adding that it is a no mean feat given the fact that the company has not spent a year in the market.

    He said: “If the Power Holding Company of Nigeria(PHCN) successor companies can pay a $559,446.773 to the government,  they can push the market capitalisation further to N36 trillion given the fact the market is deep enough to carry out big-ticket transactions.  Assuming 10 of the companies approach the market for fund, and each of them contribute N2trillion to the market, that is N20 trillion. When you add N11 trillion and N20trillion, that is N31trillion.

    “However, this is based on the ability of the government to facilitate the listing of the firms by putting in place an enabling environment.”

    He urged the government to provide an environment that would guarantee investments, adding that the Pension Commission and the Pension Fund Administrators need to be involved to make the coming of the firms to the market easier.

    “PENCOM should be allowed to invest in the power firms through the PFAs.  “When PENCOM give investment waivers to the PFAs, it would be easier for the firms to raise finds from the market. The only institution that can bring long-term investments is the PFAs. Most of the investments in power firms are long-term, which is the core business area of PENCOM.  Investments in traded securities help in providing funds to bridge infrastructural gaps, of which power is one of them,” he added.

     

  • Lagos loses 4.4m kwh of energy annually

    About 4.358million kilowatt hour (kwh) of energy is lost annually to poor management of power in homes and offices in Lagos,  a report by the Lagos State Electricity Board (LSEB) has said.

    The report, which followed a research conducted by the Board to ascertain residents’ electricity consumption, said lack of energy conservation at homes, business premises and markets, among others, is common in the Lagos metropolis.

    Individuals and organisations, according to the report, were said to be generating far more than their energy needs through power generators, with the excess wasted on daily basis.

    It said electricity consumers are leaving their appliances and electricity bulbs on,  even when not needed, adding that the development is having a far-reaching effects on their well-being. It said the cost of wasting energy is enormous because it affects various aspects of human endeavours. The report said that inability of people to manage electricity well has caused them financial and health losses.

    This, the report said, is evident by emission of carbon dioxide (Co2) by those, who expose themselves to generator fumes daily, stressing that, many spend a lot of money to recharge their meters because they cannot  manage electricity well.

    About N38 billion, the report said, could be saved annually if energy conservation is practised in the state.

    “Energy conservation is paramount to the government, which has put in place measures to manage electricity consumption. Switching to energy saving bulbs at the Lagos State Government secretariat, Alausa, has resulted in energy savings of 978,906 kwh and reduces carbon-dioxide emission by 1,278,444 (pounds) lbs annually. This was achieved through the various power projects embarked upon by the government in recent times,” the reported stated.

    The state Commissioner for Energy and Mineral Resources, Taofiq Tijani,  said the implementation of the Independent Power Plants (IPPs) has helped to improve the energy needs of the state.

    ‘’With the state getting less than 1,000 megawatts (Mw) of electricity from the national grid due to gas supply problem inhibiting the operation of the power generation companies (GENCOs), among others, the government is left with the option of providing other means of complementing whatever it gets from the national grid. Besides, the development has helped in reducing carbon dioxide emission.

    “Through the plants, we are providing power to water projects, hospitals and schools, among other institutions that require energy mass. Also, we are leveraging on the plants to reduce carbon dioxide emission for growth,” he said.

    Tijani, said Akute power plant, is targeting an annual reduction of carbon dioxide emission of 218,906,496 (pounds) lbs, while that of Alausa Secretariat Energy Saving Retrofit project, targets an annual reduction of Co2 emission of 1,278,444 (pounds) lbs.

    He said annual reduction of carbon dioxide emission of 348,670,656 (pounds) lbs is expected from Alausa Independent Power Plant, while Lagos Island Independent Power Project Expansion (IPP2) targets Co2 reduction of 185,054,976 (pounds) lbs.

    Tijani said about N600 million is being saved monthly through the Alausa IPP, which was commissioned in 2013 to serve the power needs of the state secretariat, Ikeja as well as streetlights within the Alausa precinct. The commissioner added that following the switch-on of the Alausa IPP, over 120 generators hitherto used by the various offices within the state secretariat were decommissioned.

    The state started energy conservation campaign recently. The campaign, which has entered its second edition, aimed at educating residents on how to stop wasting energy, by switching off their appliances and others when not used.

  • CBN plans 10-year bailout for GENCOs, DISCOs

    CBN plans 10-year bailout for GENCOs, DISCOs

    The Central Bank of Nigeria is planning a 10-year bailout for the electricity distribution and generation companies otherwise known as GENCOs and DISCOs.

    The Chairman of the Nigeria Electricity Regulatory Commission (NERC), Dr. Sam Amadi, told Energy correspondents at a capacity building workshop in Abuja, Friday, that the commission will work out the amount of the facility later on Friday.

    He explained that the idea is to create a fund in place of the present revenue shortfall in the companies’ operations without inconveniencing the consumers.

    The NERC chairman said, “The CBN fund gives opportunity for DISCOs and GENCOs to have this money on time right now and then repay it over 10 years. They are giving us 10 years instead of five which reduces the amount that the consumers will pay. They have given us a 10 -year facility so to say.”

    His words: “But the key issue is the revenue shortfall in the market. We are arranging with the Central Bank of Nigeria to create a fund to cover the shortfalls without necessarily inconveniencing the consumers. It will be spread over 10 years. It gives the operators the opportunity to make quick investments and quick returns in terms of services.”

     

  • Govt plans new gas price for Gencos, others

    Govt plans new gas price for Gencos, others

    The Federal Government is planning what it calls a “competative gas price” for the benefit of power generation companies (Gencons), petro-chemical and fertiliser plants.

    The proposed price regime may be introduced before September, according to the Chief Executive Officer, Nigerian Electricity Regulatory Commission (NERC), Dr Sam Amadi.

    It is to encourage producers that have been clamouring for incentives to increase output.

    At present, there are varying price regimes. While the gas-based industries pay 90 cents per 1,000 standard cubic feet (SCF)  of gas, the power firms pay $1 per 1,000 cubit feet.

    When benchmarked against international rates, the prices are considered inadequate to encourage local firms to produce for domestic use. The proposed price regime is expected to bring the local price nearly at par with the international market rates.

    Amadi told The Nation that the Ministry of Power, NERC and other relevant stakeholders were working to ensure that the price comes out in September, adding that the price will precede the declaration of the Transitional Electricity Market also slated for  September.

    He said: ‘’The domestic gas price ranges from $1 to $2. We are still working on the issue to ensure that gas producers are incentivised  and produce more for the sector. Power is critical to the growth of the economy and we want to see a situation whereby the electricity companies would be able to produce optimally.

    “The declaration of the Transitional Electricity Market is slated for September. We hope to get the new gas price regime on ground before that date because of its importance to the energy sector.’’

    The  domestic gas users know how important the new gas regime is to their operations, and as such, would embrace it, he said, adding that the Commission has no doubt that companies in the oil and gas sector would comply with the policy.

    To the Director-General, Bureau of Public Enterprises (BPE) Benjamen Dikki, investment in gas is not attractive to foreign firms.

    He said  prices of gas in the domestic market were lower compared to  the international markets.

    ‘’While the domestic gas price is between $1 and $2, the international market price ranged from $5 to $6.  Foreign firms are not ready to invest in gas production in Nigeria because they would not be able to get good returns.

    ‘’Once there is a cost reflective price for our gas, we would see a lot of investments going into that area. The gas challenges we are facing would be taken care of in long-term, once all the variables that determine the cost of producing gas are taken into consideration.  The cost of mining, drilling, production  and piping gas should be well considered, ‘’ he said.

    He admitted that gas is a problem, noting that it has affected power generation.  He said power distribution firms should not be blamed for the problems in the industry.

    ‘’The distribution companies are not to blame. The generation companies generate electricity and supply to the DISCOs. The GENCOs do not have gas to generate. Once the GENCOs do not have power to generate and no power to give to the DISCOs,  the DISCOs would not have anything to distribute. None of the distribution companies generate power. It is the generation companies that generate power,‘’ he added.

  • Group faults NCP, BPE on power privatisation

    Group faults NCP, BPE on power privatisation

    The National Council on Privatisation (NCP) and the Bureau of Public Enterprises (BPE) claims that they carried out financial and technical due diligence on new power investors may not be true.

    The General Secretary, Senior Staff Association of Electricity Workers and Allied Companies (SSAEAC), Abiodun Ogunsegha, said the claims were misleading, in view of the financial and technical problems the 15 power generation companies (GENCOs) and  distribution companies (DISCOs) were experiencing.

    He said: “Had it been that NPC and BPE conducted a thorough financial and technical due diligence on the investors, they would know that many investors are not financially prepared for the electricity business. Many are struggling to pay back the banks the money they borrowed to purchase the assets of Power Holding Company of Nigeria (PHCN).  Some of the distribution firms cannot provide money for imprest because they could not generate enough revenue.

    “Many investors are technically deficient. They do not have deep knowledge of operations of the sector. They were not properly advised on  the technical partners needed for growth. They thought they would recoup their money within the three months. However, events and circumstances have proved them wrong.’’

    Ogunsegha said the sector is suffering because the investors were not ready to commit additional funds.  He said it is illogical for investors to use money realised from other business to finance the loans, adding that the sector would continue to suffer.

    According to him, the pre- and post-privatisation mistakes committed by the BPE and NCP have culminated in the problems facing the sector. He said consumers are protesting because they could not get regular power, arguing protests would not stop until there is improvement in electricity supply.

    However, BPE’s Spokesman, Joe Anichebe said the allegations that proper due diligence was not carry out on the bidders was not true. He said the bodies consulted on wide range of issues before taking decisions, noting that they spent months in examining the bidders’ proposals.

    He said no privatisation programme succeeds without sound due diligence, adding that BPE considered many factors before starting the exercise.

  • Let there be light

    Let there be light

    Six months after the coming of the distribution and generation companies, DISCOs and GENCOs, power supply and generation remain absymally low. The privatisation of the Power Holding Company of Nigeria (PHCN) seems not to have solved the epileptic power problem. What is the way out? The DISCOs and GENCOs say it is by sacking the inherited PHCN workers, who they believe do not measure up. They plan to inject fresh funds into their operation after the planned sack; writes Assistant Editor, EMEKA UGWUANYI.

    When private investors acquired the assets of the Power Holding Company of Nigeria (PHCN) last year, many electricity consumers felt their prayers had been answered. They thought that the era of blackouts, excessive load-shedding, power rationing and paying for electricity not consumed was over. But things have not gone that way. Shortly after the generation and distribution companies GENCOs and DISCOs took over, supply dropped and has since remained so.

    Then came the blame game. The Federal Government blamed the GENCOs for not supplying enough electricity for transmission and distribution; the GENCOs berated the government for failing to wheel enough gas to run the turbines. Since gas is the feedstock for the turbines, it is difficult to run them without it.

    However, the power sector is undergoing a paradigm shift. To meet consumers’expectations, The Nation gathered that the investors are set to implement their agenda for improving power.

     

    Current investment/operational plans

    Initially, investors in the 11 DISCOs had an understanding with the Nigerian Electricity Regulatory Commission (NERC) to invest $1.8 billion between last year and 2017 as capital expenditure (CAPEX) to improve supply on sustainable basis through repairs and replacement of damaged and obsolete equipment.

    A breakdown of the investment shows that Ikeja Electricity Distribution Company (IKEDC) requires an average annual investment of $58.737 million for five years to improve power supply, Eko and Ibadan Electricity Distribution Companies, $45.17 million and $43.865 million yearly, and Abuja Electricity Distribution Company, $36.606 million.

    Others include Kano DISCO, $30.379 million; Kaduna DISCO, $29.96 million; Enugu DISCO, $27.23 million; Port Harcourt DISCO, $25.514 million; Benin DISCO, $24.314 million; Jos DISCO, $22.755 million and Yola DISCO, $13.133 million.

    What they met on ground, however, has made them to restrategise. Before their takeover of PHCN assets, the investors had an agreement with labour groups in the power sector to retain the workers of the former state-run power firm for six months. But, when the investors took over, they discovered that the wage bill was “too huge” for them to bear and as such they disengaged some workers. The workforce is still large. To get the right size, they decided to further reduce the staff.

    The investors, it was learnt, have concluded their staff auditing and, penciled down for sack former PHCN workers deemed to lack the requisite skills. It was also learnt that some of them hired KPMG and PricewaterhouseCoopers (PwC) for the auditing to ensure transparency and professionalism. The workers may be asked to go by the end of this month.

    An official of one of the DISCOs, who spoke to The Nation in confidence, said: “We have concluded our staff auditing. You are aware that the six months agreement will expire by the end of this month. Some of us have engaged reputable auditing firms, such as KPMG and PwC, to carry out the exercise. The essence is to ensure transparency and professionalism in carrying out the exercise and the truth is that the era of family connection as a criterion to secure job in the power sector is over.

    “We have decided to sieve the workforce, keep those that have the required skills, prepare those who have the motivation to move the company to the next level, and have the operational excellence to give power to the man on the street, and disengage those without the required skills. In fact, the auditing was both scientific and professional.”

    The GENCos and DISCOs have new investment plans following a facility inventory showing areas requiring attention. For instance, the management of West Power and Gas Limited, owners of Eko Electricity Distribution Company (EKEDC), said it has drawn a N42 billion investment plan for the acquisition of transformers, feeders and other equipment to strengthen its network and reinforce electricity supply within five years.

    Its Chairman, Charles Momoh, and a Director, Dr Tunji Olowolafe, said the company is being repositioned to serve customers better. They added that because of poor power supply from the national grid, the company is exploring possible off-grid supply.

    The Chairman, Sahara Energy Group, owners of Ikeja Electricity Distribution Company and Egbin Power Generation Company, Mr. Kola Adesina, said he could not give the amount the group would invest because of what it plans to achieve. He, however, noted that a substantial investment is being planned to improve supply and customer service in both companies.

     

    Gas supply challenge

    The Group Executive Director, Gas and Power, Nigerian National Petroleum Corporation (NNPC), Dr David Ige, confirmed that the corporation has gas supply challenge. He said the complaints of the investors are genuine.

    Ige said: “There is truth in their complaints. Over the last two to three years, we have seen a big growth in our gas supply development. “We have maximised our efforts in infrastructure; every day we are building new pipeline infrastructure. Gas supply has grown from 500 million standard cubic feet per day (MMscf/d) three years ago to 1.5 billion standard cubic feet per day (Bscf/d). But we are having serious short time challenge and there are two things responsible for that.

    “The first arises mostly from vandalism. So, at every point in time, we are repairing one pipeline or the other. Last year, Escravos-Lagos Pipeline System (ELPS) was down for seven months. Now ELPS is back, Trans Forcados is down. At every point in time, we have been experiencing one major outage or the other. And the way our system works is that the pipeline artery connects major gas supply assets. Trans Forcados pipeline is connected to Oben, Sapele and Pan Ocean gas plants, so when it is down, we lose three plants at once.

    “When ELPS is down, we lose Escravos, so we are truly struggling with these outages and because it happens repeatedly and there is almost no time one of them is not down, all the efforts that we have made in terms of bringing supply up, the consumers never have been able to see the full benefits. This is because there is always one problem or the other.”

    The other problem, Ige said, is that of supply shortfall. He said facilities working normally need regular maintenance but this is made difficult by the high rate of vandalism and the few facilities available. This, he said could cause serious disruption in the system.

    Ige continued: “By not taking them out on maintenance, they are also turning over more than expected. So, we are suffering a little bit of short term challenge. We expect that through the course of this year, they (power investors) would have had more gas supply.

    “Really, the problem now is a short term stabilisation problem. I agree we haven’t built supply to the full capacity of demand for gas but we have always known the gap would be there until next couple of months. We are going up in gas supply and they (power suppliers) are going up. There is a gap but we are closing the gap over the next couple of months. That has always been in our plan but our biggest challenge is that the supply we have brought to bear is like at any point in time we are struggling with unplanned outages.

    “I think the power sector investors are jittery right now. There is no doubt about it but the (gas supply) challenge is a short term challenge because the fundamentals are there, the gas pipelines are being built. We have never put as many pipelines as we are putting right now and the supply is being developed as well.

    “Hopefully, we will get to a point where we will overcome this very short term issue and people would see the benefits. A lot is going on in the background that will make that happen.”

    On whether the Joint Task Force (JTF) is not doing its job of policing the pipeline as vandalism is getting worse, he said: “Everybody is doing his job but it is a very difficult problem to deal with and, ultimately, you need a social re-engineering. “These pipelines are hundreds of kilometres long and it is impossible to man every kilometre 24/7. We really need to get to the people who are doing this to change their attitude.

    “Social re-engineering will contribute significantly to solving the problem because people need to know that there cannot be a sustainable solution in their attacking a national infrastructure; it doesn’t solve their problem. There has to be a better way of agitation. For those who break crude oil pipeline, we really have to reorientate them because we can put as much security but we have got over 5,000 kilometres of pipeline. So, how many security people are we going to put on every kilometre?”

     

    Finding solution

    The investors are facing the challenges of meeting customers’ power supply needs and recouping their investments. But, with the state of power supply, it is clear that they need alternatives to remain in business. Currently, some of the DISCOs cannot pay for their supplies from the Nigerian Bulk Electricity Trading Plc (NBET) from the national grid.

    Lagos, Eko and Ikeja DISCOs are contemplating sourcing power from captive power generators and other embedded generators (generation outside the grid) to be able to meet the power demands of customers. Adesina said grid supply has become insignificant, adding that the management of Ikeja DISCO is sourcing about 230 megawatts (MW) from off-grid supply.

    Mr Yeom Gyoo Chull, Managing Director, Korea Electric Power Nigeria Limited, Sahara Group’s technical partner, said management has been discussing the transformation of Egbin plant. He said the power firm is to restore Egbin to its full capacity of 1,320MW this year and build more turbines that will provide additional 1,350MW.

    He added that the construction of the 1,350MW additional capacity will begin within three years, promising that on completion, it will bring the combined output of Egbin to 2,670MW. He noted that the target is to achieve a total capacity of over 10,000MW in the next decade if the demand permits.

    He said: “We intend to collaborate with our partners in Nigeria to initially restore Egbin to its fully built capacity of 1,320MW within the year and provide additional projected capacity of 1,350MW commencing within the next three years, thus at completion, we’ll have 2,670MW, with the aim of achieving a total capacity of over 10,000MW in the next decade if the demand permits.”

    The Managing Director, Egbin Electric Power Plc, Mike Uzoigwe, said only one turbine of the six-turbine power plant is not working. The six turbines generate 220MW each but the plant generates far below what it is supposed to generate. He said Egbin can generate 1080MW but gas supply constraint has limited output to just over 600MW.

    The Chief Executive Officer, Eko DISCO, Dr Oladele Amoda, told The Nation that the management was exploring other options of getting power outside the grid for distribution to customers because of gas supply challenge.

    Amoda said: “We want to get power from embedded generation. The main purpose of this initiative is that we will not continue to rely on the power that we get from the grid because it is not constant; it fluctuates. Besides, in the past five months, we have not been able to get more than between 250 and 260 megawatts (MW) and even sometimes less than 100MW while we have the capacity to take 700MW, which is the demand. You can see the difference between an average of 200MW and 700MW daily.

    “The consequence of this huge supply gap is rationing of available power and massive load-shedding going on now. The power supply gap, according to the GENCOs, is due to inadequate gas to run the power stations following pipeline vandalism and sabotage. “So, that is where we are now. But going forward, we are looking at about 400MW from embedded generation that will be under our control and will not be subject to grid supply. This will enable us to offer our customers a measure of stable power supply. “The initiative will enable us plan maintenance of our facilities when necessary by having a regulated load-shedding programme that everybody will know but currently, we cannot do any reasonable load-shedding programme.

    “We hope to roll out the first PPA Power Purchase Agreement) and actual embedded generation into our system between July and August this year. Currently, we are also discussing with companies that have excess captive power such as Flour Mills and Honeywell as well as other companies in Apapa and Agbara that are generating more than they need. That one will come on very quickly. We have Island Power where we get 1.5MW. The Island Power arrangement is ready but we get the 1.5MW during off-peak period (10pm to 6am daily), so we target some companies that will take the power. The Island Power deal will come into operation by the end of this month.”

  • Coleman votes N7b for expansion

    Coleman votes N7b for expansion

    Coleman Technical Industries makers of Coleman Wires and Cables has earmarked N7billion for expanding its production line to include the production of high voltage cables that is up to 33 KV that will rank it as the first manufacturer in West Africa, its Managing Director, Mr. George Onafowokan, has said.

    He said when the fund is injected into the firm, it will allow it to produce high capacity cables that will fill whatever gap that may be existing for the new generating companies (GENCOs) and distribution companies (DISCOs), all successor companies from the bundled Power Holding Company of Nigeria (PHCN).

    According to him local production of the cables will save the nation the much needed foreign exchange and grow the nation’s gross domestic product (GDP). He said the products will not only be cheaper, it will also save the time wasted by the power firms while awaiting the products to come from abroad.

    He said an additional investment of N200million be would dedicated towards expanding the production lines to include Coxial cables, CAT 5 and 6 cables used for computer networking and others making them the first in the country too.

    Onafowokan said if given the enabling environment, cable manufacturers will not only build capacity but will put the nation in global reckoning terms of the quality and standards of the products manufactured thereby creating jobs in the process.

    He advised the public to stop patronising imported cables because of the dangers of fire outbreaks in homes and offices.

    He urged the Federal Government to set aside more intervention fund for cable manufacturers in particular, noting that it is only through such interventions that the sector could make significant input into the economy.

    According to him, the intervention fund is needed in the sector because operators have deployed previous intervention fund to capacity utilisation and quality improvement making the nation’s cables the best for the purposes they are made for.

    He said from studies, it has been proved that houses or offices that experienced fire incidents patronised imported cables and wires which are not made to specifications and also not suitable to the weather conditions in the country.

    On ways to discourage making the nation a dumping ground for sub-standard cables, he said such products should not be allowed into the country from their countries of origin.

    He commended the Standards Organisation of Nigeria (SON) for their effort in checking the importation of fake and substandard materials into the country.

  • NERC, BPE to monitor DISCOs, GENCOS

    NERC, BPE to monitor DISCOs, GENCOS

    The Nigerian Electricity Regulatory Commission (NERC) and the Bureau of Public Enterprises (BPE) are contemplating an inter-agency committee to monitor the 15 power firms.

    BPE’s spokesman Joe Anichebe told The Nation that the committee would monitor the activities of the firms since they took over the Power Holding Company of Nigeria (PHCN) assets last year to ascertain whether they have complied with the post-privatisation and regulatory laws.

    He said the committee would look at whether the companies have achieved some of their objectives or not, and their ability to meet the goals enshrined in the reforms act.

    The modalities for assessing the operators, he said, would be provided by the Committee.

    Anichebe BPE and NERC perform different functions, hence the need for them to jointly monitor the firms’activities from their perspectives.

    He said: ‘’There would be an inter-governmental agency committee to work out modalities on how to monitor the activities of the newly approved players in the power sector. The committee would be saddled with the responsibility of providing accurate and objective observation of the events in the sector to foster growth.”

    Anichebe explained that while the BPE would look at the post-acquisition plans of the companies and the Share Purchase Agreement (SPA), the NERC would look at the technical and regulatory obligations the companies are expected to meet to achieve their goals of improving electricity supply.

    ‘’ Under the post-acquisition plans, the firms told us the things they want to do; they told us what they intend to achieve within a particular period of time. Through the exercise, we would find out whether the companies have accomplished some of their set goals or not.’’

    Also, the NERC’s Chairman, Sam Amadi said the commission would ensure that the firms comply with the best practices of corporate governance. Amadi, who gave the assurance in a telephone interview with The Nation, said no stone would be left unturned in making the companies operate in line with the established frameworks. He said there would be checks and balances, adding that the firms must obey the laid down rules to ensures success of the reforms.

    NERC, in line with the Electric Power Sector Reform Act (EPSRAct 2005) is expected to formulate and implement policies that would protect the interest of consumers. It will also set and review tarrifs, issue licensces to operators, and where possible promotes competition.

  • Ecobank eyes $5b yearly power sector financing

    Ecobank eyes $5b yearly power sector financing

    Ecobank Nigeria has projected power sector funding of at least $5 billion annually over the next five years.

    In a statement made available to The Nation, the lender said the investment is in line with its policy to support the development of the power sector in Nigeria. It said the fund is part of its contribution to the sector’s transformation, initiated by the Federal Government through its privatisation programme.

    The lender said it has played a major role on the buy-side of the power sector privatisation exercise by providing financial advisory services, lead arranger role, acquisitioning financing and guarantees to distribution companies (DISCOs) , generating companies (GENCOS) and National Integrated Power Plants (NIPPs).

    Ecobank Country Head, Power & Energy, Olufunke Jones said the bank’s objective is focused on playing actively at all levels of the sector’s privatisation, which includes generation, transmission and distribution.

    She said:”Nigeria has one of the largest gaps between demand and supply for electricity. To bridge this gap the country requires a combination of favorable government policies, private sector participation and foreign direct investment (FDI) as well as transparency and persistent monitoring that will guarantee an improved business environment.”

    According to her, the current power reforms have created opportunities for capital expenditure (CAPEX) and operating expenditure (OPEX) funding, which is a consequence of the handover to the new owners. She said:“There is the urgent need to rehabilitate the distribution networks in order to make them robust and flexible enough to accommodate the nation’s demand for power.”

    Also commenting, Local Account Manager, Corporate Banking Group, Mrs. Funmilola Ogunmekan said unlike the telecoms industry where new investors were able to take advantage of new technologies to redefine industry norms, the power sector is faced with the challenges of upgrading mostly obsolete equipment and processing under a traditional technology framework. This, amongst others, are the immediate challenges that should be addressed before the potentials of the industry are fully manifested.

    Ogunmekan reiterated that this year, the lender will leverage its position as a bank with the third largest branch network to provide effective utility collections and cash management services while providing the required additional CAPEX/OPEX funding for at least five of the distribution companies across the country.

  • Gas shortage frustrating our power project, says MAN

    The Manufacturers Association of Nigeria (MAN) has blamed gas shortage for the delay in the take-off of the power plants project it initiated with some energy service providers.

    Chairman, Infrastructure Committee, MAN, Reginald Odiah said the initiative conceived some years ago would have become a reality if not for gas challenge.

    He spoke against the backdrop of gas shortfall in the sector that has seen power generation drop to less 3, 674.9 mega watts (Mw).

    Odia lamented that as the the problem persists, manufacturers and other operators are experiencing crisis.

    He said: “From the beginning, we did not intend to have our own power plants. This informed our decision to partner with companies that would provide us power plants for growth. A lot of people are prepared to help to get the plants on board, but gas problems have made it impossible.

    “I cannot say the extent to which the inability of the power generation to get gas to fire their turbines and further improve electricity generation and distribution has affected the manufacturers. The reason is because I do not have information or data on each of the manufacturers operating in the country.”

     

    But what I know is that the development is having ripple effects on us. We need electricity to function well, and failure to get the required energy has prevented manufacturing companies from producing optimally.’’

    He said the only alternative source of energy available to the manufacturers is generators, noting that the issue has eaten deep into the cost of production.

    ‘’ Since most of the manufacturing outfits rely on generators to operate, they have no option than to get it to survive. This is having cumulative effects on production of goods and services, cost of living and other economic variables. We hope that gas problem would be addressed soon and that the 15 power generation companies (GENCOs) and power distribution companies (DISCOs) would function well,’’ he added.