Concerted efforts by the different tiers of government to boost power generation, transmission and distribution capacities have recorded a giant leap with the proposed sale of newly built power plants, reports Ibrahim Apekhade Yusuf
To say that power generation has remained a nightmare of some sort is not in doubt. Truth is, many Nigerians rely exclusively on alternative source of power for their personal use.
Expressing concern over the parlous state of the power sector, Chairman, House Committee on Power, Steel and Metallurgy, Patrick Ikhariale, stated: “The power sector has been a major source of concern to all of us and the reason for this is that during the tenure of some administrations, particularly the military, there was neglect of basic infrastructure, especially in the power sector. What we have today is a problem that is all-encompassing.”
Damning verdict
A recent poll showed that about 81 per cent or 130 million Nigerians, out of the about 160 million population, generated their own electricity through alternative sources to compensate for irregular power supply, according to the result of a series of Power Sector Polls conducted by NOI Polls Limited for the second quarter of 2013.
According to the results, a combined average of 69 per cent of Nigerians or 110 million Nigerians, have experienced increase in their spending on alternative power supply compared to a year ago.
The result of the poll further showed that an average of 47 per cent of Nigerian adults said that electricity supply was poor or went from bad to worse in the second quarter of 2013.
Reality bite
The Federal Government had in 2005 projected that it would be able to generate 10, 000megawatts (MW) of electricity into the national grid every day.
The target was set around the time that the Electricity Power Sector Reform Act (EPSRA) was signed into law in March 2005, four long years after the bill itself was first presented at the National Assembly.
The late President Umar Yar’Adua had reportedly assured at the time that he wanted to get the nation plug into 6,000MW of electricity by December 2009 and increase the wattage to 10,000MW by 2011, when his mandate was supposed to end. That dream remains a pipe dream till date.
As at the end of February 2013, Nigeria was generating 4,397MW at peak, and a minimum of 3,819MW.
Crux of the matter
A number of factors from the superficial to the complex have been adduced for the challenges besetting the nation’s power sub-sector.
Corroborating the foregoing, Chief Executive Officer, Eko DISCO, Mr. Oladele Amoda, at the fourth edition of the company’s Customer Parliament recently observed that at the centre of the problem of power supply in the country, are the issues of generation, transmission and distribution capacities.
Presidential promise
In what was a blessed assurance, President Goodluck Jonathan in his “Roadmap For Power Sector Reform”, launched in Lagos in August 2010, fixed the medium term as December 2013, when according to him: “our expectation is that the total quantum of power delivered to electricity consumers across the country should be at least twice the current level. This ambition reflects expected outputs from the planned completion of projects which have already been budgeted and for which the government will retain direct accountability, namely: the completion of all the overdue NIPP projects (for generation, transmission and distribution); the completion of the outstanding (and already budgeted) PHCN projects; and the completion of the outstanding (and already budgeted) NGC investments in the gas supply and transportation industry.
NIPP to the rescue
Perhaps in acknowledgment of the presidential promise, there has been a renewed vigour on the part of government at all levels to increase power generation, transmission as well as distribution through the National Integrated Power Projects (NIPP), which is being managed by the Niger Delta Power Holding Company Limited (NDPHC).
Established under the Electric Power Sector Reforms Act of 2005, the NDPHC was incorporated in the same year as a limited liability company to serve as the legal vehicle to build, hold and manage the NIPP assets using private sector-based global best business practices.
Interestingly, in fulfillment of its mandate, the NDPHC built from the scratch NIPP 10 gas-fired plants with a combined design capacity in excess of 5,453 megawatts (mw) at ISO conditions and 4,774mw (Net), all of which are now on offer to competent private operators for effective management through competitive bids as announced by the government through the NDPHC in collaboration with the Bureau of Public Enterprises (BPE).
To facilitate the sale of the power plants in line with due process and laid down procedure, it was learnt that the government set up three committees namely, the Joint Evaluation Committee, whose work is to evaluate the expression of interest for the power plants; the Joint Transaction Committee of the NDPHC headed by the Managing Director, Mr. James Olotu; and the Joint Technical Committee, headed by Benue State Governor, Gabriel Suswam, the outcome of which would be given to the board of NDPHC and National Council on Privatisation (NCP) for final approval.
Expectedly, to help actualise this phase of the power reforms, the NDPHC, alongside the BPE and other stakeholders in the power sector, recently launched a road-show in Lagos, London, Hong Kong and New York respectively, to, among other things, woo prospective investors to buy into the power plants.
An upbeat CEO of NDPHC, while clearing all doubts about the state of the plants told journalists at a public forum in Lagos that: “All the plants are in top condition and have gone through pre-commissioning and reliability tests to ensure optimal performance in the hands of the operators who would be selected through a detailed and rigorous process to ensure that the full objectives of the NIPP projects are realised.”
Besides, he assured that the exercise is in tandem with the privatisation of the Power Holding Company of Nigeria (PHCN) successor companies and is bound to introduce improvement in the auctioning of public sector assets in the country, adding that President Goodluck Jonathan would soon commission the comprehensive NIPP projects.
The Nation can authoritatively report that at the expiration of the Expression of Interest (EoI) for the purchase of the power plants last Friday, July 19th to be precise, a total of 110 private investors’ companies beat the deadline. It was further gathered that the BPE will make public a shortlist of successful bidders for the power plants on August 8, 2013 while the tentative date of the delivery and handing over to the highest bidders is between June and July 2014.
In what appeared to be an open endorsement by Vice President Namadi Sambo, who heads the NCP, the VP commended the NDPHC management over “the manner it handled the successful completion of the 10 power plants.”
Power plants for grabs
Up for grabs on the auction block are the 80 per cent shares belonging to the three tiers of government in the 10 power plants. During the road-show, Olotu explained that the three tiers of government have agreed “to divest 80 per cent stake in each power plant as valued by our financial advisers/valuers. We will retain 20 per cent in order to assure potential investors of our confidence in the plants we are selling.”
While shedding more light on the plants up for grabs, Olotu said “the Alaoji Power Plant in Aba, Abia State has four gas and two steam turbines with current capacity of 1,131.4mw (ISO) and 961mw (net). It is designed as a combined cycle gas turbine (CCGT) facility with duct firing its heat recovery steam generators, (HRSGs). 831.3mw (ISO) and 706mw (net) of the Alaoji Power Plant are anticipated by its date of sale to private investors.”
There is also the Ihovbor Power Plant in Benin City, which has four GE Frame 9E gas turbines of 507.mw (ISO) and 451mw (net) capacity. It is an open cycle plant built to accommodate future conversion to combined CCGT configuration.
Prospective investors, he stressed, can also buy into the 634.5mw (ISO)/562mw (net) capacity Calabar Power Plant, which is also an open cycle plant built to accommodate future conversion to combined CCGT configuration, he said.
The Egbema Power Plant located near Owerri, Imo State has three GE Frame 9E gas turbines capable of 380.7mw (ISO) and 338mw (net) power generation output. It is designed and built to accommodate three additional gas turbines and future conversion to combined CCGT configuration.
In Yenegoa, Bayelsa State where the 253.8mw (ISO)/225mw (Net) Gbarain Power Plant, made up of two GE Frame 9E gas turbines, has open cycle gas turbine power plant, and also built to accommodate future conversion to CCGT configuration.
Also up for sale is the Geregu II Power Plant at Ajaokuta, Kogi State. An open cycle gas turbine power plant built to accommodate future conversion to CCGT configuration. Geregu II has three Siemens V94.2 gas turbines with 506.1mw (ISO) and 434mw (net) capacity.
The fully operational Sapele II Power Plant is the seventh facility the NDPHC has put for sale. It has four GE Frame 9E gas turbines of 507.6mw/451mw (net) capacity and is located in Sapele, Delta State.
The Olorunsogo II Power Plant in Olorunsogo, Ogun State, which has 754mw (ISO)/676mw (net) output capacity, provided by four GE Frame 9E gas turbines and two GE Steam Turbines as well as the Omoku II Power Plant, near Port Harcourt, Rivers State, powered by two GE Frame 9E Gas Turbines of 264.7mw (ISO) and 225mw (net) capacity are also on offer, just as the Omotosho II Power Plant in Okitipupa, Ondo State, made up of four GE Frame 9E Gas Turbines with the capacity to generate 512.8mw (ISO) and 451mw (net).
Informed sources further told The Nation that the NDPHC plants are also being sought after since they are all newly constructed and as such offer the best fuel efficiency and lowest operating costs, thereby relieving investors of pressure from construction cum commissioning costs.
Investors are also excited by the NDPHC plants because they are assets that can be further developed, as all but one of the open cycle gas turbine power plants have the potential for expansion and growth.
Return on investment
At the Hong Kong road-show, Governor Suswam disclosed that the three tiers of government have, so far, invested well over $8 billion in the building of the 10 power plants on offer for sale. However, the government expects over $6 billion (about N936 billion) in revenue from the on-going moves to divest 80 per cent of public sector interests in the 10 new power stations.
The revenue receipt, according to officials of the Ministry of Power, would be ploughed back into the sustained capacity development in the power sector, specifically to build a number of hydropower dams across Northern Nigeria in line with the aspiration to drive the country’s economy up to the biggest 20 in the world by the year 2020.
Also during the road-show, Minister of Power, Prof. Chinedu Nebo, stressed that “the power sector will thrive in the hands of the private sector and drive the Nigerian economy. We will give maximum support to investors to take over the sector.
“The entire process of privatisation of the power sector is irreversible and what happened in the telecoms sector is about to repeat itself in the power sector. We expect that the achievement in the power sector will dwarf the telecoms sector. We expect this to revive our economy and revive our SMEs, which are currently moribund.”
Echoing similar sentiments, Chairman, Presidential Task Force on Power, Mr. Dagogo Jack, stated: “This project is consistent with government’s policy to push the plants to the private sector, which can manage it better. Government will create incentives for investors in the power sector.”
Representative of the financial advisers to the privatisation programme, West African CPCS, Mr. Arif Mohiuddin, also assured potential investors that the bidding process would commence in August and the final handing over to the eventual winners would be in June 2014.
On his part, Chairman, Senate Committee on Power, Steel and Metallurgy, Philip Taminu Aduda, said: “Privatisation is the best for our economy because a lot of investment and money is needed to be injected into the power sector and that is why successive governments have had problems in ensuring that it works and I will say so far, so good, the present administration has done its best in putting machinery in motion for the privatisation of the sector.”
On his part, Chairman, Senate Committee on Privatisation, Senator Gbenga Obadara, assured the potential investors that the Federal Government would provide security for their investments.
Value addition
Thankfully, the NDPHC boss has equally assured that the proceeds collected in the sale of the power plants would be ploughed back into the power sector to further boost the capacity of the country’s power infrastructure.
According to him, when collected from buyers of the power plants the money would be re-invested in the sector to boost power supply to all the nooks and crannies of the country.
Stakeholders also hold the view and very strongly too that the heightened interest in the power sector, especially the quantum of investments, will help in no small measure to unleash the huge potentials of Nigeria, leading to meaningful economic growth and development.
