By Clifford Ndujihe
AN editor of a national newspaper, last week, threatened to wage media war against electric power distribution companies in the country. Reason: Power supply has been so irregular in his area of Lagos that for 30 days, power was ‘flashed’ for only a couple of minutes while electricity bills remained high.
The top journalist was so irritated with the development given the enormous investments government has made on power in recent years.
Responding to the complaints of the editor and many Nigerians, who share similar experience, the Managing Director of the Niger Delta Power Holding Company (NDPHC), Mr. James Olotu, said that with the privatisation of the generation companies (GENCOS) under the National Integrated Power Project (NIPP) and the 10 thermal power plants, power situation in the country would improve significantly soon.
Indeed, on March 7, 2014, a consortium of investors – foreign and local – successfully put up their financial bids for the 80 per cent equity of the 10 thermal power plants built by the NDPHC under the NIPP.
It was a realisation of a vision conceived in 2004 when the NIPP was initiated amid skepticism. However, 10 years after, with funding from the three tiers of government, the NIPP’s $8 billion investments include construction of 10 power stations with total capacity of 5,774MW; 125 high voltage transmission network, gas pipelines and metering stations for the power stations; provision and integration of grid-wide telecommunication and tele-protection infrastructure; and over 290 electrical distribution and network projects at 11kv and 33kv voltage levels with injection substations and transformers.
Govts to earn $5.8 bn
With the bids for the 10 power plants, offered to the highest bidders, the three tiers of government are expected to recoup $5.8 billion of their investments in the NIPP.
66 companies initially applied to bid for the 80 per cent equity in the 10 power plants and 42 of them were approved to take part in the exercise with the following bidders succeeding: .
¨Alaoji Generation Company – AITEO Consortium, which offered $902,000,000 for the 1,076 megawatt facility.
¨Benin Generation Company – EMA Consortium, $580 million
¨Calabar Generation Company – EMA Consortium, $625 million.
¨Egbema power plant – Dizzy Integrated Power Limited, $415,075,000
¨ Gbarain Generation Company – KDI Energy Resources, $340 million.
¨ Geregu Generation Company – Seoul Electric Power Limited, $690,200,000
¨Ogorode power plant— Daniel Power Consortium, $531,777,777.
¨Olorunsogo Generation Company – ENL Consortium Limited, $751,240,000
¨Omoku power plant – Shayobe International Limited Consortium, $318,710,840.
¨Omotosho Generation Company – Omotosho Electric Power, $659,999,000.
Bidders to take over June
The new owners of the power plants are expected to take charge of them by June. The financial bid process also produced 10 reserve bidders who are expected to displace any of the preferred bidders that fail to meet the transaction guidelines.
Said to be over priced by the bidders, and indication of high quality and viability, the power plants were constructed from the scratch and simultaneously by the NDPHC alongside its work of expanding the country’s power transmission capacity and gas distribution networks.
16 hydro power stations
Considered as an arm of President Goodluck Jonathan’s transformation agenda, the sale of the 10 thermal stations brings to an end the first phase of the NIPP and marks the beginning of the second phase of the initiative.
The second phase includes transformation of the country’s power infrastructure in other locations not fully captured under the first phase and this will include the construction of 16 large, medium and small hydro power plants on dams in the country as follows:
¨Mambilla Dam hydro power plant (HPP), 3,050MW (Taraba State)
¨ Gurara II Dam HPP, 360MW (Niger State).
¨ Itisi Dam HPP, 40MW (Kaduna State)
¨Bakolori Dam HPP, 3.0MW (Zamfara State)
¨Challawa Dam HP, 7.5MW (Kano State)
¨Tiga Dam HPP, 10MW (Kano State)
¨Kampe Dam HPP, 0.5MW (Kogi State)
¨Zobe Dam HPP, 0.30MW (Katsina State)
¨Jibia Dam HPP, 4.0MW (Katsina State)
¨Doma Dam HPP, 1.0MW (Nasarawa State)
¨Katsina Ala Dam HPP, 40MW (Benue State)
¨Oyan Dam HPP, 10MW (Ogun State)
¨ Ikere Gorge HPP, 6.0MW (Oyo State)
¨Owena Dam HPP, 0.45MW (Ondo State)
¨Ahmadu Bello University (ABU), Zaria HPP (Kaduna State)
¨Jado Dam HPP, Adamawa State.
When completed, the 16 HPPs are expected to increase Nigeria’s power generation capacity by about 4,000MW.
Speaking on these developments, an elated Governor Gabriel Suswam of Benue State, who is the chairman, Joint Technical Transaction Committee of the bid for the 10 thermal power stations, reportedly said: “All the plants are in good condition, the investors who bided for the plants have done their own due diligence and inspection of the plants before submitting their bids.’’
Also, Mr. Benjamin Dikki, director general, Bureau of Public Enterprise (BPE), said the NIPP privatisation process would usher in “the last step of the session. At the conclusion of this, all the generation companies (Gencos) will now be in private hands and it is a historical landmark.”
Although, the NDPHC can leverage on the invaluable experience it has got from executing the first phase of the NIPP, building the 16 HPPs is not going to be a tea party because there is an avalanche of hurdles to surmount.
Weak transmission capacity
In the North, for instance, Transmission Transfer Capability is said to be less than 4,000MW or about 40 per cent of the line capacity.
Voltage instability degenerates further North on account of the long radial lines that characterise the three northern planning regions.
Specifically, in the North-east, residents reportedly experience high and low voltages regularly. The region also suffers from high voltage during light load condition and low voltage at times of heavy load condition. Compared to other parts of the country, some of the weakest system nodes are located in the North-east due to long electrical distances from generating stations. Power transfer capacity to the region is reduced to less than 30 per cent of the line capacity because of voltage regulation problem and the entire transmission capacity is about 150MW because of the voltage regulation challenges.
Similarly, the North-west geo-political zone also has voltage regulation problem and the transmission power transfer capability is less than 30 per cent of the 330kV line capacity of 660MW, which translates to less than 200MW.
Another hurdle is funding. Although, part of $5.8 billion proceeds of the partial sale of the 10 thermal plants would be spent on the second phase of the NIPP, government said it would seek a $10 billion worth of investments in collaboration with private investors to build the new hydro power stations across the North.
The rising debt challenge among the players in the power sector is also of a snag with the NDPHC being owed about N36 billion for electricity supplied to the Transmission
Company of Nigeria (TCN) as at the end of December 2013.
Observers want government to critically look into the debt issue to avoid sending wrong signals to investors in the sector.
Government would also need measures to check rampant acts of vandalism of gas supply infrastructure because gas supply remains a challenge in the optimisation of the 10 thermal plants.
After all said and done, Nigerians need regular power supply, which will drive our industries, boost the economy and lead to improved fortunes for the electric power-thirsty citizenry. Will these initiatives meet these yearnings? Only time will tell