Nigeria’s power sector has turned out to be a beautiful bride that attracts more than 311 investors who have already indicated interest to partner with the government
| By Anayo Ezugwu | Mar. 17, 2014 @ 01:00 GMT
THE Nigerian power sector has continued to attract more investors. Godknows Igali, permanent secretary, federal ministry of power, said recently that about 311 investors have so far indicated interest in partnering with the ministry to boost electricity supply across the country. “We have gone far with the process of planning and as you know we need to inject more funds into the power sector. We need long-term concessionary funding so that we can maintain not only the integrity of the system, but also add more value by way of upgrading and modernising some of the assets we have,” he said.
The permanent secretary, who had acknowledged that the country’s power sector was facing many challenges bordering on vandalism of gas pipelines, said the federal government was desirous to sign a Memorandum of Understanding, MoU, aimed at improving the country’s power sector. Igali said efforts had been intensified to address the problems. “We are looking at these problems. Nigerians should just bear with us while we put the problems on the table and find permanent solutions to them.”
Already, the federal government on Monday, March 3, secured a fresh investment of $1 billion from 15 investors to finance the Azura-Edo Independent Power Project. Ngozi Okonjo-Iweala, minister of finance, said the Azura Power Holdings Limited would work with other international investors and financiers to invest the amount in the IPP to generate an initial 450 megawatts of electricity.
She described the investment as a huge display of confidence not just in the power sector, but in the entire Nigerian economy. The minister said the Azura project reflected the positive multiplier effects created by the capitalisation of Nigerian Bulk Electricity Trading Company and the provision of the Put Call Option Agreement being provided by the federal ministry of finance.
Through this, she said, the project would help to unlock about $700 million of project-financed investment in a large- scale and about $300 million worth of investments in gas processing. “We have a visit from a group of investors for the first Greenfield Independent Power Project to be built from the scratch in Nigeria. Since we liberalised the sector, as you know, we have privatised all the power assets and opened up the sector, and this is a big project and the investment is quite large. About $730m, with another $300m of associated investments in gas, and we have more than 15 investors represented here, and all of them are the best of investors internationally,” she said, adding that this was the first time a group of investors would come together to fund a power project to the tune of $1 billion.
Meanwhile, there are indications that power generation in Nigeria may exceed 4,000 megawatts by June, sequel to the six-month ultimatum given by President Goodluck Jonathan to the ministry of power to ensure efficient generation, transmission and distribution of electricity across the country. As it is, the target may be exceeded because the nation’s four hydro power stations, Kainji, Jebba, Shiroro, and Zamfara are expected to be at peak operation as a result of the rainy season. At that period of the year, the water levels at River Niger, Kaduna River, and Bunsuru River are expected to increase, thereby enabling the plants to work at full capacities.
Kainji power station, the biggest hydro station in the country, during the rainy season generates 800 megawatts, MW, Shiroro 600MW, while Jebba and Zamfara generate 540MW and 100MW respectively. As a result, power generation is expected to increase by 2,040MW during this period of the year.
But the gains of the rainy season may be lost again after all, except the 10 National Independent Power Projects are completed on schedule. Eight of the NIPP projects are open cycle gas turbine plants and the other two are combined cycle gas turbine plants. The Alaoji Power Station in Abia State, has a combined cycle gas turbine plant with 1074MWs capacity but currently is operating below capacity due to evacuation delays and securitization for Shell, according to Niger Delta Power Holding Company, NDPHC.
For Calabar and Egbema Power Stations (Simple cycle gas turbine), the plants are still under construction with 158MW and 138MW respectively. Geregu II Power Station in Kogi state was completed in 2012, but commenced operation in the first quarter of 2013, contributing 434MW to the national grid. For the Ibom Power Station, overall generating capacity is technically constrained by existing transmission and distribution facilities of PHCN and the Transmission Company of Nigeria, TCN, to only 60MW but has a capacity to generate 190MW of electricity.
Although the Ihovbor Power Station with 450MW capacity was scheduled to be completed between 2012 and 2013, the NDPHC said it can’t be launched due to delays in evacuation capacity. The Olorunsogo II Power Station with a 675MW capacity, even though completed in 2012, is also working below capacity due to gas supply issues.
The 225MW Omoku II Power Station is still under construction, indicating that the contractor, Rockson Engineering, failed to meet the 2013 completion deadline. Built and operated by China Machinery Engineering Corporation, the Omotosho II Power Station, with a 450MW capacity, was commissioned in 2013 by President Jonathan, but currently it generates 375MW of electricity.