Nigeria currently produced only about 5 000 MW of electricity, but required at least 15 000 MW to sufficiently power the country and ensure supply security and reliability, said Nigeria Presidential Taskforce on Power chairperson Reynolds Bekinbo Dagogo-Jack at the 2014 Power & Electricity World Africa conference, in Johannesburg, last month.

“This power shortfall has driven President Goodluck Jonathan’s government to embark on an ambitious power reform programme in the last five years; the programme aims to privatise the country’s State-owned power utility Power Holding Company of Nigeria’s (PHCN’s) power generation, transmission and distribution assets,” he explained.

Dagogo-Jack noted that, in December 2010, government established an independent regulator – the Nigerian Electricity Regulatory Commission (NERC) – which introduced a multi- year tariff order in June 2012, “that is acting as an enabler for private-sector investment in the Nigerian power industry”.

He added that NERC was reviewing the tariff order, as certain elements in the tariff’s design required a revalid-ation to provide investors with confidence.

Further, Dagogo-Jack said one of the con-ditions for private companies to take effective control of Nigeria’s assets was to independently assess what the loss assumptions were in designing the tariff and to reassess the tariffs.

“It is only fair that we give the new owners a sense of justice so that they can come back to NERC with their own studies. This process also enables them to ascertain whether the tariff structure is correct or whether it needs to be altered to reflect the realities of power-generation, transmission and distribution costs in Nigeria,” he noted.

Dagogo-Jack said that government expected that the tariffs would only be “slightly altered”

.

Nonetheless, he emphasised that government regarded this process as important to show that the system was “fair and transparent”.

“Nigeria’s . . . gross domestic product (GDP) is growing at 7% a year and if the country increases its power generation capability to 10 000 MW, the . . . Nigerian GDP will increase to a yearly growth of at least 10%,” he asserted.

Nigerian Privatisation Necessity

Energy Commission of Nigeria director-general Professor Eli Jidere Bala explained at the conference that the decision by the Nigerian government in 2005 to reform the electricity sector was motivated by the need to end the energy monopoly by the PHCN.

“The PHCN was not providing adequate service delivery and the Nigerian economy did not reach its full potential, owing to the utility’s inability to consistently provide power for manufacturers and heavy industrial operators,” he stated.

“Through privatisation, access to electricity and the reliability of the supply will significantly improve,” Bala added.

“By 2020, we hope to have 40 000 MW of installed capacity and we aim to increase this to 100 000 MW of installed capacity by 2030,” he stated.

Moreover, Nigeria Bureau of Public Enter-prises (BPE) director Ibrahim Babagana added that private investors had taken over control of the country’s 11 transmission companies and its six power generation companies, as part of the unbundling of the PHCN.

“The PHCN transmission and generation companies were sold off to the private investors for a collective total of about $2.5-billion,” he highlighted.

The BPE is selling off ten of the country’s thermal generation power plants, built under the National Integrated Power Project, to private operators, which will provide the Nigerian government with about $5.8-billion when the privatisation drive is completed in June this year.

Further, Babagana highlighted that the bulk of the funds raised to buy off PHCN assets came from Nigerian banks.

“This is a sign of the growing confidence that local financing institutions are showing in this important programme to improve power efficiency and competitiveness in the country,” he enthused.

African Collaboration Needed

Dagogo-Jack said that not enough collaboration of business efforts was taking place in Africa.

“Instead, power projects are being undertaken on an individual basis. When one talks about energy, it should not be done within national boundaries. “For example, in power generation, it is possible for a country to generate excess capacity, which can be sold to a bordering country that does not have sufficient power supply,” he stated.

Dagogo-Jack urged African leaders to overcome differences to create the required enabling platforms “to ensure efficient regional synergies are achieved on the continent”.