Transitioning Nigeria’s state owned electricity sector to a private power market
Energynet Ltd (http://www.energynet.co.uk) will be hosting the inaugural Power Investors Summit Nigeria, this coming 2 – 4 October 2013, at the Lagos Oriental Hotel, Victoria Island. This senior level industry engagement, endorsed by the Honourable Minister of Power, Prof Chinedu Nebo, the Presidential Task Force on Power, BPE, NERC and NBET. This summit will bring together national stakeholders and highly acclaimed international investors from the Africa Finance Corporation, International Finance Corporation, KPMG, FCMB Capital, Globeleq, GE, Schneider Electric, Transcorp, and Eta Zuma Group.
“All of the international project developers that we are working with are all talking about Nigeria. It is certainly the most exciting investment destination right now!”
Simon Gosling, MD, Energynet Ltd
Considerable developments in Nigeria’s power sector have been achieved so far this year. The 21 August 2013 was a day of reckoning for Nigeria and will forever hold its place as a day of victory for the power sector and the citizens, who were initially sceptical about President Goodluck Jonathan and his administration’s ability to implement Nigeria’s globally acclaimed power privatisation programme.
Privy to contrary belief, the Bureau of Public Enterprises (BPE) and the National Council on Privatisation (NCP) remained steadfast to the final completion payment deadline for the remaining 75% for the unbundled, Power Holding Company of Nigeria (PHCN) power assets. Entitling the preferred bidders to take full possession of the 15 PHCN unbundled assets, which include 10 Distribution companies (DISCOs) and five Generation companies (GENCOs). Generating a total of $1.957 billion in revenue, of which the proceeds will be utilised to settle outstanding obligations to PHCN workers and invested in the transmission grid.
Nigeria’s Power Sector Reform has now reached the next most crucial phase — the Transitional Electricity Market (TEM) stage — for the commencement of a fully contracted electricity market mode under an anticipated robust commercial and technical regime.
The Power Investors summit will be the first summit to feature the new GENCO and DISCO asset owners. Senior executives from, Transcorp Ughelli, Mainstream Energy Solutions Limited, CMEC/ EURAFRIC, GENCOs plus AURA Energy Ltd, NEDC/KEPCO Consortium, 4 Power Consortium and Integrated Energy Distribution & Marketing, DISCOs. These new asset owners will be speaking at the GENCOs and DISCOs Roundtable on the morning of the 3rd of October. And discussing with interested industry experts, their plans for rehabilitating their newly acquired assets, how they plan to boost system efficiency, and adhere to their KPI’s, whilst providing reliable and affordable power to the nation.
The battle for electricity in Nigeria has not yet been won. Rebuilding Nigeria’s dilapidated transmission network and the uncertainty in Nigeria’s gas supply to existing and upcoming power projects, remains an anonymous and political debate. The success of Nigeria’s privatisation programme now rests on the monitoring mechanisms that will be enforced by the regulator to manage market efficiency, whilst providing reliable and affordable electricity to the end user.
Dr David Ladipo, MD of the Azura Power Project (The first developer to achieve, Nigeria’s only, private power purchase agreement (PPA) will be sitting on a panel alongside developers; Dr Chukwueloka Umeh, MD and CEO of Century Power and Anibor O Kragha, Upstream Treasurer at Mobil Producing. Nigeria’s upcoming IPP developers will discuss how to negotiate a bankable Project- Financed PPA and share their experience in developing IPPs in Nigeria.
Boosting Nigeria’s power output is not just about privatising the power sector to attract foreign investment into a developing nation. A significant increase in electricity supply in Nigeria will have substantial impact on the economy. Boost and expand industrial output, whilst encouraging job creation and a better standard of living for the estimated 150 million citizens, currently living without electricity or relying on cost intensive generators to carry out their everyday duties.
Nigeria has certainly proven its commitment to restructuring its neglected electricity industry. The political will is imminent, projects are being developed, and the global power industry has awakened to the prospects for investments in Nigeria, owing to the attractive investment landscape that has been created to engage and encourage private sector participation.
The time has come for Nigeria to stand up and actualise its potential of becoming the second largest economy in the world and the overall success of the power sector reform will be the first step to greater economic success.