FG Plans to Open Power Market to New Investors – VP Osinbajo
The Federal Government is creating policies that will open up the nation’s electricity market to new investors in generation, transmission and distribution infrastructure, the Vice President, Prof. Yemi Osinbajo has said.
Osinbajo said on Thursday that resolving the power supply problem had been a top priority of the Federal Government in the past few years.
He, however, said the current structure of the market could not deliver on the government’s promises for power for domestic and industrial use, adding, “A substantial change of strategy is being pursued.”
Total power generation in the country stood at 3,586.5 megawatts as of 6am on Thursday, data obtained from the Nigeria Electricity System Operator showed.
This confirmed The PUNCH’s report on Thursday that the Federal Government was considering repossession of 10 electricity distribution firms as one of the options to rescue the nation’s beleaguered electricity industry.
This is coming ahead of the scheduled final performance review of the private firms that bought into the distribution companies carved out from the defunct Power Holding Company of Nigeria.
However, document available to one of our correspondents shows that the Federal Government would require up to $2.4bn (N736bn) to repossess the privatised distribution assets from the core investors if it finally takes the decision.
Giving clue that it could recover the assets from the core investors, the Ministry of Power, Works and Housing in a document sighted by one of our correspondents has described the co-owners of the distribution companies as ‘failed investors.’
Osinbajo, while speaking at the inauguration of a 2x60MVA, 132/33kV substation built by Niger Delta Power Holding Company Limited at Abeokuta, Ogun State, on Thursday, lamented the inability of the distribution companies to distribute available grid power to consumers.
He said, “Today we have 13,427MW of installed capacity, and an available capacity of 8,342MW. The national grid has the capacity to transmit about 7,000M, an increase from less than about 5,000MW in 2015.
“But distribution capacity in the 11 Discos are significantly low, hovering at around 4,000MW on average with a peak of about 5,400MW. So despite the availability of about 8,000MW of generation and about 7,000MW of transmission capacity, lack of Disco infrastructure to absorb and deliver grid power to end users has largely restricted generation to an average of about 4,000MW.”
According to the Vice-President, at the heart of that strategy is the Nigeria Electrification Road map aimed at deploying financing and technology on commercial terms agreed with transmission and distribution companies in partnership with the German government and Siemens.
On July 22, 2019, the Federal Government and Siemens signed a Letter of Agreement on the Nigeria Electrification Road map, a three-phase project designed to achieve 25,000MW of electricity in the country by 2025.
“Second is the opening up of the market to new investors in generation, transmission and distribution infrastructure, transacting directly with each other to serve willing customers including deploying off-grid power and using micro-grids, especially for deployment of solar power,” Osinbajo said.
According to him, the policies and regulations meant to empower customers to get the services they want at prices they agree to include the Independent Electricity Distribution Networks 2012; the Mini-Grid Regulation, 2016; and the Eligible Customer Regulation, issued on November 1, 2017.
He said, “The Electricity Distribution Franchising Regulation, which is still in public consultation preparatory to its issuance within a short period of time, sets out the rules for a distribution company to appoint or be compelled to cede consumers connected to a 33kV or 11kV feeder or a designated area to an agent or third party willing to make investments in lines, metering, transformers, other equipment and operations to serve the customers better at a mutually agreed tariff.”
The Vice-President said these polices, when fully implemented, would enable the opening up of the market to new investors.
He described the inauguration of the transmission substation in Ogun State as an important part of the Federal Government’s efforts to improve the supply and quality of power reaching the homes and businesses of Nigerians.
According to him, before the end of the year, new generation is expected from Gbarain (extra 115 MW); Kashimbilla (40 MW); Afam III Fast Power (240 MW); Gurara (30 MW); Dadin Kowa (29 MW); and Kaduna (215 MW).
The Managing Director/Chief Executive Officer, NDPHC, Mr Chiedu Ugbo, said electricity supply to the parts of Ogun State along the axis of Ota to Abeokuta was initially via a double circuit 132kV line into Ota from the mega 330/132/33kV Transformer substation at Ikeja West, which served as a marshalling station for several power plant inflows into Lagos.
He noted that a 130MVA capacity substation was built at Ota for supply to Ota and environs, while a single circuit lower capacity 132kV line was built outside Ota to connect Abeokuta via an intermediate 132/33kV substation at Papalanto, within the premises of Lafarge Cement Company.
He said the Abeokuta substation was also equipped with 2X40MVA 132/33kV transformers for supplying Abeokuta and its environs, adding, “Over time, all these facilities became overloaded and lacking capacity to cater to growing demand in these locations, necessitating government intervention through the NDPHC.
“The NDPHC constructed a total of 77.5kms high capacity 132kV transmission lines, thus providing near quadrupling of the supply (wheeling) capacity out of Ota (from 70MW to 250MW) and thereby eliminating supply constraints and attendant load shedding that had existed before at Ota, and Abeokuta,” Ugbo added.
The Ogun State Governor, Mr Dapo Abiodun, commended the NDPHC for the successful completion of the project, saying,“It is a major leap and a big development towards the Next Level agenda of the Buhari/Osinbajo administration.”
He said the project would be a boost to his administration’s agenda of creating an enduring economic development and individual prosperity for the people of Ogun State.
When contacted by one of our correspondents, the Executive Director, Association of Nigerian Electricity Distributors, Mr Sunday Oduntan, declined to comment on the move by the government to open up the market to new investors.
Also, the Executive Secretary, Association of Power Generation Companies, Dr Joy Ogaji, could not be reached for comment as she had yet to respond to calls or a text message as of the time of filing this report.
The distribution and generation companies carved out of the defunct Power Holding Company of Nigeria were handed over to private investors on November 1, 2013, following the privatisation of the power sector by the President Goodluck Jonathan administration.
But 11 of the electricity firms had been declared technically insolvent.