The Managing Director, Niger Delta Power Holding Company, Chiedu Ugbo, projects that power supply will increase from the about 5,000 megawatts currently available to 7,000MW in one year. He spoke to Okechukwu Nnodim
How would describe the progress of power generation in Nigeria
The installed capacity in the country as 1999 was between 5,000 to 6,000MW. When I say installed, I mean the nameplate of the plants and not what the plants were able to do at the time. Of course, what the plants were doing at the time was about 1,800MW and that’s all that was available as of 1999 for NEPA (National Electric Power Authority) to distribute to the whole country. This means that about 4,000MW, though installed was not in good shape, either the units were bad and were not mechanically functional at the time. Of course, the government at that time decided that something had to be done and they had to amend the Electricity Act at the time which removed NEPA’s monopoly in electricity generation. No investor could go to the minister, who was the electricity regulator at the time, to get a power generation licence. But you must necessarily sell to NEPA. Recall the Lagos project that was taken over by AES.
That was the Lagos AES IPP (Independent Power Project), which I can call the first IPP in the country. So with the amendment of the NEPA Act and the Electricity Act, the monopoly of NEPA was removed from generation and AES came in with 270MW. The plant is located at the same site where Egbin Power Plant is situated now. The Federal Government was also able to contract Agip Okpai around 2001 and they have a capacity of about 450MW now. Subsequently, Ibom Power Plant came in and then Shell JV IPP, which is very much functional and has about 690MW. So, all those came between 2000 and 2005. That is part of our story in generation. With the electric power policy reform in 2001, the Federal Government helped NEPA to build another 276MW plant and that is the Siemens Afam V Station, which is one of the very few functional generation units NEPA had before it was unbundled and sold. Afam VI is owned by Shell.
In terms of generation, there’s been some level of growth. To date, we have about 13,000MW of generation capacity in the country. It has grown between 1999 and now from less than 6,000MW to about 13,000MW. Well, the growth you would say was made in 21 years and that we’ve done about 6,000MW addition. But you will also look back and know that for nearly a century we did only 5,000MW. There is hope and these things cost money. On the NIPP alone government invested a lot and during the course of the reform, the governments of the federation came together to say we can’t continue to have the power sector the way it was going then. So they put in a lot of money and today we have 4,000MW installed capacity in NIPPs. Therefore, if you are talking of 13,000MW availability, 4,000MW of it is held by the Niger Delta Power Holding Company and that makes us the biggest electricity generation company in Nigeria and I dare say in West Africa.
Is NDPHC investing in transmission and distribution?
We’ve also done a lot of investments in transmission. We’ve invested in various transmission substations, whether it is at 330kV, 132kV and others. So we have many of these substations with several MVAs in capacity of transformers at the transmission level, as well as several kilometres of transmission lines. We also have a lot of interventions in distribution all over the country. Whether it is in terms of injection substations with various capacities. I will tell you that under this present administration, which is from 2015 till now, we’ve done well over 80 major projects in distribution and in transmission. These projects are in electricity distribution and transmission infrastructure. That is in addition to our already installed capacity of 4,000MW in generation. In the next two months, we are bringing another 126MW to the grid from our station in Gbarain, Bayelsa State. So the generation capacity is increasing.
Has the NDPHC lived up to its mandate?
Our mandate is to design and develop about 5,000MW capacity. We have over 4,000MW on the ground now and the remaining ones are at various stages of completion. I’m not happy that 12, 14 years after, these projects have not been completed and we have not achieved the entire 5,000MW. However, I am happy we have achieved 4,000MW, which gives us 80 per cent and this is an A anywhere. But again, that is not an excuse, we are supposed to make 100 per cent. The problem we had wasn’t the company’s issue, it was an extremely recalcitrant contractor. We have recovered these uncompleted projects from that contractor. We’ve terminated and recovered the projects and under the direction of the board we are procuring new contractors to complete these projects and we hope to finish these projects next year. That is one of the reasons why I’m not so happy.
Since you have up to 4,000MW, why is power supply still low in Nigeria?
This brings us to the main reason why I’m not so happy and it is the fact that we have 4,000MW sitting here in Nigeria. We have invested a lot in evacuation or transmission facilities from the power plants and so none of the power plants are stranded due to lack of transmission infrastructure. None. We have that. But unfortunately, the electricity we generate, the transmission company cannot evacuate. The transmission company cannot evacuate because there are issues at the transmission interface with the distribution companies. There is a lot of argument in that space and that is not where we operate. The transmission company will tell us to shut down because distribution companies are not taking the power being transmitted. The distribution companies on their part claim that the transmission company dumps this electricity where they don’t need it and that is why they don’t take the power.
So I have 4,000MW sitting here. If you check my dashboard now, we are probably giving out 400MW or 500MW of that 4,000MW capacity. Half of the constraint is by transmission and the other half is by gas. Nigeria is described in the oil and gas industry as a gas territory with some oil in the country. But why can’t I have gas? It all goes back to the issue in the sector, for even the little that we dispatch we don’t get paid. People consume electricity and they don’t pay. We are short-paid. We get about 30 per cent payment of our invoice. So you can see my pains. That forced the government to intervene by paying us for gas in order to keep us afloat, which was why it provided the N701bn payment assurance facility.
Are you paid for capacity as a generation company?
There is a term in the electricity business called capacity payment but we don’t get it. And it is paid to generators whether or not you generate electricity. But we don’t get that payment. So whatever invoice we send out, it is the invoice for electricity generated with gas and consumed or utilised. But unfortunately, when the money is coming back, it is landing short of 70 per cent as I only get about 30 per cent payment on average. So we have been living on that 30 per cent and were it not for government’s intervention there would have been no power generation in the country today. Were it not for the payment assurance intervention, I can tell you that no generation company, whether NDPHC or privately owned, will survive it. Why? Because you can’t pay your suppliers. You can’t pay gas suppliers. From the 30 per cent paid to generation companies, you probably get up to 60 per cent or more as gas cost. So you can’t even cover that gas cost and that is a challenge really.
Out of the 13,000MW installed capacity today, what is the quantum that is available for use?
There is light at the end of the tunnel and we are seeing some rays of light, as the government has been able to secure the Siemens deal through the Presidential Power Initiative. Out of the 13,000MW installed capacity in Nigeria, 8,000MW is available and ready to run but we are doing less than 5,000MW today. So what Siemens has come to do through the project is to help to clean up the networks. Cleanup transmission and the argument between transmission and distribution companies will be eliminated. So, all the technical losses will be cleaned out. Commercial losses, hopefully, will be resolved and, of course, the collection by way of metering will be done. In the next one year or thereabout, we will be able to get at least 7,000MW of that taken up and served to Nigerians.