NDPHC Delivers on NIPP Phase I

Right of Reply

…creating the backbone ofNigeria power infrastructure
BY YAKUBU LAWAL

Our attention has been drawn to an article in ThisDay Newspaper of May 3, 2016 titled “10 Years After Conception, NIPP Still Unable to Deliver Power” written by its Abuja Energy Reporter,Mr. Chineme Okafor. Though it is not our corporate culture to join issues in the media, we owe the public an obligation to set the records straight out of concern that a publication in a newspaper of international repute like ThisDay may mislead its numerous and valuable readers worldwide.

A summary of the aforementioned article was that the implementation of the National Integrated Power Projects hasso far contributed nothing towards improving the availability of electric power in the country. To say that the article was a treatise of falsehood, amateurish and a complete distortion of factsis an understatement. Here are verifiable facts as evidenced by commissioned projects located all over Nigeria.

In the area of power generation, eight of the ten power plants in the NIPP portfolio,along with associated gas transmission metering/receiving infrastructure projects to support commercial operation, have been commissioned and connected to the national grid contributing over 22,000,000kWHr of energy daily. While it is a fact that power generation is often disrupted by acts of vandalism on gas pipelines and transmission lines, the NDPHC does not offer such incidences as excuses – success is second nature to our operations. The NDPHC has continued to operate these power plants in the interest of the Nigerian economy, despite undesirable security challenges and an accumulated debt of over N94bn owed it by the electricity market. – that’sdefinitely more than a tangible contribution to the nation’s supply of electricity.

Many of the NIPP power plants on the national grid also provide ancillary services in support of system operations, a contribution critical for stabilizing the national grid. The writer should have contacted Transmission Company of Nigeria (TCN) to get information on the vital role of NIPP power plants in bringing electricity supply to consumers. It is noteworthy that the System Operator heavily depends on the NIPPPlants for the provision of these critical services. Following recent grid instability as experienced by consumers nationwide, TCN and NDPHC are currently concluding a contractual agreement by which NIPP plants would provide about 265MW of Spinning Reserves to facilitate grid responsiveness during swings and disturbances on the transmission network. The provision of spinning reserve and other ancillary services is best practice the world over and Nigeria now largely relies on NIPP Power Plants to provide the service.Contrary to the allegation, the NIPP is definitely not a failed project.

The NPDHC has over 2,000MW of generation capacity readily available for deployment as soon as vandalized gas processing projects are completed by the associated nominated gas suppliers thus presenting the best opportunity for the rapid improvement of power supply. Completed power plants include 750MW Olorunsogo II, 450MW Sapele, 434MW Geregu II, 450MW Omotosho II, 450MW Ihovbor, 450MW Alaoji, 563MW Calabar and 225MW Gbarain. Imminentlycompleted ones include 225MW Omoku, 338MW Egbema and 530mw 2nd Phase Alaoji – that’s something worthy of mention in the article. Contrary to the allegation in the said article that most of the power plants have not been completed, the NDPHC assets are truly the backbone of the nation’s power infrastructure. The completed power plants have been operated with private sector orientation and supported by Long Term Service Agreements (LTSA) in line with international best practice. Under condition of transmission and gas challenge, the profitability of the plants is constrained but these are short term developmental challenges which the NDPHC is working to mitigate by divestment to the private sector either as privatized entities or under practical Operations and Maintenance (O&M) contracts. Despite the inability of some IOCs to deliver gas to NIPP plants on schedule, the management has been proactive in securing alternative gas from Accugas Ltd which clearly is outside the aggregation framework. Had the writer investigated the purported claim that our management is relying oninadequate gas as an excuse, the published article would have been radically different.

The NDPHC has completed 2,194km of 330kV transmission lines and 809km of 132kV transmission lines. This represents an increase of 46% and 13% respectively over the pre-NIPP status of grid infrastructure. A total of ten (10) new 330/132kV substations and seven (7) new 132/33kV substations have also been completed with several other existing substations significantly expanded thereby adding 5,590MVA and 3,313MVA capacity to the national grid – the statistics of NIPP contribution to overall transmission system with transformation capacity progressively increasing each day as the balance of the projects are being delivered. The current blackout being experienced in the EKO area of Lagos is to grant NIPP outage to connect completed projects at both 330kV and 132kVlevels at Alagbon and Lekki NIPP 330MVA Substations which in a few weeks would significantly improve power supply to Lagos axis. Similar projects are being primed for commissioning to facilitate power evacuation from NIPP’s Calabar and Alaoji Power Plants to the SS, SE and NW of the country, amongst many other beneficiary states. The design basis of some of the transmission projects include significant closing radial lines to form loops thereby providing the required flexibility and redundancies to a better management of the national grid – these are things worthy of informing the public.

With regards to Distribution infrastructure – the NDPHC has constructed and commissioned over 350 injection substations with a combined capacity of 3,540MW across the length and breadth of this country. The NDPHC has further constructed a total of 2,600km of 11kV and 1,700km of 33kV distributionlines for improving access to electricity and quality of power supply to consumers. The nation’s distribution capacity has also been enhanced by the installation of 25,900 completely self-protected (CSP) transformers all over the country thereby significantly reducing technical losses. Under the NIPP program, the capacity of 33/0.415kV and 11/0.415kV has been increased by 26%.The NIPP is designed to increase the number of 33/0.415kV & 11/0.415kV substations by 163% all the projects are nearing completion –this is definitely worthy of noting by your uninformed reporter.

The National Integrated Power Projects is the largest single intervention in power infrastructure in Africa and the implementation has not been without challenges, which includecommunity restiveness, security situation in the Niger Delta and disruptions arising from recurring probes by the National Assembly. We trust that this oversight function by the legislators is often occasioned by the imperative of obtaining informed knowledge and gathering of valuable data –albeit with undesirable effect of causing disruptions in operations and adversely impacting on the speed of project delivery. Other challenges have been the unintended side effects of the power sector reform and a misalignment between the NIPP and the implementation schedule of gas projects under the NNPC and its subsidiaries. Such challenges are not unexpected in the process of executing multi-billion dollar projects inemerging economies in which there are significant external risks to project implementation. With an overall level of completion of projects in excess of 80%, the balance of which are on the verge of completion, the NDPHC has definitely delivered on its mandate of providing robust power infrastructurefor the nation. Not a bad track record for NIPP.

In spite of the above laudable achievements recorded by NIPP in an environment where this is anathema, the power throughput in Nigeria remains at about 12GW at generation level, 5.5GW at Transmissionlevel and about 5GWat Distribution level, a situation that has restricted the improvement of service delivery at the last mile to consumers. In recognition of the subsisting gaps in power infrastructure,the Board and management look forward to doing a lotmore for our country under NIPP phase II for the nation to benefit from a world-class transmission infrastructure and a more diversified generation-mix underpinned on the utilization of alternative sources of power generation including renewables.Under the initiative, the NIPP plans to close the infrastructure deficit arising from the continued growth of the economy and gaps associated with other critical stakeholders in the power value chain – that is keeping phase with economic and population growth as practiced in other developed economies. NIPP plans to fund these newly proposed projects either from proceeds of the ongoing divestment of 80% equity in NDPHC generation subsidiaries or by leveraging on the company’s significant balance sheet to attract the much needed foreign as well as local capital. Only few companies in Africa can boast of an asset base in excess of $8bn– and a much higher valuation when a financial close is achieved on the transaction. It is noteworthy to report that the sum of US$5.7bn offered for the acquisition of the 80% in our equity power plants is well in excess of the amount expended in building the plants thus an affirmation that the NIPP procured its assets with duty of care and due consideration for value for money. Contrary to the writer’s negative perception, it is an acceptable practice for willing buyer and willing seller to renegotiate bids, if circumstances and parameters related to a transaction deviate from the understanding at the time of offer. It is therefore no surprise that many Fortune 500 companies are eager to partner with NDPHC as investors. Nigerians deserve to know this, and not falsehood.

We are sure that your respected energy reporter,Mr. ChinemeOkafor, who allegedly authored (doubtful as we believe that he usually writes from an informed position) the originating falsehood is now better informed to do the rightful thing – inform Nigerians based on verifiable facts. We also expect the management of ThisDay newspapers to do the needful in clearing the wrong perceptions created in the minds of its critical readership by the earlier publication, in a manner befitting of its integrity and standing in the local and international media thereby retaining the goodwill of its numerous and loyal readers who depend on you for the truth.

The critical question to answer is where would Nigeria have been without NIPP?Let the more balanced analysts go to work.
As we call on ThisDay Newspapers to avail these clarifications equal prominence as the originating article on the NDPHC, the management remains available, as always, to provide further information relating to our critical role in building a strong and viable electricity industry.

– Lawal is General Manager,
Communication & Public Relations
NDPHC