FG to Revive Sale of 10 NIPP Plants in New Economic Plan

• Gas, water constraints chip off 2785MW generation volume, Discos justify load rejection

Chineme Okafor in Abuja

The  Federal Government has said it would conclude the sale of 10 brand new electricity generation plants built under the National Integrated Power Projects (NIPPs) by the Niger Delta Power Holding Company Limited (NDPHC) in line with its recently launched Economic Recovery and Growth Plan (ERGP).

The government also stated that within the three-year timed ERGP, it would review the strategies employed by the Central Bank of Nigeria (CBN) in the disbursement of its N213 billion Nigeria Electricity Market Stabilisation Fund (NEMSF) to the electricity sector.

There have been claims of unequal terms in the CBN disbursement of the funds by electricity distribution companies (Discos), who alleged that the apex bank had placed stringent conditions to make the fund quite difficult to access.

Similarly, the government tried to sell off the $5.7 billion plants to investors who were shortlisted after a competitive bid process in 2014, but the transactions were stalled following consistent attacks on gas supply pipe­lines that have rendered the new power plants redundant, as well as preferred investors’ claims that the government had not lived up to its pre-transaction pledge to ensure uninterrupted gas flow to the plants.

Following from this, the government subsequently stated that it would sell off the plants on a one-by-one basis, starting with three of the plants – 634 megawatts (MW) Calabar, 506MW Geregu and 513MW Omotosho power plants.

But the ERGP, which President Muhammadu Buhari, recently launched in Abuja, showed that conclusion of the NIPP privatisation would be part of the several intervention efforts in the power sector that the government’s economic recovery programme would pursue.

The document, which THISDAY reviewed yesterday in Abuja, disclosed that within the power sector segment of the ERGP, the government would be targeting to increase power generation by optimising operational capacity, encouraging small scale projects, and pursuing long-term capacity increase, in addition to improving the commercial viability of the legacy generation and distribution companies.

The federal government would, also in the ERGP, plan to restore lost gas supply through the Gas Flare Commercialisation Programme, produce strategy towards elimination of gas infrastructure vandalism, complete major gas infrastructure lines to plants and main trunk lines to facilitate gas supply for power generation, as well as improve the financial capability of the Nigerian Bulk Electricity Trading Plc (NBET) to support the electricity market.

Government, according to the economic recovery programme would also strengthen the governance framework and capacity of sector agencies, introduce strategy for capital market and banking programmes that ensure all upstream industry operators get paid for each contract, and review the gas pricing structure to recover all prudent costs as services improve and give willing developers access to under-developed gas resources.

Meanwhile, recent records on power generation and supplies in the country from the government has shown that constraints from gas supplies to power plants in the country as well as water management constraints have chipped off 2,785MW of generation volume from the system, leaving the country with just about 3,653.8MW of electricity to distribute across the 11 distribution networks.

According to the daily operational statistics from the government, average power generation as at April 05, 2017, was 3,441MW. This however picked up to 3,653.8MW on Friday.

The reported gas and water constraints were 2,695MW and 90MW respectively, while no constraints from the transmission lines were recorded.

The government’s record also stated that the power sector lost an estimated N1.337 billion on April 05, 2017 due to these constraints.

Notwithstanding the generation constraints, the 11 Discos have justified their reasons for rejecting loads sent to their networks by the Transmission Company of Nigeria (TCN).

A recent statement from the TCN had accused the Discos of rejecting electricity loads allocated to them.

The statement had explained that: “This has left the SO (system operator) with no other option than to ask the Gencos to reduce generation to ensure grid stability,” and subsequently denied that the challenge was that of transmission’s wheeling capacity which it said was 6,500MW.

However, responding to the charge, the Executive Director, Research and Advocacy of the Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan, stated that the TCN was often defying the load allocation schedules of Discos by transmitting generated power to where the Discos have low distribution needs, and thus leaving out the high areas of electricity demand.

Oduntan told reporters in Abuja that, “The issue is about wrong dumping of load where the Discos cannot recover the cost at that point as the power supply is not always enough for all the customers under a particular Disco.”

He added that, “For instance, TCN dumps power where it should not in a Disco because its equipment is obsolete and out-dated and has not spent money to maintain the line.”