Gas, Power Operators Decry State of Nigeria’s Electricity Industry

Ejiofor Alike

Operators in the Nigerian power and gas sectors have decried the poor state of the country’s power sector, saying that nearly four years after the power assets were handed over to the private sector, both the government and the private sector have failed to deliver on their post-privatisation commitments as a result of liquidity challenges.

Speaking thursday in Lagos at the Business Forum organised by the Nigerian Gas Association (NGA), the operators argued that $3.9 billion proceeds realised from the sale of the power assets was misapplied to pay off the workers of the defunct Power Holding Company of Nigeria (PHCN), instead of applying the fund to boost the transmission infrastructure for which it was meant, according to the terms of the power reform.

In his speech, while moderating the debate by the operators, the Chairman of Independent Petroleum Producers Group and Chief Executive Officer of First E & P, Mr. Ademola Adeyemi-Bero, said the federal government should have considered the fact that the private investors would require seven times the money they paid for the assets to upgrade the assets after take-over, before asking the investors to pay such high price to buy the power assets.

Also speaking, a Director of Eko Electricity Distribution Company and Principal Partner, George Etomi and Partners, Mr. George Etomi, said the privatisation agreement had set clear Key Performance Indicators (KPI) for the owners of the distribution companies but argued that the federal government did not fulfill its part of the agreement.

According to him, the government was supposed to provide N100 billion subsidy, ensure sanctity of contracts and also ensure that the investors inherited clean balance sheets, free from liabilities.

Etomi also added that the federal government was supposed to give the investors six months shadow management of the power assets to enable them study the assets, stressing that government did not fulfill any of these obligations as a result of the pressure by the labour unions.

He said the sector was facing liquidity challenges because of government’s failure to meet its obligations as contained in the privatisation agreement, adding that even the $3.9 billion realised from the sale of the assets was used to pay the labour instead of deploying it to upgrade transmission as planned.

In his keynote address, a former Minister of Power and Chairman of Geometric Power, Prof. Bart Nnaji, argued that tariffs must reflect currency movement, stressing that Nigeria is at the bottom in terms of power generation in Africa.

In his presentation, the new Managing Director of NIPCO Plc, Mr. Sanjay Teotia, argued that natural gas is the preferred fuel for vehicles, stressing that the technology of natural gas vehicles is available and most competitive.

A former Group Executive Director (GED) in charge of Gas and Power at the NNPC, Dr. David Ige, said the power sector faced tactical and non-tactical challenges and identified the delay in the completion of the Escravos – Lagos Expansion and the Bonga Divert, which was initiated in 2014 to supply 120 million standard cubic feet of gas per day (equivalent of 650MW), as some of the tactical challenges.

In his welcome address, the President of NGA and Chief Executive Officer of Frontier Oil Limited, Mr. Dada Thomas, stated: “Nigeria is not without its challenges at present but I believe we are capable of finding solutions.”