Barth Nnaji, Others Bemoan Nigeria’s Power Sector Challenges

Oluchi Chibuzor

Energy Stakeholders in the country have expressed concern over the country’s inability to build new power plants in than 10 years, saying the country cannot progress if its energy stock is not growing year-on- year (YoY) compared with its Gross Domestic Product (GDP) growth.
They equally urged the federal government to ensure sustainable energy security for the people in its energy transition initiative.

Additionally, they called for the lifting of the suspension on the Guarantee Instrument for Power Purchase Agreements (PPAs) to allow for more investors in the sector, just as they stressed that the current $4 per/day energy supply cannot encourage the industrialisation in economy aiming to hit $1 trillion in the next five years.

Speaking at the bullion lecture themed, ‘Architecting The Energy Sector For Nigeria’s $1 Trillion Economy Vision’, the Founder and Chairman, Geometric Power Plant, Prof. Barth Nnaji, said the government has a role to play to improve investors’ confidence in attracting the private sector players in the energy sector.
He questioned why in 10 years the country has not built new plants if it plans to have an energy sector that would support a $1 trillion economy.

He said the country must make a substantial investment in gas to encourage more thermal plants to boost generation up to 100, 000MW to become a higher medium economic power.
But he argued that such a level of power generation cannot be achieved without the lifting of the suspension of the PPAs to attract investors.

According to him, “During our time in government, I, in collaboration with then Minister of Finance and Coordinating Minister of the Economy, had introduced Partial Risk Guaranty (PRG) through the World Bank as a way to incentivise and provide payment security for power plant development in Nigeria.

“Many companies started working fast to take advantage of this initiative. It was based on this initiative that significant projects like ExxonMobil (500MW); Oma Power (1080MW), etc. got developed to maturity. Unfortunately, the 461 Megawatt Azura-Edo Power Plant in Edo State is the only product of this initiative by the time President Jonathan left office, the Buhari Government, which succeeded, did not continue with the MOUs and the PRG Instrument for the PPAs.
“So for more than 10 years, no new power plant has been built or initiated in Nigeria. The 188MW Geometric Power plant commissioned last year was conceived before this period and built without a need for a Guarantee instrument. We should never forget that for any country’s economy to keep growing, it must keep growing its energy stock year-on-year.”

He advised that the country should aim for 100,000MW but expressed doubt if it could ever be achieved because of the suspension of the guarantee instrument for Power Purchase Agreements (PPAs) by the then President Muhammadu Buhari’s administration.
He noted that as the Vice Chairman, Nigeria Electricity Regulatory Commission (NERC), Dr. Musiliu Oseni, has argued eloquently, “without new PPAs, no new plants will be built,” he stated.

He revealed that the ExxonMobil Power plant, OMA Power by the JV of Geometric Power and General Electric and others has been in abeyance because of the suspension of the PPAs.
“It is costly to build a plant approximately $1.5 million per MW. No investors will build any without at least a Partial Risk Guarantee (PRG). To achieve desired power adequacy of over 100000MW, the Nigerian government has a critical role to play,” he stated.

The former Minister of Power warned the country not to join huggers in the global energy transition process.
“We should recognise that natural gas is a transition fuel. Therefore, we should not be cowed to classify it as a classic fossil fuel to be extinguished immediately. This fuel is our energy ticket to sustainable economic development.

“The Nigerian Government(s) should employ the already tested approaches to collaborate with the private sector to quickly progress power availability to the level that matches our country’s sustainable economic growth desire,” he said.
He pointed out that in all the initiatives of energy transition no country undertakes the journey of carbon emission without considering sustainable energy security for its people.

However, he acknowledged that in considering achievement of climate change objectives, Nigeria should therefore focus on energy security for the nation.

“The country should not join the tree huggers of the world because they will abandon the ship of climate change initiatives once their own energy security is threatened. We saw how the UK, Germany, France and other European countries re-embraced coal power,” he said.

On her part, the National President, Women in Energy, Oil and Gas and Chairman of the Lecture, Tolulope Longe, said the ambition of a $1 trillion economy cannot depend on diesel generators but on energy transition that reflects the Nigerian realities, not foreign prescriptions.

According to her, “The energy sector, in all its complexity and promise, sits at the very heart of that vision. Let’s be clear, Nigeria cannot build a $1 trillion economy on a $4 per day energy supply. We cannot industrialise on diesel generators and so our energy transition must reflect the Nigerian realities, not foreign prescriptions.

“We certainly cannot compete globally with infrastructure gaps, policy disconnects, and under-leveraged capital in our energy sector. But here is the opportunity. Nigeria has potential to move from barrels to bricks, from gas flaring to gas monetisation, from extractive dependency to energy-led development.”

She highlighted key areas that the country must urgently attend to in order to set the architecture right for the trillion-dollar economy, while stressing the need for the country to utilise its natural resources.

According to her, “We need to aggressively decentralise energy. Mini-grids, embedded generation of captive energy as some people prefer, and reliable hybrids must be mainstreamed to reach underserved and unserved communities. The second thing we must do, unleash Nigeria’s gas renaissance. Let gas work for Nigeria.

“We have sat for too long on a resource that can liberate us. Today, we have amazing reserves of coal in a city that has wasted wealth, whilst others are able to tap into it to change the narrative and the course of their countries. So, from powering industries to fuelling transport and creating clean cooking markets-compressed natural gas (CNG), as well as liquefied petroleum gas (LPG), must be repositioned, not just as transition fuels, but as economic multipliers.”

She maintained that the country must give policy clarity to boost investors’ confidence, which will be equivalent to capital inflow, emphasising that the country must harmonise policies, fast-track regulatory reforms, and embrace investments.

“It is time to give investors what they really crave, clarity, consistency, as well as commitment. Bureaucracy cannot be the bottleneck to our trillion-dollar economy. It has long been a major stumbling block. It is time to unblock that challenge,” Longe said.

Commenting, the Chairman Board of Trustees, Centre for Financial Journalism, Mr. Ernest Ebi, said over the years the bullion lecture has shown to become

“As our nation aspires to become a $1 trillion economy within the next five years, the energy and power sectors are at the centre of this journey. Without a reliable, resilient, and inclusive energy architecture, the vision will remain an illusion,” he said.