Nigeria’s power investment expansionAugust 24, 2018
Bart Nnaji, the CEO of Geometric Power, talks to TOGY about electrification in Nigeria, the potential for power expansion in the country and the need for balanced regulators. Geometric Power is an indigenous power generation and distribution company in Nigeria.
• On power capacity: “We like to benchmark ourselves against Brazil, which has a population of just over 200 million. The installed power there is about 130 GW, while our installed power is still at 12 GW. That’s an opportunity.”
• On the private sector: “The challenge is decision makers recognising that this has to be done and clearing the way for the private sector to feel comfortable investing. That’s always a challenge, as well as making sure people don’t feel like they’re giving the private sector special treatment by allowing them to build a power plant.”
• On generation: “You need to be able to generate enough power to overtake the self-generators. Then, instead of running a generator, people can get power from the grid or from an industrial producer of power reliably and at reasonable tariff.”
• On investment: “The regulators then have to be balanced, knowing that they are the ones standing between the private sector investors and the government off-takers, and the masses as well.”
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What steps need to be taken to achieve electrification of the country?
The government has to enforce the rules it sets in its performance agreements with the companies it has sold assets to. This will also force these companies to perform well. The regulators then have to be balanced, knowing that they are the ones standing between the private sector investors and the government off-takers, and the masses as well. The masses want to pay significantly reduced tariff for power, but you cannot get power for free and have it available 24/7.
Distribution companies have to be measured and held to a standard such as the SAIFI [System Average Interruption Frequency Index] and SAIDI [System Average Interruption Duration Index]. When these figures hit a steady decrease, then we are making progress. If they don’t go down, we are not making progress.
What are the biggest opportunities and challenges for an indigenous power generation company in Nigeria?
The biggest opportunity for us is that we haven’t even scratched the surface of power building in Nigeria. We should address the issue of repressed power: self-generators are generating more power than the actual grid. You need to be able to generate enough power to overtake the self-generators. Then, instead of running a generator, people can get power from the grid or from an industrial producer of power reliably and at reasonable tariff.
There’s tremendous opportunity. If you look at the population of Nigeria, it is approaching 200 million. We like to benchmark ourselves against Brazil, which has a population of just over 200 million. The installed power there is about 130 GW, while our installed power is still at 12 GW. That’s an opportunity.
The challenge is decision makers recognising that this has to be done and clearing the way for the private sector to feel comfortable investing. That’s always a challenge, as well as making sure people don’t feel like they’re giving the private sector special treatment by allowing them to build a power plant. Sometimes, people in government think they are presenting the private sector with a gift when they allow them to come and invest money and build.
How is the Aba Integrated Power Plant (IPP) progressing?
We expect to complete the Aba Integrated Power Plant and commission it this year . It has been a long time coming, and the power project is a different model from other power projects. It serves an economic-geographic area. Next to Lagos, Aba is the largest economic city in Nigeria. The plan was to build this power project as an embedded power plant, clean up the distribution network and raise the distribution infrastructure to be the equal to those of any in the developed world, delivering power to the people.
The goal is to provide efficient, reliable electricity so that industries can run in shifts like they do anywhere else. This is something we don’t have today in Nigeria. In Nigeria, a company may decide to work on supplying reliable electricity, but when workers go home, there is no reliable electricity on the streets or at their homes. We are talking about solving this problem for the entire metropolis of Aba.
A minimum of 2 million people will receive electricity this way. Before the end of the year, the city will have this reliable electricity. The investment is USD 530 million, and we anticipate that GE will be a part owner and the other smaller industrialists in Aba will have an equity stake as well.
We built a 27-kilometre gas line from Shell Owaza gas processing facility in Abia State to the power plant; we also have brand new substations that we built, new power lines and, of course, the power plant itself. That’s very exciting for us.
What other projects will soon be adding capacity to Nigeria?
We have some other projects in which their development is very close to being completed. Oma Power is a big power project that is being developed in collaboration with General Electric and Engie of France. We will build the 1.08-GW power plant, of which phase 1 is 540 MW. That project is fully developed, and the government bulk electricity buyer has also initialled the power purchase agreement for it. It’s going through the process of being finalised, and we now can complete financing and start construction before the end of the first quarter of 2019.
There’s another project we are working on called ADIA Power, which is the same capacity, 540 MW. This project is being done in collaboration with Orascom of Egypt and Engie of France.
We think that if Oma can reach a financial close this year, it will take a maximum of 30 months to complete and commission. ADIA should reach financial close in the third quarter of next year or the last quarter of next year. That’s what we’re shooting for.
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