The future is bright for Nigeria
Upper Reach interviews Oladele Amoda, CEO of Eko Electricity Distribution Company, who discusses the current state of Nigeria’s power sector, the progress made towards achieving an uninterrupted supply by 2020, and the ongoing privatisation campaign in the power sector
Nigeria has 5,900 megawatts of installed generating capacity. However, the country is only able to generate around 4,000MW. Most facilities are poorly maintained. Infrastructure development is one of the main focuses of the current administration and it is estimated that by 2012, 90 per cent of the country will be covered.
The power sector, for now, is having a lot of challenges ranging from aged infrastructure to inadequate supply of gas to run the existing power plants and other maintenance challenges. However, with the current administration’s resolve to revamp the sector in line with the provisions of the Electric Power Sector Reform Act, there is a lot of hope that the electricity market in Nigeria will soon blossom. Secondly, the on-going privatisation process is expected to open opportunities and pave the way for sustained and consistent investment in the sector to expand the existing infrastructure and make electricity available to over 90% of the country. The on-going NIPP (National Integrated Power Projects) coupled with rural electrification projects will complement these efforts.
The goal of providing uninterrupted electricity supply to Nigerians by 2020 is achievable going by the current administration’s efforts to revamp the power sector. With all the several IPP, NIPP and rehabilitation projects going on at different locations, coupled with short and medium term emergency power projects coming up, it is certain that the target of 40,000MW will be achieved. The sector is already opened up for investors both in the power and the gas sectors and more will be investing in coal, solar and even nuclear power projects.
Before starting on the expansion of the facilities and the network it has been noted that it would be more adequate to invest in the existing plants in order to modernise them. How do you see the current infrastructure network?
The existing electricity supply infrastructure (power plants, transmission and distribution networks) are in a poor state and require major maintenance/rehabilitation works to put them back into good working condition. Presently, the Federal Government is already investing in major maintenance and rehabilitation of existing power plants and the grid network to bring them back to normal operating condition. Some of the old plants are being retrofitted and several ones under rehabilitations will be delivered soon.
The electricity tariff is another important issue. In an interview with Upper Reach, Dr. Sam Amadi (CEO of the Nigerian Electricity Regulatory Commission) stated that “by the end of the year a second multi-year tariff order will be addressed, making operators more efficient and also more profitable.” Do you agree?
Electricity, just like any other product, must be appropriately priced for the industry/market to function effectively and efficiently. By NERC’s mandate, the electricity tariff is to undergo a minor review from time to time and a major review every five years under the MYTO arrangement. Therefore, MYTO 2 represents the major tariff review being undertaken by NERC to have a cost reflective pricing that will stimulate interest of investors wishing to enter the electricity market in Nigeria.
Eko Electricity Distribution Company is one of the most important assets in the power sector, serving the country’s “Centre of Excellence”, the business capital of Lagos. What have been the steps taken since the new administration to improve efficiency and turnaround time, in order to serve its customers better and shore up its revenue base?
Eko Electricity Distribution Company actually represents a very important asset in the power sector by virtue of its location and coverage area. Our service territory covers areas with a large concentration of high net-worth corporate and individual customers with huge revenue potentials. The current administration, through the budget appropriations and other intervention funding, has invested in the distribution network rehabilitation/expansion projects aimed at stabilising and improving service delivery to our esteemed customers. The improved service delivery will, in turn, translate to improved revenue generation.
Privatisation of the power sector, which will enable the much-needed investment in the sector, is at an advanced stage. The Bureau for Public Enterprises has almost concluded the process and a tentative month for the emergence of winners is set for October. It is expected that new investors will start operations before the end of the year 2012. Most of the challenges have been surmounted leaving more or less the labour issue, which is almost concluded. The whole process is very transparent and the prospective investors and members of the public are carried along at every stage. The potential investors are already aware of the huge opportunities that will come from their investment.
I am a professional electrical engineer, a fellow of the Nigeria Society of Engineers, a member of the Institution of Engineering and Technology (MIET) of the United Kingdom, member of the Institute of Electrical and Electronics Engineers (MIEEE) USA, and a fellow of the Nigerian Institute of Management (FNIM).
What is your final message to the readers of this report?
The electricity industry/sector in Nigeria has a bright future for customers and investors. The efforts of the Federal Government to revamp the industry and drive the privatisation process will create tremendous opportunities for investors and drive economic growth in Nigeria. Everybody should wholeheartedly embrace the transformation agenda of Mr. President, Dr Ebele Jonathan GCON, GCFR, and his team. The future is bright for Nigeria.