How Nigeria can ensure sustainability in power sector

•MESL begins expansion of Kainji Hydropower Plant
Chairman, Mainstream Energy Solutions Limited, Sani Bello has said there was need for urgent measures to ensure the sustainability of the country’s power sector.

Speaking at the ground-breaking ceremony for the expansion of Kainji Hydropower Plant – Units 1G3 & 1G4, Bello said the sector must adopt policies that would unlock and guarantee liquidity within the value chain to enable investors as well as financing institutions to make adequate return on investments.

According to him, the sector is capital intensive and as such requires policies that aid commercial viability, sanctity of contracts and timely payments.

Bello added that the sector must aggressively focus on infrastructure rehabilitation and in certain areas complete rebuild.

“We must also adopt new technology, and stakeholders must note that rehabilitation and expansion is a dire necessity with no shortcut across the entire value chain. If this is done, we can guarantee a strengthened infrastructure for another 40 years,” he noted.

Bello said while most of the equipment required for the rehabilitation, installation and continued maintenance in the industry are largely produced abroad, the foreign exchange requirements remained challenging.

Bello said: “Sourcing foreign exchange is very difficult. The volatility of sourcing foreign exchange against a largely Naira-based revenue makes rehabilitation, operations, and maintenance costs very expensive.

“Also, payment of regulatory fees due to government denominated in foreign currency further impacts operators’ finances negatively in a volatile foreign exchange market.”

The chairman said the industry has been faced with huge bottlenecks in obtaining regulatory permits, licenses, and waivers, adding that ease of doing business in the sector must be expedited given the magnitude of the task ahead.

According to him, the power sector is vital to the growth of the economy and development; therefore, the regulators and stakeholders must not waiver in their efforts to remove regulations that will hinder commercial viability.

Managing Director of the company, Lamu Audu said in keeping to its Concession Agreement with the Federal Government, the company has recovered 542MW from Kainji and Jebba hydropower plants, bringing on a total available capacity to 1002MW.

“The company has also signed contracts for the overhaul of Jebba Unit 2G5 (96.4MW). There are ongoing rehabilitation works for Jebba Unit 2G6 (96.4MW) to be delivered in March of 2023, and the rehabilitation of Kainji Unit 1G9 (80MW) to be delivered by December 2023. To complete the Recovery Programme, processes are ongoing for the rehabilitation of Units 1G8 & 1G10 (160MW)”, he added.

According to him, the installation of units 1G3 & 1G4 will add 220MW to the national grid.

He said the project is expected to be completed within 44 months from the commencement date at a cost over $89 million approximately, bringing the firm’s combined total investments in Capacity Recovery & Expansion Programme to over $240 million.

“It is pertinent to note that the completion of this Project is pivotal to our company as it means 10 units would have been installed at Kainji, which brings the total capacity to 980MW, an asset which had no units operating when we took over in 2013 – Dare I say, this is an achievement worthy of a gold medal from the government. The Project has other advantages such as improving the water management during the flood season which has posed a great challenge especially during the very wet years,” Audu said.