Sunday, 3rd December 2023

Pushback over proposed sale of five independent power plants

By Kingsley Jeremiah, Abuja
31 August 2022   |   3:00 am
Electricity consumers have described it as a miscalculation, a move to sell about five independent power plants in the country.

Transmission Company of Nigeria station. PHOTO

Electricity consumers have described it as a miscalculation, a move to sell about five independent power plants in the country.

This is coming ahead of a meeting later this week by the Special House of Representatives Joint Committees to commence an inquiry into the proposed sale of the five plants by the Bureau of Public Enterprises (BPE).

The National Integrated Power Project (NIPP), which was conceived in 2004 under the Olusegun Obasanjo government, has been marred by a series of controversies even as Nigeria continues to face serious electricity shortage.

BPE had, last year, moved to sell five of the NIPPs. The plants are Benin Generation Company Limited at Ihovba, Edo State; Calabar Generation Company Limited, Cross River State; Geregu Generation Company Limited, Kogi State; Olorunsogo Generation Company Limited, Ogun State and Omotosho Generation Company Limited, Ondo State.

Director General of the BPE, Alex Okoh, had then said the move was in line with the bureau’s 2021 work plan as approved by the National Council on Privatisation (NCP) and would be strictly adhered to.

In July this year, BPE released names of 16 pre-qualified bidders for sale of the assets to include Mota-Engil Nig, Amperion Power, Sifax Energy, Pacific Energy Company Ltd and Globeleq Africa Limited. The rest were: Geoplex Drillteq Limited, Asfaliza Acquisition Ltd, Lauderhill PJB, Lauderhill Tata, Unicorn Power Genco Ltd, Connaught Energy Services Ltd, ENL Consortium Ltd, Ardova Plc, Central Electric and Utilities Ltd, North South Power Consortium and Quantum Megawatt Consortium.

Days after the announcement, the House of Representatives asked the BPE to halt the sale of the power plants.

The Nigeria Consumer Protection Network (NCPN) in a release on Monday, described the proposed sale as a national security risk, insisting that such action is self-serving and at very best, a chronic form of national assets stripping.

NCPN accused some of the bidders for the Geregu, Omotosho, Olorunsogo, Calabar and Benin-Ihovbor NIPP plants, of lacking the capacity and experience in the business of power generation.

President, Nigeria Consumer Protection Network, Kunle Kola Olubiyo said: “For instance, during the COVID-19 pandemic when the private investors of other Generation Companies (GenCos) ramped down electricity generation due to low revenue returns, the NIPPs being public assets, provided Nigeria with the much-needed energy security and its attendant socio-economic stability as it had to ramp up power supply to avoid economic and administrative shut down in the country.

“The private firms in the power sector so far, have not fared better than the NDPHC GenCos, which have their gas obligations, gas pipeline assets, contributed to both transmission and distribution networks nationwide.

“Very recently, the gas producers have allegedly made claims of a legacy debt of about $1 billion. These legacy gas debts were accumulated over a long period of time and if at any point they stop supplying gas to the GenCos, Nigeria could be plunged into darkness if the NIPP GenCos are sold off and the entire power sector upstream is left at the whims and caprices of wholly private sector investors.”

Olubiyo noted that even when some of the NIPP/NDPHC GenCos have not been put to optimal use, the country is still seeing their impact on the national grid while serving as the nation’s energy security backups.

He urged BPE and any designated agency of government to rather think of how to optimise the NIPP/NDPHC GenCos so that Nigerians could make the best use of the sector intervention, as that was what they were designed for.

Olubiyo further stated that the NIPP interventions which cut across the power sector value chain and implemented by NDPHC require that the Nigerian Electricity Regulatory Commission (NERC) would have evaluated them and determined their real value.

“However, for over nine years, NERC has been endlessly doing the evaluation of these investment values without result. Without this evaluation to determine the Capital Expenditure (CAPEX) in the NIPP power sector intervention projects, NDPHC has been continually short-changed of revolving funds that should be re-invested into other power interventions in line with Nigeria’s energy access for all targets of 2030.

“The consumer network (NCPN) at the moment opposes any move to sell off five of the NIPP GenCos for now. We are not saying that the plants would not be sold at the appropriate prices and time in the future but not now when Nigeria is seriously battling challenges of deliberate load rejection by the Distribution Companies (DisCos), deliberate low energy dispatch by the Transmission Company of Nigeria (TCN) load dispatch managers from the various energy load dispatch centres and the National Control Centre in Osogbo, Osun state.

“It is already election time and we believe that even if the five NIPP GenCos are sold, the proceeds may not be useful for the country and may just go into the hands of political cronies at the three tiers of government rather than a re-investment in NIPP/NDPHC revolving funds that could help in upscaling the investment milestones and expansion of the original ideals of the NIPP project’s conceptualisation,” he said.

The consumers stressed that selling off the five NIPP plants may not guarantee optimal performance as the new investors would have to begin a fresh journey of having some levels of Power Purchase Agreements (PPAs) and Vesting Contracts with the Nigerian Bulk Electricity Trading PLC (NBET).

They also noted that the NDPHC has some already signed bilateral contracts for Taking or Pay deal for gas supply agreement for some of the GenCos and come in handy, to operate as national energy security backups, even private GenCos down tools, thus serving as a core energy security backup for Nigeria while earning revenue for the governments.

“We advise the government to join hands with experts and professionals like-minded people within and outside the power sector to come up with a comprehensive mechanism to address the decline in growth being generally witnessed in the areas of universal access to energy security, the decline in energy load dispatch by TCN, the decline in generation capacity, the decline in energy load utilisation by the DisCos,” Olubiyo said.

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