12-01-09 Nigerians may have to wait for a long time for Government to achieve stable power supply as the global financial meltdown has affected private investors licensed by the Nigerian Electricity Regulatory Commission (NERC), to boost power generation in the country.
The global economic downturn has eroded their financial base such that their move to build new power plants in various parts of the country is facing serious challenges. Even the recent pledge by the Federal Government to generate 6,000 MW of electricity this year may remain a mirage as none of the 25 companies licensed to build independent power plants have made any appreciable progress.

Presidency sources hinted that President Umaru Yar'Adua may have shelved the much-awaited declaration of a state of emergency in the power sector due to the negative signals from the private investors in the IPPs.
"The IPP licensees had earlier complained about policy summersaults and inconsistencies in the power sector for their reluctance to take off. They also needed guarantees for the funds they intend to invest. Although the NERC had tried to assuage their fears by increasing electricity tariffs, they still needed more guarantees because IPPs require huge financial investments over a long period of time," the source said.

The presidency source also confirmed that the problem of the licensees have been compounded by the current global financial melt down which has wiped out the financial base of most overseas banks and financial institutions.
"Many of these companies depended on overseas banks and financial institutions to fund such long-term projects, but some of those institutions are either distressed or grappling with liquidity problems due to the global financial meltdown. That is why most of them are no longer in a position to do anything about the IPPs."

For his part, National President of the Electricity and Allied Companies Senior Staff Association, Godwin Ifeanacho said the Federal Government can still achieve 6,000 MW of electricity generation this year if the right things are done.
"It is possible, provided we diversify our sources of power generation. The government must take a proactive decision on the Niger Delta issue to reduce the incidences of vandalization of the gas-operated pipelines. It is very difficult to achieve the 6,000 MW electricity generation if these two issues remain unresolved."

Ifeanacho also wondered why government concentrated all efforts on only one source of electricity generation when there are cheaper and readily available alternative sources.
"Another issue is the diversification of sources of power generation. Why should Nigeria continue to depend only on gas for electricity generation when we have coal? Why can't we go to Mambila and get 4,000 MW? That's what we can get from Mambila if we do it now. Mambila Plateau power plant alone can give Nigeria 4,000 MW of electricity and even more. These are issues about diversification."

"You don't have to depend all the time on gas. By thetime we are able to generate coal in Kogi, Enugu and Benue, you do three power plants there, to go by coal. America is still generating electricity by coal. South Africa generates more than 80 % of their electricity by coal. So, why can't we exploit coal which is in great abundance from the coal belts of Enugu, Kogi and Benue?"
"So, these are things that can be achieved if they work hard. It is not just making verbal pronouncements. It is getting our priorities right, providing the funds and making sure the money is properly applied to achieve the desired results and the money is spent where it is supposed to be spent."
On the issue of IPPs, the unionist said building power plants does not come cheap.
"The NERC has been there since Obasanjo's time. They have licensed about twenty-five companies, including Obasanjo's Otta Farms Electric Limited. But none of them has built even one single power plant."
"It gives room for worry if you have licensed twenty-five companies for the past six years andnone has started anything. They have licensed so many of them, even those that will do coal power plants, but they have not started. This is one of the issues, when people say it will be driven by the private sector. They don't know the enormity of funds required, the amount of expertise required. And people get into it and discover that it is more than just getting license. A lot of money is required," he stressed, adding that a minimum of eighteen months is required to build a power plant.

Another senior official of the National Union of Petroleum and Natural Gas (NUPENG) said government's lack of seriousness was demonstrated by the poor performance of the power sector in 2008.
"The sum of N 115 bn was allocated to the power sector in the 2008 budget for investment, but it did not achieve any tangible development within the last one year. The sector witnessed only a slight increase in the level of output from the previous 2,700 MW to about 3,500 MW, which is quite insufficient for domestic and industrial consumption in the country," he said.