Nigeria to build four independent power plants

The Federal Government of Nigeria and its joint venture oil partners plan to build four independent power plants that will raise electricity generation in the country by 4,000 MW. The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Jackson Gaius-Obaseki, who disclosed this in Rio de Janeiro, Brazil, said that the a total of 1,000 mm cfpd of gas, would be made available by the oil companies to fire the new power plants.
Nigeria’s joint venture partners are Shell, Mobil, Chevron, Agip, Elf and Texaco. The Federal Government through the NNPC, holds an average 57 % equity in the ventures. Gaius-Obaseki, briefing participants at the on going 17th World Petroleum Congress (WPC) on Nigeria’s gas and power generation programmes and investment opportunities, said the execution of the projects had been planned for over the next decade.

Each of the power plants, with 1,000 MW generation capacity, will be sited in Abuja, Kaduna, Abeokuta and Akodo in the outskirt of Lagos, he added. The Abuja plan will be fed with 250 mm cfpd through the proposed Oben-Ajaokuta pipeline system. Same for the Kaduna plant.
The Abeokuta and Akodo IPP projects will be fed with 250 mm cfpd each, by extending the existing Escravos to Lagos Gas Pipeline and also extending the spurline of the pipeline from Alagbado through Ewekoro. "These IPP projects might seem ambitious but with commitment and cooperation by all stakeholders and proper organisation, they are achievable," said the NNPC chief.
Gaius-Obaseki said that the government had begun implementing IPP projects in the effort to meet growing demand for electricity and given the problems faced by the National Electric Power Authority (NEPA).

IPPs already in place include the Lagos/AES project currently supplying 270 MW emergency power to the national grid, the IPP by Agip Oil located in Kwale, Delta State, which will supply 450 MW, and also the proposed power project by ExxonMobil for the supply of 300 MW in Bonny, Rivers State.
Power supply in the country had remained largely unstable due to inadequate generating capacity. While total national demand has been put at over 6,000 MW, NEPA is only able to generate about 4.000 MW now. The NNPC chief said that an oil industry-led study on the Abuja-Kaduna pipeline and other gas related projects, which was carried out by ILF Consulting Engineers, showed that the country’s power demand in the next five years would rise by about 5,535 MW. Providing a reserve of about 20 %, a generation capacity of 6,650 MW would be required, he said.

An investment outlay of about $ 1.5 bn, he added, is required yearly to meet demands of the power sector where installed generating capacity has been projected to increase to 9,000 MW in 2010 and 25,000 MW by 2020. Nigeria, he said, was equally playing a key role in the current plans to improve power generation in West Africa in the bid to ensure economic growth in the sub-region.
This is being done through the $ 500 mm WAGP project involving Nigeria,Ghana, Togo and Benin Republic, and the West African Power Pool project. Gaius-Obaseki said that the WAPG project, which entails the supply of natural gas nearly 200 mm cfpd of gas from Nigeria to the three neighbouring countries, would come on stream in June 2005.
The power pool project, he said, entails the development of transmission network that will interconnect the entire West African sub-region. "The availability of such a network will facilitate the export of power from countries with comparative advantage in power generation, e.g. hydro and thermal, to those with less advantage," he said.

Meanwhile, the NEPA electricity generating capacity has recorded a new and highest record level of 3,126.7 MW and is expected to exceed 4000 MW by December 2002. This figure represents an increase of 43.7 MW from the 3,083 MW generation capacity recorded in June 2002, and 1377.7 MW increase from the 1,749 MW recorded in March 2000, according to the Managing Director and CEO of NEPA, Engr. Joseph Makoju said.
Makoju at a briefing on NEPA's activities in Abuja also spoke on various issues spanning the authority's planned privatisation, funding, and its new monthly internal revenue generation capacity of N 4 bn, which though is an improvement from the previous N 2.5 bn record, still falls short of N 10 bn estimated requirement. NEPA's CEO also hinted at possible increases in tariffs, "with improved quantity and quality of electricity supply."
On the new generation capacity, Makoju noted that actual generation capacity is about 3,300 MW although the peak demand capacity met at about 7.45 pm on September 3, is 3,126.7 MW. Attributing the achievements to the many efforts at resuscitating the power sector, he warned that the tempo must be maintained and increased if further improvements and eventual goal of uninterrupted power supply is to be achieved.
"Honestly, if we are not proactive in the needs of the sector, in two years time, we will get back to where we used to be," he warned.

Makoju listed some of the investments made in the generation of power to include the rehabilitation of 18 generating units, the installation of eight brand new generating units in Afam and Delta II, with capacities of 276 MW and 150 MW respectively, as well as the Emergency Power procured for Abuja, providing an addition of 50 MW to the needs of the Federal Capital Territory.
Other initiatives include the introduction of private sector participation in power generation, such as the joint venture with Agip Petroleum for the installation of a 450 MW generation plant in Kwale and the 270 MW AES barge in Lagos, in partnership with the Lagos state government.
He also disclosed that discussions with Shell and AES are on going for a Rehabilitate-operate-Transfer (ROT) contract, while operations and management (O&M) contract for non ROT power stations are being proposed.

Investments in transmission were also listed to include the on going construction of 13 new 132 kV and 330 kV lines and sub stations, the reinforcement of sub stations, repair and rehabilitation of various transmission lines, and the separation of the 330 kV network into two islands to safeguard against total system collapse due to trip offs.
The NEPA boss, however, explained that this separation is temporary; as both islands would be interconnected as soon as rehabilitation works in the identified problem areas are completed. With respect to distribution, Makoju explained that 85 power transformers and 1,256 distribution transformers with accessories have so far been procured and installed, while more than 50 % of another 128 power transformers and 4,374 distribution transformers with accessories have been procured.

Furthermore, work has also been done on 260 faulty circuit breakers requiring replacement and/or maintenance. Despite the elaborate efforts, the NEPA CEO said that over 90 % of generation is from rehabilitated units, which are between 12 to 35 years old, and therefore of low reliability and low economic life replacement cycles.
He also observed that the transmission network is very fragile, a radial system and has insufficient redundancy. Noting that government funding to the sector is on the decrease, although reinforcement programmes to the transmission and distribution networks are yet to be concluded. Makoju, therefore, advocated "a proactive response" in order to avert the "imminent reversal" in about two years time.
These, according to him, would include Federal Government funding of new plants to increase capacity from 10 % to at least 40 % within the next two years, as well as the completion of transmission projects to "wheel improved generation and to avoid abandoned projects." He also called for NEPA's funding of distribution network reinforcement in partnership with private sector participants in order to ensure stable supply of power to end users.

Makoju said that NEPA's joint venture with Eskom, a South African power company, would culminate in a company called NESKOM. The new company which would be involved in making available "low cost communication links" using NEPA's fibre optics that are currently not being utilised to its maximum capacity, adding that it would serve as an additional source of revenue for NEPA's currently "precarious" funding situation.
Makoju, however, hoped that with improvements in revenue collection mechanism. NEPA's internally generated revenue (IGR), was expected to increase from its new record of over N 4 bn a month to N 6 bn by the end of the year 2002.
He, however, noted that it would still not be up to the estimated N10 bn a month required to meet the "basic recurrent expenditure" of NEPA. He disclosed that efforts at improving revenue generation include a numeration exercise to increase customer population, introduction of a metering scheme aimed at ensuring that all customers are provided with meters. "With improved quality/quantity of electricity supply it would be more feasible to implement small periodic increases in tariffs to facilitate full cost recovery," he said.

He saidthat the World Bank Transmission Development Project credit worth $ 100 mm was now active and would be applied to the establishment of a new transmission company, improving communication, grid metering and other grid strengthening projects. On power sector reforms, Makoju said that a newly created Corporate Planning & Strategy Sector is liasing with the various institutions responsible for the formulation and implementation of the unbundling of NEPA into 18 business units, as approved by the National Council on Privatisation (NCP).
He described as misconception, reports that the planned maintenance works by Nigeria Gas Company (NGC) would plunge the nation into blackouts, adding that there would be "organised rationing of power in certain areas during the period of the maintenance by NGC because the supply of gas to some power stations would be slightly disrupted.”
He further explained that the maintenance work has been structured to also afford NEPA the chance to carry out some routine checks on the affected stations. "We will not do it during the week. It will be at weekend and when it is happening any local area that will be affected will be informed," he said.

Makoju called on consumers to be patient and appreciative of the efforts being made to revive the power sector, even as he acknowledged that expectations might have been wrongly raised to expect a change too soon.
"It must be appreciated that the long period of neglect of the sector has made the funding requirements needed to revive the sector more colossal and that the resuscitation of the sector back to the desired level of providing predictable and stable power will take some time," he said.