Wednesday, 07 December 2011
The Nigerian Electricity Regulatory Company (NERC) yesterday issued licences to 20 new power generation firms, a distribution company and the Nigerian Bulk Electricity Trading Company (Bulk trader) as part of the Federal Governments efforts to improve on power generation in the country.
Government expects to generate an estimated 6,105 megawatts of electricity within the next three years from the ventures of the licencees, beginning in the first quarter of 2012. Current generation levels stand at about 4,000 megawatts.
Industry watchers say that the licensing of the power generation firms, will progressively bring about cost and efficiency reliefs to existing businesses, encourage generation of new businesses and create more employment opportunities for teeming Nigerians.
They add that the move will make the products of Nigerian businesses more competitive in local and international markets, and hope that it will attract back to Nigeria, some multinational firms that have repartriated their businesses to neighbouring countries, as a result of high operational costs here. Industry analysts say that 30 percent of the cost of doing business in Nigeria is spent on providing alternative energy, on account of inadequate and erratic supply from the national grid.
Minister of Power, Barth Nnaji, speaking at the licensing ceremony, described it as a laudable step towards securing improved electricity access for Nigerians, while disclosing that the ministry had elected to provide a budget of N40 billion as take-off capital to both the Bulk Trader and Nigerian Electricity Liabilities Management Company (NELMCO) with each entity getting N20 billion, to help them begin operations in the industry.
Eight firms were granted off-grid generation licences, ten got grid connected licences, two companies got embedded generation licences while one got licence for a distribution network.
Meanwhile, the ‘Bulk Trader’, securing its official trading licence, can now commence business as an entity in the power sector, as well as perform its task as manager of the Federal Government/World Bank’s Partial Risk Guarantee (PRG) scheme. The expectation of over 6,000 megawatts is deduced from the proposed generation capacities of each of the 20 companies with a licence. Zuma Energy Nigeria Ltd,has disclosed plans to generate about 1,200 mega watts of power from its proposed coal-fired power plant to be located at Itobe, Kogi State. The plant will be the first of its kind in Nigeria when inaugurated.
Nnaji specifically tasked the new licensees to brace up to the challenges before them, reminding them that: “Government expects you to help move this sector forward because there is no other way we expect a leap frog in the sector, other than from the National Integrated Power Projects (NIPPs).
“It is easy to give licences but it is actually the quality of the companies that are given these licences that matters, because we have capacities from government’s existing power plants as well as a limit from NIPPs which is about 4,775 megawatts. Once we reach that point, that’s it, we close and allow for expansion and we can only help you rather than impede you in achieving success,” the minister added.
Nnaji, commending NERC’s transparency in the process, said, “I like to say that licences issued by the regulatory body are not dodged licences, and so we expect that you are going to help to transform the power sector by these licences.”
He further said, “One of the things government wanted to do from the start, is to see that we have a very high quality strong and independent regulatory commission and we have one now. For them to come through with the processes of issuing these licences today is commendable.”
He reminded NERC of its obligation to the Nigerian people, saying: “There are many things that the regulatory commission does but let me say that the act of licensing, which empowers you to go out there and do what is important in the delivery of electricity to the country is a very important act and you have to bear in mind that you have obligations with this empowerment.”
Earlier, the President of the Independent Power Producers Association of Nigeria (IPPAN), Jerry Gana, observed that on-going reforms in the power sector as well as the issuance of new licences to investors, suggests that government’s intention for the sector is genuine.
Gana said, “Bearing in mind the challenges that these licencees would have faced just a year ago, the rigorous processes initiated by NERC for this, as well as the gradual surmounting of obvious impediments to the operations of independent producers, we only expect to see the best in the sector.”
Some of the licencees for off-grid generation include Tower Power Abeokuta (20MW), Akute Power Ltd (13MW of renewal energy), Shoreline Power Ltd, Sagamu (9MW), CET Power Project, Sagamu and Ewekoro (7MW and 6MW respectively), Income Electrix Ltd (6MW), Energy Company of Nigeria (3MW) and Ilupeju Power Ltd (2MW).
For the grid connected licensees, Zuma Energy (1200MW coal power plant), Alaoji Generation Ltd (1,074MW), Knox J&L Energy Solutions (1,000MW), Olorunsogo Generation (750MW), Ogorode Generation (450MW), Azura Power West Africa (450MW), and Zuma Energy (400MW gas plant).
Others are MBH Power Ltd (300MW), Eleme Petrochemical Ltd (135MW) and Delta Electric Power Ltd (116MW). The embedded grid category has Geometric Aba Power Ltd (140MW tenure extension), Kaduna Power Supply Ltd (84MW), as well as a distribution licence to the Aba Power Ltd.