Tuesday, December 06, 2016 12:14 PM/ FBNQuest Research
The sabotage of the Forcados pipeline in February had a dramatic impact on electricity generation and also highlights why the FGN has a policy of encouraging diverse energy supplies.
Babatunde Fashola, the federal minister of power, works and housing, said in August that generation had declined by as much as 3,000 megawatts (MW) at one point. Yemi Osinbajo, the vice president, nevertheless maintained in October that 7,000MW is attainable in 2017, citing works in progress.
One high-profile project is Geometric Power’s in Aba, Abia State. The company is confident that its first plant, a 150MW facility, will come onstream within six months. In partnership with General Electric of the US and Orascom of Egypt, it then plans to build two further plants, each of 500MW, in the city.
Successful industrialization is dependent upon regular and adequate power supplies. Since Nigeria falls well short in this respect, the sector is, rightly, a priority for the FGN. It received N209bn of the total capital releases of N754bn made this year through to end-October.
The CBN has played a supporting role with its Nigeria electricity market stabilization facility, launched in 2014. It is available to generators, distributors, gas companies and service providers. The first disbursement of N64bn was made in February 2015 and the second of N55bn in May this year, marking 57% utilization of the facility.
The frustration for the FGN is that the pipeline of projects and initiatives is overshadowed by the sabotage, which explains its support for power sources other than gas.
Coal has a role in the FGN’s energy policy but Kayode Fayemi, the solid minerals minister, is adamant that mining licences are only awarded to companies with a coal-to-power programme. Nigerian Bulk Electricity Trading is preparing a suitable tariff. The FGN projects that coal will generate 1,000 MW by 2020 and will eventually supply 30% of the country’s energy mix.
The Nigerian Investment Promotion Commission (NIPC) has hosted talks on solar power in the north east between Germany’s LTI Re Energy and a local operation, NIGUS International.
A memorandum of understanding has been signed by the two companies, and the NIPC is confident that a power purchase agreement will follow. The partnership plans an N180bn (US$590m) investment in a solar farm and related infrastructure in Adamawa State.
Looking further ahead, the FGN is developing a nuclear power programme to generate 1,000 MW, rising subsequently to 4,000MW.