ENERGY-NIGERIA: Private Sector Steps In To Boost Power Supply

By Toye Olori Reprint | | Print |

Toye Olori

AJAGURO-IKORODU, NIGERIA, Aug 26 1999 (IPS) - More than 300,000 inhabitants of this community, some 50 kilometres east of the commercial city of Lagos, have been without electricity for ten years.

Despite electric poles and wires, which criss-cross the narrow streets, the village remains in total darkness.

“This village has been in perpetual darkness for the past ten years”, says Shola Shotola, chair of the village’s Landlords Association.

Shotola recently wrote to the new Nigeria’s Minister of Power and Steel, Bola Ige, following a statement by the latter to reduce by 50 percent power outages in the vast West African country within six months.

“We are easy targets of armed robbers at night. Many people interested in settling in the area could not move in, years after completing their houses, while artisans who rent houses here are fleeing everyday,” Shotola told IPS this week.

Shotola blames the state-owned National Electric Power Authority (NEPA), which enjoys a monopoly in the country’s power industry, for failure to provide electricity in their area.

The power outages in Ajaguro-Ikorodu and other areas in Nigeria may, however, soon be a thing of the past as the government plans private sector participation to check incessant outages.

In his maiden press briefing, Ige promised to cut outages by 100 percent in two years and increase the maximum peak electricity demand to 2,500 megawatts within six months, through the new initiative.

Nigeria’s daily maximum electricity demand currently stands at 1,600 megawatts. Nigeria, with a population of about 110 million, generates 5,800 megawatts.

“Unless we have huge private sector investments we may not be able to take off as an industrial nation. We should encourage private investors interested in investing in the power sector to establish independent power plants so that we can actualise our vision,” NEPA’s Chief Executive, Hamzar Ibrahim, said early this year.

As part of efforts to reduce the hardships caused to residents of Lagos as a result of incessant power cuts, the government last week entered into a 300-million-dollar joint partnership with Enron Power Nigeria Limited to produce, using gas as a major raw material, 2,000 megawatts of electricity daily.

The project involves, in the interim, the mounting of 330 megawatts barge for emergency power supply within 52 days from the date of commencement.

Under the agreement, Enron will build and operate a new 560 megawatts gas turbine power plant. Besides, the company is expected to finance, build and operate a 280-kilometres, 24-inch offshore natural gas pipeline to supply the power plant.

The new initiative is expected to guarantee steady power supply for, at least, 20 years, according to government officials.

The first phase of the project, expected to be completed in 52 days, will generate about 20 percent of NEPA’s total electricity supply to Lagos. Although Lagos state requires 250 megawatts of electricity, only less than half of the required amount is currently available.

Lagos State Governor, Bola Tinubu, said commercialising NEPA and breaking its monopoly would reduce Nigeria’s unemployment rate by more than 50 percent.

“We have created a monster called NEPA. We need to break it into pieces of manageable segments and if broken, it will benefit the nation,” he said.

“The commercialisation of the NEPA is fundamental to elimination of poverty. For example, if you have energy generation companies independently and are competing with one another, can you imagine the number of employment that would be created?”, Tinubu asked.

“Apart from direct employment, artisans like hairdressers, welders, fabricators and carpenters would benefit greatly from a commercialised NEPA,” he added.

NEPA officials are, however, not convinced by the new initiative by the Lagos state government.

“We are still waiting to see the magic the state government hopes to perform. Right now, nothing has been discussed with us about the logistics of transmitting the power generated to end users,” says NEPA official who requested anonymity.

Nigeria, according to the advocates of privatisation, lost more than 1.4 billion US Dollars in the past ten years as a result of erratic power supply by NEPA.

Incessant power failures by NEPA and fuel scarcity has been blamed for huge losses to the nation and dwindling fortunes by industries in the past four years, causing social instability, and forcing a number of manufacturing industries to close down.

Industries, which survived closures during the past four years, sustained their operation by using private electric generating.