BUILDING A VIRILE FOUNDATION FOR NIGERIA’S POWER STABILITY
Special A Special Publication of XCEL INTERNATIONAL MAGAZINE April, 2014
022014
NIGERIA’S POWER INDUSTRY
...A Long Walk To Privatization
EDITO
International
Publisher/Editor-In-Chief Barth E. Emuekpere
Now that we have privatized
Editor Obinna Ebogidi
resounding adulation for the willpower it deployed to implement the Power Sector Roadmap it launched in August 2010.
Editorial Babafemi Omosehin Rev.Emma Ameh
Since the Roadmap was launched, government has shown enough commitment to its promise of providing stable power supply for Nigerians. It has religiously pursued the reform agenda by rehabilitating existing power stations, increasing generation capability with the NIPP Power Stations, improving the transmission capability and enhancing the operational and commercial performance of the distribution companies, as a run-up to the eventual privatization of the sector. This was the focus of the first part of this publication aptly titled: Nigeria's Power Ministry: On The Threshold of History.
Operations (Nigeria) Dare Adesanya - Kaduna Olawale Osolo - Abeokuta Business Development Akin Williams (Special Projects) Mohammed Ladan - North Weni Diffa - South South Foreign Operations Chief Otonye Igoni (UK) Ralph Odua +13474995559 (USA) Ossai Ngozi (South Africa) +27827070039 Woods Eyituoyo (South Africa) +27765599668 Photo Journalists Ini Ekpo Eke Okoro Ogechi Gift Golden IT/Web Operations Syswaves Digitech Services p Computer Graphics/Typeset Uzezi Elebe (Head) BUREAUX USA 100 Elgar Place,Apt. 17g Bronx NY 10475 USA, Tel: +13474999655 United Kingdom 3 Guildford Road, London, E6 5QS Tel: 0207 476 0804, Mobile: 0793 282 3036 South Africa Xcel Media SA (PTY) Limited. 130 Portobello Place, Camilla Lane Off French Lane, off North Road, Morningside, Rivonia - Sandton. Tel: +27727533060, +27827927278 United Arab Emirates African Restaurant Deira-Dubai XCEL Magazine is a periodical publication of XCEL Media Limited LAGOS 9 Seidu Ajibowu Street, off Toyin Street, Ikeja, Lagos Tel: 08037825667, 08098559998 SOUTHERN NIGERIA REGIONAL OFFICE 1st Floor, Left wing, 31 Aba Road (Opposite Union Bank) Port Harcourt Tel: 0805-5181009, 0816-2339596 Website: www.xcelmediaonline.com xcelmedia@yahoo.com xcelinternationalmagazine@gmail.com info@xcelmediaonline.com
CREDITS Inspiration, Wisdom and Strength - God Almighty
Special thanks - Amb. (Dr.) Godknows Igali (Perm Sec., Min. of Power) - Mr. Timothy Oludele (Director, Media MoP)
Barth E. Emuekpere Publisher/E-I-C
“Today, therefore, not only concludes legal transactions, it is a day of hope, a day of promise and a new beginning for one of the most vital sectors of our national economy” as captured in the speech of an enthusiastic President Jonathan at the formal handover of Share Certificates and Licences for purchasers of PHCN successor companies on Monday, 30th September 2013 in Abuja. The history of electricity supply in Nigeria dates back to 1886 when two power generating sets were installed to serve the colony of Lagos. Regrettably, we have continued to grapple with the problem of epileptic power supply, since then; with successive governments attempting, in futility, to fashion out plans and modalities for ensuring stable power supply. As futile as they were, such plans made little or no impact at salvaging the encumbered industry. It is worthy of note to recall that the journey to the reality which Mr. President celebrates today as “a new beginning for one of the most vital sectors of our national economy” started in 1999. Then, the National Council on Privatization (NCP) constituted the Electric Power Sector Implementation Committee. The committee was to study and review the nation's Power Industry with a view to liberalizing the sector, make it transparent and attractive to private sector investors. That was the genesis of this long walk to privatization which the nation celebrates today as a rebirth of a new power industry, expected to put an end to the era of chronic epileptic power supply and usher in an era of modern, efficient customer-focused, private sector-driven electricity supply industry. Whereas the Electric Power Sector Reforms Act became Law in 2005, it is regrettable that for several years, these reforms could not be implemented fully. It is for this reason that the Jonathan-led administration deserves
In this concluding part of the publication, we xray the ministry's other efforts at electrifying Nigeria as well as the 2013 government historic hand-over of the major power generation assets to the private sector which it, in the process, accrued over $2.5bn into the economy with other significant accomplishments in the sector. Now that we have privatized our power industry with transfer of ownership to about ten private Distribution Companies (DISCOS) and five private Generation Companies (GENCOS), it is expedient to note that the privatization exercise is not a guarantee of success in itself. It is not yet time for the Uhuru dance. Whereas it is true as Mr. President said, that we do not expect the sector to be revitalized overnight, it is also true that Nigerians have been patient for too long, and now in a hurry to see the gains of privatization of the power sector. They want to begin to see the opportunities and investment promised by proponents of privatization especially how it will impact on the socio-economic well-being of the people. If the expectation of the people will come any soon, then all hands must be on deck for the privatization to begin to yield the positive dividends. The government and the private owners must collectively midwife the process. Government on its part must ensure that the enabling environment is continually provided for the private investors. The ministry and regulatory authorities must re-orientate its staff on the new realities and responsibilities thrown up by circumstances of the change of baton from provision to supervision and regulation. On the part of the GENCOS and DISCOS, it is time to step up their game and justify the confidence reposed in them. They must work hard enough to prove skeptics wrong for this may be the only way to consolidate on this significant achievement in the sector and get the dividends roll down to the common man who has paid dearly for the absence of power to contribute his quota to national development. It is hoped that in the months and years ahead, we will have cause to say thank you to Mr. President for his foresight, will and commitment to see the reform through. Goodluck Nigerians!
LEGACIES
“...Things can only get better, from this point onwards”
I
t is with great pleasure that I welcome you all to this historic event, which is in every sense a milestone in our journey from a government-owned operated electricity sector to a private sector-driven industry.
“Today, therefore, not only concludes legal transactions, it is a day of hope, a day of promise and a new beginning for one of the most vital sectors of our national economy. We embark on a new journey, a journey that will usher us to a destination of enduring gain and fulfillment.”
Tor this Administration, today's ceremony is indeed a major step forward in our concerted efforts to ensure efficiency, competitiveness and best practices in the country's electricity sector. Let me from the outset refresh our memory about the genesis of the Electricity Sector Reform Process (ESRP), which has brought us to this special moment. We will all recall that in 1999 the National Council on Privatization (NCP) constituted the Electric Power Sector Implementation Committee (EPIC) with a mandate to undertake a comprehensive study and review of the entire industry.
March 2005, providing legal backing to the industry's reform programme. It was against the backdrop that I also launched this Power Sector Roadmap in August. Since then, we have not only made remarkable progress; we have accomplished the significant milestone that were outlined for the sector in the 2010 Roadmap. To provide the needed institution support, this administration reconstituted the Nigerian Electricity Regulatory Commission (NERC) NERC has been working assiduously to ensure that a balanced regulatory framework is in place as well as to protect both the investors and the consumers. Similarly and in recognition of the need to provide investors with the enabling environment for their resources, the Nigeria Bulk Electricity Trading, Plc (NBET) has also been put in place.
The effort was aimed at preparing the grounds for liberalizing the electricity power industry, attracting private sector investment and ensuring competition in the electricity market
This is also to provide the securitization that is key to driving power production efforts.
Following this, the Electric Power Sector Reform Act (EPSRA) became law in
In addition, we engaged the services of a management contractor, Manitoba XL
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LEGACIES Hydro International (MHI) of Canada, with the objective of reorganizing Transmission Company of Nigeria (TCN) into a technically and financially efficient, sustainable, stable, commercially viable, and marketdriven company. With respect to actual service delivery, I appreciate the fact that there are still a number of challenges that we are grappling with. But it is much comforting to note that significant progress has been made, with steady and sustained increase in national power generation capacity. I want to assure all our people that things can only get better, from this point onwards.
Going forward, this Administration is committed to providing all elements that are necessary for our private sector partners to succeed in providing Nigerians with Going forward, this uninterrupted power supply.
Administration is committed to providing all elements that are necessary for our private sector partners to succeed in providing Nigerians with uninterrupted power supply.
We are here today because of a power sector privatization process that has been adjudged by both local and foreign investors as transparent, wellorganized and fair. The process has resulted in the completion of transactions involving 10 successor distribution companies (DISCOS) and 5 Generation companies (GENCOS). Arising out of the successes recorded so far, efforts have recently commenced, to privatise the generation assets of the new National Integrated Power Project (NIPP) of the Niger Delta Power Holding company of Nigeria (NDPHC). Carefully, worked out measures are also being taken to address all other issues, particularly the resolution of labour-related issues. In partnership with labour unions, we have been able to come up with an outcome that is beneficial for all stakeholders. As earlier pointed out by the Minister of Power, the payment of all labourrelated benefits commenced in August this year, and is almost concluded as a condition precedent to today's event. It is important to say to our labour partners, who we know to be patriotic Nigerians that they should not nurse a feeling of displacement, but dwell on the tremendous possibilities that the revitalization of the sector holds for them and the future. I thank them for their partnering with the Government through the reform XL
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process and urge them to continue in this spirit for the greater good of all Nigerians.
To start with, the Nigeria Bulk Electricity Trading Company (NBET), the off-taker, has been provided with a capitalization of over $750 million dollars, positing it to carry out its mandate without financial constraints.
Arrangements are also on-going to ensure that the Nigeria Electricity Liability Company (NELMCO) is adequately funded, to assume all of the liabilities associated with the privatization of the PHCN successor companies, as well as other related liabilities
Various options are being explored for funding the Transmission Company of Nigeria (TCN), so that it is able to implement the projects that are key to stabilizing and expanding the transmission grid.
Power, Finance, and Petroleum Resources, and others that gave true meaning to the activities that kept the reform process on course. I applaud you all. However, I must remind you that the work is not over. Your staff must reorient themselves to play the needed new roles that have been assigned to them, as a result of the reform. They must be prepared to collaborate efficiently with our private sector partner; business can no longer be as usual; all the relevant Ministries, Departments and Agencies (MDAs), must be ready to work in a more determined, proactive and resultdriven manner. I will like to note that the reform effort was made much easier by the support that our country received from our friends and partners in various multilateral organizations and banks. There were also bilateral partners and foreign private sector organizations. To them all, we owe a debt of gratitude. To the Nigerian people, who have demonstrated such great patience and confidence, putting up often with darkness, noisy power generating sets, the related pollution, and the daily disruption in their lives, I say better days are coming.
The new Genco owners are inheriting We do not expect the sector to be signed gas supply and transportation revitalized overnight but we can all agreements, a new phenomenon in the look forward to a better time very soon gas-to-power industry, as we have seen in the thereby, moving the telecommunication and industry away from the To the Nigerian people, banking sector. prior status of best who have demonstrated endeavour supply and I am confident, that the such great patience and power transportation basis. sector will promise no confidence, putting up less, knowing the caliber of Accordingly, we will often darkness, noisy those who are taking over. maintain the agreed gas pricing policy in order to power generating sets, I congratulate our new e n c o u r a g e n e w the related pollution, and owners who have taken over investments in gas the engines and cables that the daily disruption in are expected to drive not s u p p l y a n d i n f r a s t r u c t u r e their lives, I say better just the electricity industry, development. but also the socio economic days are coming well-being of the nation. The implementation of the gas policy will Today, therefore, not only culminate in a willing buyer, willing concludes legal transactions, it is a seller structure to establish a fully day of hope, a day of promise and a market-driven environment. new beginning for one of the most vital sectors of our national economy. As we herald the handover of the successor companies to private We embark on a new journey, a investors it is important to journey that will usher us to a acknowledge the efforts, diligence and destination of enduring gain and commitment of all the Ministries, fulfillment. Departments and Agencies on Privatization headed by the Vice Dr. Goodluck Ebele Jonathan, GCFR President; the Federal Ministries of President, FRN
(Being Speech of the President at the ceremony where share certificates and licences for purchasers of PHCN successor companies were presented)
The History of our dear Country will remember this day... “The history of our dear country will remember this day and forever salute with deep appreciation, His Excellency's foresight, courage and determination. We are eternally grateful for your unparalled support to the power sector.”
I
am most delighted to welcome this distinguished audience to the occasion of the Formal Handing-over Ceremony of Share Certificates and Licenses to Purchasers of PHCN Distribution and Generation companies under the on-going reform of the power sector. The event, which we are witnessing today, is a major step in the effort of Government, in providing the nation with adequate power supply. The privatization of major components of the Nigerian power sector has been internationally recognized as one of the most ambitious reform programmes ever embarked upon by any nation in Africa and indeed around the world. As a matter of fact, when we started, many stakeholders were less than optimistic about the chances of success of this transaction process due to its scope and complexity. Issue of concern at the time included perceived investor apathy in a much troubled sector, expected resistance from organized labour and perceived incapacity of Government to fund the cost of severance. To the Glory of God this exercise is taking place, quite smoothly and largely concluded successfully. I am very glad to report, today that Nigerian investors have taken up the challenge of acquiring these generation
and distribution assets by partnering with credible international operators for the good of the nation. I am even more delighted to report the level of participation of Nigeria financial institutions which provided over 70 per cent of the needed funds for the acquisition of the assets. I understand that the international development partners accredited to Nigeria have coined a special phraseology for our process “simultaneous sequentially”. This, I suppose, means that this feat had entailed achieving parallel and serial results all together. To God be the Glory. As part of the reform, the Nigerian Electricity Supply Industry (NESI) has transformed into a regulated environment. Government will continue to ensure that best global professional and technical standards are maintained. We have also put in place all other support institutions to ensure the efficient functioning of the electricity market. These include Nigerian Electricity Regulatory Commission (NERC), transmission Company of Nigeria (TCN), Electricity Management services (EMS), Nigeria Bulk Electricity Trading Company (NBET), and Nigeria Electricity Liability Management Company (NELMCO). Specifically, NBET will continue to be strengthened and capacitated to fulfil its vital role as an off-taker. With financeable portfolio of Power Purchase Agreements (PPAs), a total of fifty-five (55) Independent Power (IPPs) have applied to NBET for PPAs. This number includes three (3) renewable energy IPPs, one coal generating IPR, and the rest are gasbased IPPs. Looking at all these, I should state that the XL
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LEGACIES conditions precedent essential for the declaration of the Transition Electricity Market (TEM) are substantially in place. These processes which are supposed to lead us to TEM are currently being subjected to quality and assurance review by NERC as required by law, prior to the expected formal declaration by my office This entire reform has been carried out ensuring that the welfare of the PHCN workers was fully taken into consideration. It is in this respect and after months of negotiation that we reached agreement with the Labour Unions on all pertinent issues. Accordingly, out of 47,614 PHCN workers who were identified, we have completed the biometrics capture and related validation of 45,156 workers. As at today, the severance benefits of majority of that number have been paid while others are being processed. The payment of severance and pensions will continue throughout the month of October. I should add that the slight delay in completing all the payment is due to the large number of workers, large sums involved, and the need to take all needed caution to ensure proper implementation before the eventual physical hand over of the companies.
These successes would not have been possible without Mr. President Dr., Goodluck Ebele Jonathan's personal commitment and political will to deliver on all aspects of the Transformation Agenda. The history of our dear country will remember this day and forever salute with deep appreciation, His Excellency's foresight, courage and
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We also thank His Excellency, the Vice President, Arc. Mohammed Namadi Sambo, GCON, for his personal interest in the work of the Ministry of Power, and the sector as a whole. The way and manner in which His Excellency, the Vice President, painstakingly guided and steered the work of the National Council on Privatization (NCP) in the Power Sector Transaction Process (PSTP) is directly responsible for the successful outcome, which we see today. I would like to thank my predecessors in office, some of whom for their candour and purposeful services to our country and for charting the course that we are celebrating today. I want to thank all other collaborating Ministries, Department, and Agencies for their support, spirit of dedication, and teamwork. I want to thank the Labour Unions. In respect, I want to thank specially the National Union of E l e c t r i c i t y Employees (NUEE) an d S en ior staff Association of E l e c t r i c i t y Employees (SSAEE) and allied companies for the firm but collaborative manner in which they worked with Government this far.
“God said: “let there be light” and of a certainty there will be light in Nigeria for all and sundry.
I want to assure you all that the Ministry has repositioned itself toward providing effective overall leadership for the sector and facilitating investments with special attention on the development of the National Grid, Greenfield IPPs, Renewable Energy and Rural Access to Electricity Programmes. The Ministry and its agencies would also continue to provide oversight towards ensuring that best technical and regulatory standards are complied with by all stakeholders.
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determination. We are eternally grateful for your unparalleled support to the power sector.
Let me not forget my able team in the Federal Ministry of Power, led by the Permanent Secretary Ambassador (Dr) Godknows Igali, for their continued hard work, dedication, and encouragement through this process. I charge them to be prepared, because in the days ahead, much more will be needed of them. May I also thank our Development Partners, especially the Nigeria Infrastructure Advisory Facility (NIAF) under the UK Department for International Development (DFID) for the invaluable technical and resource support they provided to the power sector of Nigeria. NIAF has been instrumental in providing and transferring global best practices standards, as well as preferring strategic and institutional advisory to sustain and enhance the power sector reform agenda. Let me restate that today's ceremony
is only a formal handover of all needed ownership certificates and licenses. However, physical takeover of assets will be effected later in the course of the month of October, as we fully discharge our responsibilities to the remaining workers of PHCN. I wish to conclude by once again congratulating the investors taking over ownership of the PHCN successor companies in distribution and generation. With the transfer of ownership to the successor companies, I wish to renew our call on the new owners to expeditiously embark on the rehabilitation and reinforcement of the assets in line with the business plans submitted and discussed at the various stages of this process. Finally, by the activities of today, we are celebrating: i) The courage, the dexterity of purpose, and the commitment and transformational leadership style of our leader, President Goodluck Ebele Jonathan, GCFR. ii) The realisation of a longstanding dream of privatisation, which has shattered the erstwhile inertia and voiding the predictions of the prophets of doom. iii) The coming of age of Nigerian financial institutions in funding mega-projects that were previously considered too big for Nigerian institutions. iv) The maturity and patriotism of our Nigerian investors and industrialists in capturing this great opportunity and not allowing the ghost of inaction that prevailed during the telecoms privatisation to hunt them. v) Robust faith in the Nigerian Nation and in Project Nigeria by our compatriots and the global community. The challenges ahead and the numerous unavoidable teething problems might appear enormous, but they will be surmounted speedily as we synergize to get Nigeria on the fast-track of industrial and economic development through this process. If you insist on calling the challenges enormous, permit me to coin the term MEGANORMOUS for the opportunities there in. God said: “let there be light” and of a certainty there will be light in Nigeria for all and sundry.
Being Minister of Power, Prof. Chinedu Nebo’s Speech at the Formal Handover Ceremony on Monday 30th September, 2013
At the Zungeru Hydro Electric Project
Building a Virile Foundation For Nigeria’s Power Stability T
he history of Electricity supply in Sector Reform Roadmap. Ironically, Nigeria dates back to 1886 when It is against this background that Africa's most populous country has one two Power generating sets were President Goodluck Jonathan has of the continent's lowest per capital installed to serve the colony of Lagos. made power privatization his main power supplies, with half of the By 1951, the Act establishing the priority. He has said at various fora that 160million people off the national grid. Electricity Corporation the ongoing divestment of Nigeria (ECN) was programme is enacted. This was irreversible and in top followed by another Act Prof. Nebo & Amb. Igali, taking power to the rural populace gear. There is no doubt establishing the Niger that providing Dams Authority (NDA) affordable and reliable in 1962 to develop electricity to all citizens hydroelectric power. of Nigeria is not The merger of the two negotiable and a organizations in 1972 critical national goal of created the National t h e F e d e r a l Electric Power Government of Nigeria, Authority (NEPA). as a major part of the Between 2001 and Transformation 2005 changes to the Agenda of Dr. National Electric Power Goodluck Jonathan. Act removed the monopoly status Little wonder that upon granted NEPA over assumption of office by g e n e r a t i o n , t h e c u r r e n t transmission, administration, a distribution and decision was taken to m a r k e t i n g o f begin, once again, Also, daily blackouts have forced electricity. implementing the reform program, as companies operating in the country to spelt out in the NEPP and EPSRA. rely on diesel-fired generators, with the Indeed, this was done to pave the way Further, in August 2010, a Roadmap adverse effects of pushing up for liberalization and increase for Reform in the Power Sector, which production cost by up to 40 percent and efficiency, but this could not evinces the Federal Government of jeopardizing the government's sociomaterialize until 2013 under the Nigeria's desire to implement the economic goals of alleviating poverty, President Goodluck Jonathan Power reform program as stated in the NEPP creating jobs and wealth. XL
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LEGACIES
Chief Matthew Uwekwe, Hon. Mohammed Wakil, Prof. Nebo & Amb. Igali and EPSRA, as launched by the President. In the foreword to the Roadmap Power Sector Reform (2010) shortly after assuming office, President Goodluck Jonathan said: "The availability of reliable electric power to the homes and businesses of our citizens has been one item in our national life that we have approached with so much hope and yet experienced so much frustration over the past decades. …"As President and Commander-in-Chief of the Armed Forces, I and my Vice President, Arc. Namadi Sambo, are conscious that what we do with the Nigerian electricity supply industry will go a long way in determining whether Nigeria remains in darkness or joins the rest of the world in the race for development," stressing, "Our commitment is to bring an end to our nation's stunted growth and usher in the fresh air of prosperity by pursuing a new era of sector-wide reform which is driven by improved service delivery to every class of customers in the Nigerian electricity sector." The roadmap outlined the administration's commitment to accelerate the pace of activity with respect to reforms already mandated under the EPSR Act and, at the same time and in support of this, a renewed drive to improve on short term service delivery.
Prof. Nebo (C) Amb. Igali (r) with a German Investor
In developing the Roadmap, government built on the solid foundation laid down in 2001/2002 by the adoption of the National Electric Power Policy, and in 2005 with the promulgation of the Electric Power Sector Reform Act. For Prof. Chinedu Nebo, Minister of Power, “This Roadmap heralds our advance to the final and very important stage in the reform process. This is the stage where we ensure that the fundamental changes to the ownership, control and regulation of the sector envisaged by the legislation are achieved and the downstream benefits are realized" The Presidential Task Force on Power set up by the president is the engine room that drives the vision of the PACP. The Task Force had the mandate to develop the Roadmap and provide monitoring to ensure effective implementation of the plan. Their activities introduced a greater degree of transparency to the way in which the reforms are implemented and greater accountability on the part of those responsible. “In the same way that the reforms in the telecommunications sector paved the way for the benefits we all enjoy today”, government maintained that “with diligent implementation and meticulous application of what this Roadmap provides, the nation would see an end to the chronic electric power supply shortages we know too well, and witness the birth of a modern, efficient,
customer focused, private sector driven electricity supply industry.” Flying from that platform, the government of President Goodluck Jonathan under the supervision of the Minister of Power, Prof. Chinedu Nebo has through its agencies the Bureau of Public Enterprises (BPE), the National Council on Privatisation (NCP) and the Nigerian Electricity Regulatory Commission (NERC) made concerted efforts geared towards engendering a power privatization programme that is not only enduring, but also transformational. As widely reported, President Jonathan not only insulated himself from the entire process of selecting potential investors in this all-important sector of the economy, he charged the NCP, BPE and NERC to ensure that whoever emerges the preferred bidder for any of the eleven Distribution Companies (DISCOs) should be the best and most credible. The Director General (DG) of BPE, Ms. Bolanle Onagoruwa once noted that the objectives of the privatization of the power distribution companies include improving efficiency by increasing collections, reducing technical/nontechnical losses, reducing costs, increasing access to electricity, improving infrastructure through private sector investment, ensuring fair tariffs to all end-users, increasing commercial viability of the power sector, and improving customer service.
...With Japan Ambassador on upgrading Nigeria’s Transmission capacity
...Admiring a Power product from China XL
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country's power sector. She has repeatedly pointed out at different fora that the selection of t h e D i s t r i b u t i o n Companies,Investors and Operators would evolve through three key stages: the Expression of Interest (EOI) stage; the Technical and Commercial Bids stage; and two-step bid evaluation process: (i) technical and (ii) commercial. In the words of the BPE DG, “The bidder who passes the technical evaluation and offers the highest discounted value of ATC & C will be designated the preferred bidder.� The commercial bids were duly and publicly opened on the 16th day of October, 2012 and preferred bidders emerged through a process that was not only transparent, but also unequivocally credible with the following manifest indices of due process: Teeming consultants worked round the clock to ensure that every bidder was given a fair shot at winning the bids; Pre-qualified bidders were given access to the virtual data room from September 1, 2011 to the proposal submission date of 31st July, 2012; Pre-qualified bidders were allowed to visit the DISCOs and physical data rooms that were located within the franchise area of each Distribution Company; and The debt profile of bidders was subjected to strict and rigid scrutiny to ascertain their suitability. The very accountable and transparent manner through which the preferred bidders emerged in no small measure gave the ordinary Nigerian a ray of hope that better days are not only coming, but already here via a transformational revolution that seeks a turnaround in the
There were challenges with the process, but the Presidency and the Minister of Power appeared quite determined to see it through as the Federal Government has risen up to many of the challenges and made compromises here and there in a bid to encourage private sector investments in the sector. Government also gave prospective investors the comfort of acquiring only assets and no liability although many of them would be buying equity in already existing companies with assets and liabilities. Not many stakeholders believed in the survival of the programme. In fact, many doubting Thomases, including the World Bank and a few other multilateral donor institutions, were skeptical over BPE's ability to pull through the power privatization process. They even cautioned the BPE against its privatization strategy on the premise that the Nigerian financial system lacked the depth to support and finance the acquisitions. Obviously, what they did not bank on was Nigeria's ability to throw up surprises when it mattered most. Besides, never in the history of Nigeria's privatization programme has the federal government generated so much as privatization proceeds in one fell swoop as the result of the process has shown. Today, Nigeria has officially handed over legal control of 15 state-owned electricity companies to their new owners, capping a $2.5bn privatization process that has raised hopes of an end in sight to years of chronic power shortages.
Prof. Nebo, Slovak Amb. to Nigeria, Miroslar Hacek & Amb. Igali
Sen. Philip Aduda, Prof. Nebo, Alh. Ibrahim Waziri, Hon. Patrick Ikhariale & Amb. Igali
...With Emir of Zazau, Alh. Shehu Idris at his palace
True to its promise, the President Goodluck Jonathan-led federal government completed what has been described as one of the largest privatization exercises in the world by handing over five (5) generation companies (GENCOs) Continued on Pg 12
Welcoming German Ambassador to Nigeria, Mrs. Wenzel
Prof. Nebo and Amb. Igali with some foreign investors
President Jonathan with new owners of GENCOS & DISCOS
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LEGACIES
PROJECTS
Geregu 434 Megawatts Power Plant
Sapele 451 Megawatts Power Plant
Omotosho 415 Megawatts Power Plant Ariel view of Olorunsogo Power Plant
Olorunsogo 676 Megawatts Power Plant
Gas Pipeline Project
Ihovbor Simple Cycle 451 MW
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Omoku 225 Megawatts Power Plant
PHOTOSPREAD
2x15MVA 33/11KV Injection Substation At Apo, Abuja
Alaoji (961) Megawatts Power Plant
1 X 15 MVA 132/33KV Transmission Station Ibadan
Calabar (561) Megawatts Power Plant
2x60 MVA 132/33KV Transmission Station Karu, Abuja
Egbema 338 Megawatts Power Plant 60 MVA 132-33 KV TRF New Haven, Enugu
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LEGACIES LEGACIES
AT THE NIGERIA POWER FINANCING CONFERENCE ON FEB 17th 2014 IN ABUJA
and eleven (11) distribution companies (DISCOs) to their new owners. The private investors had completed payment for the utilities on August 21, 2013, according to the privatization timeline following the launch of a power sector roadmap in 2010 by President Goodluck Jonathan as a follow-up to the reform process which began in 1999. Consequently, the Nigerian power sector has moved from an inefficient state-owned monopolistic industry to a private sector-driven competitive electricity market, after 14 years of painstaking effort by successive governments to reform the industry. The handing over of the 16 power firms unbundled from the now defunct Power Holding Company of Nigeria (PHCN) to their new owners took place peacefully across the country, contrary to fears that electricity workers might disrupt the exercise over unpaid severance benefits. Speaking recently, the Permanent Secretary of the Federal Ministry of Power, Amb. Godknows Igali confirmed that the implementation committee has resolved all contentious issues involving electricity workers and promised that in a short while; at least over 38,000 workers would have had their payments effected. He blamed the few hiccups experienced on the large number of people involved, adding that Government has enough fund for the process, but was careful to ensure that money was not paid into wrong accounts. At the end of it all, the Distribution companies (DISCOS) which were handed over the investors are: Abuja Disco to Kann Consortium Utility Company Ltd., Enugu to Interstate Electrics Ltd., Jos to Aura Energy Ltd., Benin to Vigeo Power Corsortium, Eko to West Power and Gas, Ikeja to
NEDC/KEPCO, Port Harcourt to 4Power Consortium, Kano to Sahelian Power SPV Ltd., while Integrated Energy Distribution & Marketing Company Ltd., took over both Ibadan and Yola Discos.
Vice President, Namadi Sambo addressing participants
Some private investors receiving their Certificates
A cross-section of participants
For the Generation Companies (GENCOS), Kainji and Jebba Power Stations were taken over by Mainstream Energy Solutions Ltd., While Ughelli Power Station was taken over by Transcorp/Woodrock. Shiroro Hydro Power Station was handed over to North South Power, while Amperion and NEDC/KEPCO took over the operations of Geregu Power Station and Egbin Power Station respectively. "With the successful handover to the private investors, October 2013, without doubt, a seismic shift has occurred in the Nigerian Electricity Supply Industry (NESI) that will be impossible to reverse," writes Juliet Alohan, Patrick Ochoga, Chika Izuora and AchorAbimaje in the article NIGERIA: FG Limits Role, As Private Owners Take Over Power Sector As Chairman of the NCP Technical Committee Atedo Peterside put it, the centre of gravity in the power sector has shifted from the government to the private sector. Putting his comment in perspective, what Peterside meant was that the management and operations of the power sector have transited from an inefficient, corrupt public sector to a much more nimble, profit-driven private sector. As the electricity supply industry evolves, analysts are confident that the investors who have borrowed extensively will come out kicking and screaming to force the hand of the federal government to meet its own end of the bargain.
Dr. Ngozi Okonjo-Iweala, Ambassador Igali & others
Credit must be given to President Goodluck Jonathan, NCP, BPE and NERC for staying the course
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Many more MOU
AT THE 4TH NIGERIA INTERNATIONAL POWER EXPO & CONFERENCE
as far as the power sector reform and privatization programme is concerned. They have collectively pulled off the unexpected and proved the naysayers wrong. Judging by the antecedents of the telecom sector vis-Ă -vis whats obtainable today, one may not be wrong to opine that in a few years from now, electricity consumers and the Nigerian economy as a whole will be the better for it. At the handing over of Abuja Disco to its new owners, Kann Consortium, Minister of Power Prof. Chinedu Nebo, who represented Vice President Namadi Sambo, stated that the Ministry's role had been reduced to that of oversight functions and ensuring that government policies were implemented through the
regulatory agency. He added that the ministry would also now focus on championing the development of alternative energy such as large hydro, solar and wind energy as well as vigorously pursue government's rural electrification agenda. "Nevertheless, let me state clearly here that both the Nigerian Electricity Regulatory Commission and the BPE will continually monitor the operations
of the successor companies and would not hesitate to sanction any core investor that does not deliver on the performance agreement that was executed with the government," he added, advising the new core investors to abide by the agreements they signed on the management of power assets. While President Jonathan has by no means claimed to be a paragon of excellence, he however, deserves to be heartily commended for this singular achievement that will serve as a progenitor of a more robust privatesector driven power distribution market. Whereas he gets the overall accolade of this transparent process, we must not fail to c o m m e n d t h e indomitable effort, strength of character, and seriousness of purpose exhibited by the BPE, the NCP and the NERC for refusing Continued on Pg 16
Operation Light up Nigeria- Solar Panels and Batteries for Durumi Community
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LEGACIES
AT THE THE FORMAL FORMAL HANDOVER HANDOVER OF OF SHARE SHARE CERTIFICATES CERTIFICATES AND AND LICENCES LICENCES AT FOR PURCHASERS PURCHASERS OF OF PHCN PHCN SUCCESSOR SUCCESSOR COMPANIES COMPANIES IN IN ABUJA ABUJA FOR
President Jonathan (centre), Vice-President Namadi Sambo (left), Prof. Chinedu Nebo (HMP) & Sen. Pius Ayim (SFG)
President Jonathan presenting Certificates to Mr. Femi Otedola
Vice-President presenting Certificates to a successful bidder
President Jonathan addressing the GENCOS & DISCOS
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President Jonathan presenting Certificates to varous companies
Chief Emeka Offor receives Certificate on behalf of his company
Chairman, KANN Consortium, S. Malami displays company certificate
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LEGACIES
Unveiling the Ministry’s Operation Light Up Nigeria project to be influenced by the popular “Nigerian factor” sentiments, the evils of the past privatization process, and manipulation by prospective bidders. At the handover Prof. Nebo had also said “I am very glad to report, today, that Nigerian investors have taken up the challenge of acquiring these generation and distribution assets by partnering with credible international operators for the good of the nation. I am even more delighted to report the level of participation of Nigerian financial institutions which provided over 70% of the needed funds for the acquisition of the assets.” “We have also put in place all other support institutions to ensure the efficient functioning of the electricity market; these include The Nigerian Electricity Regulatory Commission (NERC) Transmission Company of Nigeria (TCN), the Nigerian Bulk Electricity Trading Company (NBET), Nigeria Electricity Liability Management Company (NELMCO) and Electricity Management Services (EMS), Nigerian Bulk Electricity Trading Company (NBET), and Nigeria Electricity Liability Management Company (NELMCO)
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Pro. Nebo, Amb. Igali & others with foreign investors
Specifically, NBET will continue to be strengthened and capacitated to fulfill its vital roles as an off-taker. With the financeable portfolio of Power Purchase Agreements (PPAs), a total of 55 Independent Power (IPPs) have applied to NBET for PPAs. This number includes 3 renewable energy IPPs, one coal generating IPR and the rest are gas-based IPPs. Looking at all these, I should state that the conditions precedent essential for the declaration of the Transition Electricity Market (TEM) are substantially in place. These processes which are supposed to lead us to TEM are currently being subjected to quality and assurance review by NERC as required by law, prior to the expected formal declaration by my office”. At this point, the entire requirement for the Honourable Minister of Power, Professor Chinedu Nebo to declare Transitional Electricity Market (TEM) have been met, so the sector is prepared to usher in fully the new and improved power sector. Going by Government's time schedule,
the Nigeria power sector reform roadmap is set to enter the next crucial phase the Transitional Electricity Market (TEM) stage for the commencement of a fully contracted electricity market mode under an anticipated robust commercial and technical regime. The 3 condition precedents (CPs) for TEM to be declared are the metering of the grid interface points; testing of Market Operators settlement Systems and Processes; and the constitution of a Dispute Resolution Panel (DRP). In preparation for the TEM, therefore, the Honourable Minister of Power in collaboration with NERC has commenced the process of constituting the Dispute Resolution Panel for the Nigerian Electricity Supply Industry (NESI). The constitution of the DPR is a condition precedent for the new private sector led electricity sector. That notwithstanding, government is also keenly exploring other means of power generation. In a speech delivered by Prof. Nebo at the 3rd Nigerian Alternative Energy Expo (NAEE2013), he pointed out that in furtherance to
AT THE COMMISSIONING OF GEREGU 434MW GAS POWER STATION
President Jonathan commissions Geregu Gas Turbine the reform act to meet the target of the vision 20:20:20 in which it targets a generation capacity of 40,000MW, Nigeria now seeks a diversification of a wider energy supply mix of the Nigeria energy sources. He said Nigeria is taking various measures in implementing renewable energy/energy efficiency programs to increase the energy mix, in accordance to the United Nations General Assembly's commitment to the Millennium Development Goals. As it were, efforts are being made to explore various renewable and alternative energy sources for viability in producing electricity. Alternative energy policies are being developed for future and effective takeoff of the renewable energy/energy efficiency in Nigeria. Favorable tariffs and structures are being put in place to encourage foreign and private investors. The Federal Ministry of Power (FMoP) is in the process of embarking on some novel initiatives in which it intends to provide a practical, affordable and realistic access to electricity to a majority of Nigerians living in the rural areas. The FMoP takes advantage of the fact that Nigeria is blessed with abundant natural resources Vis-a- Vis wind, solar, dams, tidal waves, etc. The Ministry has also reached out to willing Nigerian friends interested in helping the country surmount its electricity woes.
The Ministry published Power Focus reports in its December 2013 edition that The Nigerian Government has expressed gratitude for the planned assistance coming from the French in the area of capacity building for the nation's power sector and pledged support in all critical areas of training offered by the National Power Training Institute of Nigeria (NAPTIN). The report quotes Prof. Nebo as saying he is excited by the readiness of the French to fill the huge training deficit using its expertise in the various levels of engineering expertise. He said that there is suppressed demand for electricity in Nigeria; hence there are abundant opportunities for French companies to invest in various power projects. In another development, the Governments of Nigeria and Japan have pledged to co-operate in tackling the hiccups in the transmission capacity of the electricity sector in Nigeria. With the recent handover of the g e n e r a t i o n a n d distribution components of the sector to private firms which bought them, following the unbundling of PHCN, FG is now left with only the transmission aspect, which has since been concessioned to Manitoba Hydro
Geregu Gas Turbine
International of Canada. Again, the Honourable Minister of Power has also signed a memorandum of Understanding with the Chinese Xian Electric Engineering Company XD in order to improve the nation's transmission capacity under the supervision of the Transmission Company of Nigeria (TCN). All these are beginning to pay off as some states are already enjoying the gains accruing from the President Goodluck Jonathan transformation agenda in the power sector. Recently, the Governor of Benue State, Dr. Gabriel Suswam expressed happiness that his State will soon experience socio-economic boom courtesy of the newly completed 330KVA power
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Gov. Suswam & Bello Adoke (AGF) at the commissioning
LEGACIES
COMMISSIONING OF THE 2X60 MVA 132/33 KV TRANSMISSION STATION IN KARU
Prof. Nebo cuts the tape
Prof. Nebo & Amb. Igali (L & R) listens to the briefing transmission line. According to him, economic activities will experience a boom as small scale industries and other agro-based end-users of electricity experience steady power supply linked with the Federal Capital Territory
Inspecting the computerized Control Room
iii. Handing over of TCN to Manitoba Hydro International for management contract concluded. Schedule of Delegated Authority (SODA) given to Manitoba.
vii. NELMCO was established in 2010 to assume and manage the assets, liabilities and other obligations that could not be earlier transferred from PHCN to any successor company.
iv. NERC has been reconstituted, strengthened and now fully operational.
viii. Resolution of labour issues is almost completed and payment of severance package has commenced.
Meanwhile a fact sheet from the Federal Ministry of Power listed the following as major achievements recorded as benefits of the implementation of the Power Sector Reform Roadmap of the President Goodluck Jonathan administration to date as follows: I. Bidding and selection of preferred bidders for the 10 Distribution Companies and 5 Generation Companies was concluded in November 2012. Contracts have been signed and bidders have already made initial payments of 25% of the bid price ii. P r e s i d e n t i a l P o w e r R e f o r m Transaction signing and presentation of certificates for payments of initial deposits to successful bidders of Discos and Gencos by Mr. President was performed on 22nd April, 2013.
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ix. Investor confidence evidenced by increased investment and signing of MoUs. Most recent being the MoU signed with Power China Corporation to develop 20,000 MW of Thermal Power Plants with associated substations and transmission lines up to 10,000km. x. Sale of 10 power plants by the Niger Delta Power Holding Company Ltd commenced. Control Room of APO Injection Substation v. NERC launched MYTO 2 cost reflective tariff in June, 2012, which is now operational. vi. NBET Plc was incorporated in July, 2010 and is now in operation as creditworthy off-taker.
The challenges facing the electricity sector in Nigeria are enormous, but this administration, beyond doubt, appears equally convinced that the opportunities in the sector are enormous. Therefore, the federal government is committed to creating the enabling environment that would incentivize private investors to take on these challenges.
PROMISE FULFILLED: SHAPE SOLAR ENERGY POWER STATION SPONSORED BY THE MINISTRY OF POWER When President Jonathan promised the people of Shape, a suburb of Abuja, Electricity Supply, though they were not on the National Grid, it was to them the usual political promise meant to secure votes.
So when on January 13th 2014 he visited the newly commissioned Solar Energy Power Station at Shape Community as part of the LIGHT UP RURAL NIGERIA Project, it was joy unlimited.
Full of appreciation the community leader and the entire people of Shape thanked Mr President for another PROMISE FULFILLED. To the people of Shape, it was the beginning of a new era in their annals
A zoom shot of the Solar Panels President Jonathan acknowleding cheers from the people of Shape
Stakeholders welcoming Mr. President Mr. President operates the system
“Thank You” Mr. President More greetings
...Together We Can
P wer PROTECT
Government would not tolerate vandalism because of its negative impact on the sector and economy; vandals would be treated as economic saboteurs. Nigeria’s Vice President
There are some acts of vandalism going on the power sector, we do not know by who, it is unthinkable that citizens of the country would again go to vandalise any asset that is designed to provide a basis for comfort and economic empowerment of this country. Electricity touches on everything, for children to read when they come back, and do their homework. For people to power their small business, and so on. That is why it has become the central demand of Nigerians and that is why the president has focused on this. So we must rise up as Nigerians and say no to Vandalism. These are some of the things that we must plead with ourselves as Nigerians and say please, so not cut power lines, do not take copper cables that have been laid. Nigeria’s Minister of Finance and Economy
The situation has gotten out of hand with the country continuously grappling with the activities of vandals and the enormous challenge of delivering stable electricity to Nigerians. Occasional vandalism result in hardship due to power rationing but with time Nigerians will mature to a level where we would start regarding infrastructures put in place by government for the empowerment of the people as a sacred trust that should not be abused. Nigerians must see and protect power infrastructure as their own. Nigeria’s Minister of Power
Nigerians are good listeners; with proper awareness on the damages and loss the act of vandalism causes our great Country and also the risk and danger involved. They will restrain and likely Join the awareness campaign. Perm sec., Nigeria’s Ministry of Power
We call on all Nigerians for information sharing and surveillance in the course of protecting power equipment, NSCDC had been protecting infrastructure for all the sectors of the economy since its inception. NSCDC Commander
DO N DON ’T'T SABOTAGE SABPO OWT AGE ER
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NISTRY O MI F PO
AWARENESS CAMPAIGN AGAINST ELECTRIC WIRE, CABLE VANDALIZATION AND POWER SABOTEUR
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P OWER JOIN THE CAMPAIGN
POW ER
Info: +234 7083571483 protectingpower@yahoo.com
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PROTECTING