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FG sets $35bn investment target for Gencos


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Nigeria

IMAGE: Kainji Dam »

Nov.11.2013

 

The enormity of the task before the new investors in the power sector is gradually sinking in with the government setting an annual investment target of $3.5bn for the generation companies over a 10-year period, DAYO OKETOLA writes.

 

The Federal Government, through the Bureau of Public Enterprises, has said the power generation companies will be required to invest at least $35bn over the next 10 years to increase capacity.

The Director-General, BPE, Mr. Benjamin Dikki, in a document made available to our correspondent, said the government’s aspiration to meet the Vision 2020 target by generating 20,000 megawatts of electricity required an annual investment of $3.5bn over the next 10 years.

When put together, this will amount to $35bn over the 10-year period.

 “The ambition of the Federal Government is to meet the Vision 2020 target of 20,000MW, which requires an investment in power generating capacity alone of at least $3.5bn per annum for the next 10 years,” Dikki said.

According to the BPE DG, the new power investors are contractually obligated to inject into the system the necessary investments they have committed themselves to.

“We have made the bidders contractually required to bring in this investment; therefore, the BPE and the Federal Government will be following up on this continuously,” he said.

The Federal Government had on November 1, 2013, handed over to private investors the successor companies of the defunct Power Holding Company of Nigeria in what has been touted as a complex but well coordinated privatisation exercise.

The Ughelli Power station was handed to Transcorp; Geregu to Amperion; Kainji Hydropower station was handed to Mainstream Energy Solutions Limited; while the Shiroro Hydropower station was handed over to North South Power Company.

CMEC/Eurafric Limited, the preferred bidder for the Sapele power station, has yet to complete the 75 per cent balance of the price of the power plant.

The National Council on Privatisation presided over by Vice-President Namadi Sambo had recently approved CMEC/Eurafric’s application for an extension of time to complete the payment for the power firm. The consortium has already paid $180m out of the total sum of $201m for the power station.

Dikki recalled that the BPE had recently concluded the evaluation of proposals for the Afam Power Plc and Kaduna Electricity Distribution Company, the last generation and distribution companies carved out of the defunct PHCN.

The Taleveras Group, the preferred bidder for the Afam power station, is also expected to inject fresh investment into the system.

Kainji Hydropower station has an installed capacity of 760MW but the available capacity as of September 2013 was 147MW.

The document showed that if the $3.5bn annual investment was injected into the generation companies, Kainji would be able to increase its available capacity to 1,338.4MW in the next five years.

According to the document, the 600MW Shiroro hydropower station is also expected to increase its available capacity from 450MW to 600MW within the same period; the Egbin power station will increase available capacity from 718MW to 1,320MW; while the 726MW Afam IV and V plants will increase their available capacity from 42MW to 440MW.

Also, the 720MW Sapele power station is expected to improve from zero capacity to 400MW, while the Ughelli power plant will rump up capacity from 272MW as of September to 670MW in the next five years.

With the right investment, the document stated that the Geregu power station would have its available capacity increased from 110MW to 414MW.

“Investments in the power sector will take time in order to achieve results. Construction of new generation capacity to achieve most of the results envisaged will take two to five years,” Dikki said.

According to the document, the Multi Year Tariff Order II of the Nigerian Electricity Regulatory Commission estimates that the generation capacity will be 7,500MW by the end of this year; 9,061MW in 2014; 10,071MW in 2015; 10,571MW in 2016; and 10,571 in 2017.

In order to further transform the power sector and increase generation capacity, the 10 electricity firms built by the Niger Delta Power Holding Company under the National Integrated Power Project on behalf of the three tiers of government have been put up for sale.

The three tiers of government have invested well over $8bn in building the plants and they are expected to add 5,000MW to the power being generated in the country.

The plants include Olorunsogo, Calabar, Gbaran, Sapele and Alaoji power stations.

Others are Omotosho, Geregu 2, Omoku, Egbema and Ihovbor power stations.

Bids for the power plants closed on Friday and the Managing Director, NDPHC, Mr. James Olotu, said evaluation of the bids would begin today (Monday).

He said, “We will commence evaluation on Monday. We will set up an evaluation committee that comprises technicians, engineers, lawyers, the EFCC and the SSS, while the Ministry of Power and the Nigerian Electricity Regulatory Commission will supervise the process.

“Other parties involved in the evaluation are the World Bank and the international community, which will only take two weeks before they report back to the board of NERC.”

Olotu, however, gave an assurance that by January 2014, the NDPHC management would announce those who won the bids, while the handover of the NIPP stations to successful bidders would take place in July, 2014.

Following the successful privatisation of the power assets, the nation is expected to experience an increase in the quantum of power generated. But experts have said this will only be possible if the right investments are made.

The  objectives of the Federal Government’s power reform is to reduce the cost of doing business in the country in order to attract new investments through the provision of quality and dependable power supply for industrial, commercial and socio-domestic purposes.

The government also aims to improve the efficiency of the distribution, generation and transmission networks, which are currently in a comatose state.

Article Credit: Punch Newspaper

Updated 5 Years ago
 

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