Okey Ndiribe
3 August 2005
interview
For the people of the commercial city of Aba in Abia State, it is time to bid the era of epileptic power supply by NEPA goodbye as a private power plant is soon to be activated to provide uninterrupted electricity to the city.
Professor Barth Nnaji the arrowhead of this development speaks more on it in this interview with Okey Ndiribe.
What kind of support have you received from the World Bank for the Aba independent power project?
Yes, we have a lot of support in the sense that the syndicator of our funding is the IFC. They co-supported us in bringing in the foreign company that did the technical, commercial and environmental due diligence on our project. They actually paid the company that did the financial and legal due diligence on the project. These are very critical areas in developing a project of this nature.
Furthermore, they are advising the government to look at what we are doing to facilitate how power distribution could be improved in the whole of Nigeria. Again that is another sense in which this project is a model.
When did you conceptualise this project?
The inspiration to establish an independent Power plant for Aba came to me when we were setting up the Abuja Power Plant. I began to think that really this country could not meet its power needs. And that there is a need to have a model not driven purely by the government. This is because government cannot possibly find the money. Such a model should be driven by private investment.
But that model has to be such that it should be attractive to the private sector, the consumer and all the people who would be involved in the project. I began to think of supplying directly to consumers. This would entail being able to reach the consumers directly with power supply. It would also entail collecting revenue directly from them. Aba became the place that made a lot of sense to me.
What attracted you to Aba?
There were two critical elements, the number one element is the source of fuel which is gas in this case. Aba happens to be a place with gas supply. The type of power consumers available in the city was the second element. of course you know that Aba has a lot of industries. it also has the industrial entre-preneurs that really want to expand and advance their businesses. We looked at Aba as a possible place for economic development of that whole area. We believe that by having the power infrastructure in place it would stimulate fundamental development in the whole area.
Were there obstacles on your way to actualising this dream?
The first step we took actually brought us face to face with a major obstacle. I first thought of an ideal situation. But to move from nothing to achieve that ideal situation placed obstacles on the way. The first major obstacle at the beginning was the National Electric Power Authority which was formerly a monopoly in the power sector. Because it was a monopoly, as a private investor, you are barred by law from generating your own power supply and selling to the public. You needed to have special permission to do it especially since the power reform law was gradually being developed. We envisioned that by the time we start with construction work at the site, the power reform law would have been passed into law by the National Assembly. This is essentially what has happened, thereby allowing independent power producers to establish their own power plants and supply power to eligible customers.
So we applied to the federal government and we were granted that permission to build a power plant and supply electricity directly to the consumers being the industries, residential homes and commercial outfits in the city.
Do you have plans for extending your services to other parts of the country?
Well, there are possibilities for expansion. You can predict that a number of industries would begin to move down to Aba because you now have nearly 100 per cent uninterrupted power supply. We anticipate an expansion in terms of industries, residential homes and commercial outfits because of stable power. So we expect that we would expand.
Secondly, Geometric Power itself is fundamentally a power plant developer. So we anticipate that we should be able to go to some other places to build power plants provided that these two basic elements that I talked about are there. We could also establish a power plant anywhere in the country that has potential eligible consumers but without the availability of gas provided we could be permitted to bring the gas pipeline there.
In what sense is the Aba Power project a model?
It is a model for the entire country. In fact, we are already getting a lot of support from the World Bank. The world bank being a development bank wants to copy what we are doing for other places. Actually it is the International Finance Corporation which is the private sector arm of the World bank that is interested in this project. They want to use this project as a way of developing the power sector in developing countries. They are using us as a model for the rest of the developing world. When you have a model you want to see whether it would work or not and whether there are areas that could be fine-tuned to ensure the project is actualised. You can imagine that Kaduna could be taken over by a power company that could build a power plant to supply to the city. Fundamentally, what consumers want is reliable high quality power in the end especially if the government is not providing the money. Under the present arrangement, what is also needed is a reliable power supply with cost that would be regulated by the government.
Is this project a model in terms of the concept, or a model in terms of the kind of plant and equipment that is going to be put in place or both?
No, it is not a model in terms of the plant and equipment. It is a model in terms of the structure of how plant delivers power to the people especially in Nigeria where we have had a monopoly. We are talking about we having some private transmission and distribution lines going directly to the industries. That is a new model because we have to build the transmission and distribution lines ourselves. We would have to build sub-stations ourselves. We are also going to lease transmission facilities from NEPA; that is new and very different. So in terms of model that is the model we are talking about.
How would you synchronise your operations with that of NEPA in terms of the kind of clients that are your main target?
Customers who are hooked on to our power supply would be taken out of NEPA supply. NEPA would no longer operate within the zone where we are operating. This is another reason why it is a model because it is not going to be part of the national grid. An important part of this model is to fence off an area and giving that area to a company to run on a concession arrangement basis.
Because you are taking out an area that could have relied on power from the national grid, you are essentially providing more power from NEPA, to the rest of the population in the country. Imagine if you have Lagos, Port-Harcourt and others concessioned to private power companies, then you would have more power supplied to the rest of the population in the country. This would enhance stable power supply in the country.
What is the difference between what you did at Abuja compared to what the Rivers State Government is said to be doing in the area of power supply and what you are presently doing?
What we did at Abuja, is closer to what the Rivers State Government is doing. But what we are doing now is quite different from what the Rivers State Government is doing in the sense that the state government is not taking over either the whole Rivers state or Port Harcourt for the purpose of supplying power. The management of that is quite tremendous especially in the area of distribution. It is not really the power plant. The power plant is easier to deal with. But dealing with distribution of power requires tremendous management. And that is where NEPA has also failed. Even the distribution lines have to be refurbished. Some of them are 6.6 KV lines for stability of power but we need 11 KV lines for stability of power. Other problems that could occur in the distribution of power include power theft and even sabotage by staff which can happen when the government is operating something.
Don't you think getting involved in generation, transmission and distribution would be too much for your company alone to handle?
I want you to consider a much more miniaturised version of electric power supply which is the generator in your house. When you have a generator in your house, you are involved in generation, transmission and distribution. An expanded version of it is the power we would generate for the city. But if we decide to take on the whole country it would then become too cumbersome for us. You need proper management for that. No, it is not a problem to provide power for just a city. It could become a problem if you have a much larger area to cover.
What about the human resources you need to embark on this project?
We already have some of the personnel required. But they need to be further trained in the efficient management. But we are really going to operate the power plant itself on operational maintenance contract. So we are going to have an operational maintenance company that would also install the equipment. For distribution, we are also going to get people who have a lot of expertise in management of distribution facilities to work with us at the beginning.
Then ultimately we are going to learn. We have two companies involved in this project. One is Geometric Power Ltd which would be the power producer and Aba Power Ltd. which would be the power distributor. Aba Power Ltd. would be managed by a Managing Director that would run the outfit based on the experience that company had in running distribution facilities in developing countries.
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