22 September 2012

Nigeria: National Integrated Power Project - a Dream Deferred

The National Integrated Power Project (NIPP) was conceived by the former President Olusegun Obasanjo administration in the year 2004 as a fast-track approach to solving the country's power challenges. Although the project has gulped about $8 billion thus far, EMMA OKEREH, Abuja, BEN NDUBUWA, Lagos, ANAYO ONUKWUGHA, Port-Harcourt and KOLA-NIYI EKE, Asaba report that Nigerians would have to wait much longer than anticipated to get the dividends accruable from the NIPP.

When first mooted, the National Integrated Power Project (NIPP) was designed around seven medium-size gas fired power stations in the gas producing states. But today, the project has four other power plants, making a total of 11. These are Calabar - 5 X 161 megawatts (MW); Egbema - 3 X 138MW; Ihovbor - 4 X 150MW; Gbarain - 2X 125MW; Sapele - 4 X 150MW; Omoku - 2 X 150MW; Alaoji - 10 X 1074MW; Olorunsogo I and II -7 x 150MW; Omotosho I and II - 5 x 100MW; Geregu II - 4 x 134MW; and the Ibom Power - 1 x 90MW.

These power plants were also designed with a view to expanding them to generate 1000 MW each.

While inaugurating the NIPP, Obasanjo stated that when he came to power in 1999, the nation's electricity power capacity was only 1500MW. The former president had envisaged that by 2007/2008 the NIPP would have added 10,000 MW to the national grid, which subsequent administration would build on to achieve 20,000MW by 2015.

LEADERSHIP WEEKEND learnt that Nigeria took a loan facility from the Chinese government at concessionary rate to kick-start some of the plants, namely Gerengu, Omotosho and Papalanto which were slated for commissioning in 2007.

However, in August 2005, the National Council of State and the National Assembly approved an initial $2.5 billion for the NIPP from the "Excess Crude Oil Account" (ECOA).

But following the 2007 change in administration at the federal level and in many states, the funding arrangements for NIPP were subjected to intensive legal, political and financial scrutiny, resulting in over two-year interruption in funding the projects.

According to a source at the Niger Delta Power Holden Company (NDPHC) Limited, "at the time of the interruption, over $2.8 billion has already been invested in the NIPP, including $1.78 billion in funded letters of credits, which allowed some of the projects to continue despite the funding interruption.

"This led to the contracted commitments of the NIPP projects totalling $7.385 billion and these projects were billed to be completed between 2007/2008."

LEADERSHIP WEEKEND gathered that the power plants were initially estimated to cost an average of $200 million if completed within a period of three to five years, particularly those with capacity of not more than 150 MW.

Experts say that if the project time exceeds five years, each power plant would cost an additional 25 per cent more.

But eight years down the line, the NIPP has not been delivered to the nation as envisage.

However, Managing Director, NDPHC, Mr. James Olotu, has disclosed that $8 billion has so far been sunk into the NIPP, assuring that the plants would turn in 5,500MW to the national grid by the end of this year.

Olotu, who spoke in Lagos recently while commissioning a new transmission project at the Ikeja West injection Sub-station in Ayobo, Lagos, stated that the $8 billion was used to build hundreds of thousands of kilometre of transmission lines and substations nationwide.

"This project also includes the gas pipelines to evacuate gas from source to the thermal plants," he said.

Apart from the delays the project suffered following a change of administration at the federal level, Olotu lister shortage of gas as a major challenge to firing these plants. This development was attributed to acts of vandalism carried out against gas pipelines in the Niger Delta.

Buttressing his point, Olotu disclosed that two out of the six units of the Alaoji power plant were ready but could not be put into service for lack of gas.

LEADERSHIP WEEKEND learnt that the power plants in Omotosho, Ondo State (451MW), Olorunsogo, Ogun State (750MW) and Sapele in Delta State (451MW) are also ready for use.

Earlier in the year, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, pledged that the Nigerian National Petroleum Corporation (NNPC) would increase gas supply to the power plants between August and this month under the Gas Emergency Plan.

"By December this year, we are expecting a total 2,500MW and more from the generation plants that will be completed, but this is subject to the availability of gas," Olotu said.

He added that only 1,115MW was currently being fed into the national grid by the NIPP plants instead of 1,652mw due to inadequate gas supply.

The NDPHC chief also said that the Transmission Company of Nigeria had intimated him of plans by the Federal Government to supply between 300 and 500 million standard cubic feet of gas dedicated to the NIPP under the emergency arrangement.

"If we get that, we are sure to get more power to the grid," he said.

Before he was forced out of office, former Minister of Power, Prof. Barth Nnaji, also hinted that gas pricing constituted a huge challenge to the NIPP initiative.

Also delaying the completion of the NIPP, according to the government, is the issue of hostile host community.

Nnaji told the media of a host community in Delta state which demanded a huge sum of money, far more than the cost of the power project, for the community to appease their ancestral deities before cutting down a tree standing on the right of way of the power plant near the deities' shrine.

Also, Mr. Otis Anyaeji, Chairman/CEO, O.T. Otis Engineering, one of the major engineering consultant to NDPHC, said: "There are delays associated with the time line when the engineering equipment are ordered from abroad and when they are eventually supplied.

"It takes as long as six months to three years, depending on the manufacturers, to import this equipment. Until we begin to manufacture some of this power equipment locally, the delays by the overseas suppliers will continue."

In spite of these, however, Special Adviser on Public Affairs to the President, Doyin Okupe, has assured that the government would add 800MW to the national grid from the Olorunsogo, Omoku and Egbema power plants between now and December.

"Out of the 10 NIPP power plants, eight are almost at 90 to 95 per cent completion. Only the Omoku and Egbema power plants are at about 80 per cent completion," he said.

According to him, "so far, President Jonathan has made substantial progress in the power."

Since the NIPP has apparently failed to deliver on promise, many states across the country have taken to generating electricity to meet their power needs.

Their quest received a major boost recently when the Nigerian Electricity Regulatory Commission (NERC) authorised state and local governments as well as communities in the country to generate and distribute their own electricity.

The authorisation came through two regulations issued by the commission entitled; "NERC Regulation on Embedded Generation 2012," and "NERC Regulation for Independent Electricity Distribution."

The embedded generation regulation authorises investors, communities, states and local governments to generate and distribute electricity for their exclusive consumption, using facilities of existing electricity distribution companies or independent electricity distribution network operators.

On the other hand, the independent electricity distribution regulation permits communities, local and state governments to invest in electricity distribution networks in areas without access to the grid or distribution network or areas poorly serviced.

With this authorisation, the Rivers State government, for instance, is moving fast to generate and distribute electricity in its domain with a N30 billion investment plan.

The state's Commissioner for Power, Augustine Nwokocha, told LEADERSHIP WEEKEND: "The state will generate enough capacity, have a robust transmission infrastructure that will take the power to the people and have a solid distribution infrastructure that will take it to their routes.

"We are addressing three things, power generation, transmission and distribution. Unlike the previous system where they were all given to one person, here we have a total of 10 outfits doing different things to ensure that we deliver on time.

"What we have done differently is that we have divided this work into smaller units that are deliverable, faster, and better. We have also focused on getting quality personnel that can deliver this work and deliver them well."

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