This Day (Lagos)

25 July 2014

Nigeria, U.S. Finally Sign MoU On 10,000MW Power Africa Initiative

Even though they happened separately, the signing of a Memorandum of Understanding (MoU) between Nigeria and the USA on a 10,000-megawatt (mw) power generation project and the release of 248 abandoned containers of imported power equipment worth billions of naira belonging to the defunct Power Holding Company of Nigeria (PHCN) portend hope of more Nigerians having access to electricity.

With the MoU formalised yesterday, the federal government has agreed to work with the US Government to increase access to and availability of electricity in Nigeria through the US-backed Power Africa initiative which was launched last year in Cape Town, South Africa by US President Barack Obama.

According to available statistics, the power output from the national grid stood at 3,800mw last May, a marginal increase from the 3,600mw figure in April.

The initiative hopes to double the number of people with access to power in sub-Saharan Africa, starting with six countries including Nigeria which signed an MoU with the US to formally activate the initiative.

As a result of this development, Global Edison Corporation has also concluded plans to construct a $2.5 billion, 1500mw gas power plant in Anambra State within the Power Africa initiative. The MoU, which was signed by the Minister of Power, Prof. Chinedu Nebo, on behalf of the federal government and US Ambassador to Nigeria, James Entwistle, in Abuja now offers a framework to coordinate the implementation and support of institutional reforms, privatisation and regulation of Nigeria's power sector within the Power Africa initiative.

Obama had at the launch of the initiative stated his recognition of the importance of electricity to the economic development of emerging economies. He expects from the initiative that about 20 million Africans will have access to electricity by the completion of the first tranche of the initiative in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.

Through Power Africa, African governments, private sector and other development partners such as the World Bank and African Development Bank (AfDB) are expected to improve their power generation by 10,000 mw, by unlocking the substantial wind, solar, hydropower, natural gas, and geothermal resources in the region.

It is stated that the level of funding needed to electrify Africa far outstrips the capacity of African governments and foreign donors; Entwistle in this regard explained that the initiative would strengthen Nigeria's energy sector through credit enhancement, grants, technical assistance and investment promotion efforts.

"Nigeria is well-positioned to reap the rewards of this increased focus on the energy sector. It is our expectation that our joint effort will improve the lives of countless Nigerians and serve as a model for other African countries whose implementation of energy sector reform is nascent," Entwistle said shortly after signing the MoU with Nebo.

Nebo on his part stated that Nigeria had benefitted from the US in her reform of her power sector. He added that the country would leverage on the initiative to provide electricity for its growing population, even in far flung rural areas.

From its structure, Power Africa has developed an innovative model based on transactions with private investors and also policy support to governments to focus and enable key energy projects. It equally wants to leverage on the strengths of US in energy technology, private sector engagement and policy as well as regulatory reform to galvanise collaboration, make quick-impact interventions and drive systemic reforms to facilitate future investments in the power sector. Meanwhile, the Nigerian Bulk Electricity Trading Company (NBET) has released its entire $350 million allocation from Nigeria's $1 billion Eurobond issued to the Nigerian Sovereign Investment Agency (NSIA) to manage for profit.

NBET's release of the fund followed a funds management agreement signed yesterday by the two government agencies in Abuja.

According to the NBET Chief Executive Officer, Mr. Rumundaka Wonodi, the agreement frees his agency to focus on its core mandate to develop the electricity market while at the same time ensuring that the agency's funds are earning interest that would help to defray the cost of the funds while it remains available.

The signing of the MoU came on a day the Nigeria Customs Service (NCS) commenced the phased release of 248 containers of power equipment worth several billions of naira imported by the defunct PHCN but which it abandoned owing to its inability to pay the required clearing costs and accumulated demurrage.

THISDAY learnt that the containers which had been abandoned for 11 years at the ports in Lagos and Onne in Rivers State contained equipment meant for turnkey power projects in about 12 states in the country thereby stalling all the affected projects, and effectively raising concern on the commitment of the government and other stakeholders in the power sector.

Speaking yesterday at the commencement of the release of 151 out of the 248 containers by the NCS, Nebo identified 10 of these projects to include: Abor Mbaise -Mpu- Ideato Substation projects in Imo State; Kano Combusto-Dankata -Hadejiya Transmission Substation; Oba- Nnewi Substations and Lines in Anambra State; Dambata Substation and Omotosho-Epe- Aja lines in Ondo and Lagos States.

Other projects include: ALSCON - Ibom 330KV Lines in Akwa Ibom State; Igangan -Igbora Substation and Ikorodu-Odiganya -Shagamu Transmission Lines in Lagos and Ogun States. Other projects affected by the untimely delivery of the equipment according to Nebo, include Nsukka - Ayangba through Enugu, Benue and Kogi States; as well as the project for the supply of current transformers and capacitor voltage transformers.

Nebo said: "These projects have been stalled for seven to 11 years. The Customs Service graciously agreed to release these things to the Power Holding Company of Nigeria (PHCN) now defunct and being represented by the Transmission Company of Nigeria (TCN). Virtually all of these equipment that have been on these wharfs and ports, including Onne, have been ordered by the defunct PHCN, fully paid for, came into Nigeria and got abandoned in Nigeria.

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