Nigeria: Leveraging NIPP for Nigeria's Power Sector Development

9 January 2019

Over the years, the growth of Nigeria's power sector has continued to fall short of stakeholders' expectations, and this is evident in the epileptic supply that has characterised operations. This anomaly not only hurts individuals and businesses, but has also continued to plunge the country into the doldrums of underdevelopment.

Where Nigeria is coming from

Nigeria was once unfortunately named to occupy the 70th spot on the global electricity production chart by the CIA World Fact book. This is in spite of the fact that the country is not lacking in electricity sources as it has abundant hydro, thermal, solar and wind electricity sources to generate adequate power supply. Where then does the problem lie with its huge power deficit? The major problems, according to industry watchers, have been the lack of the right political will to do the needful coupled with an abysmal record of improper management of public power bodies.

The first 132KV line in Nigeria was built in 1962, to link Ijora power station in Lagos to Ibadan power station. As the years went on, there were no commensurate deliberate activities on a major scale yearly to continually boost electricity supply infrastructure to a fast growing population. Even when some efforts were made, they were largely lethargic and not holistic until the return of constitutional rule in 1999 and the setting up of the National Independent Power Project (NIPP) in 2005.

NIPP to the rescue

Through the National Electric Power Authority (NEPA) and Power Holding Company of Nigeria (PHCN) era, epileptic power supply was the norm and the expectation for stable power supply in the country was continually dashed. Hydro-electric dams went into decay and the transmission and distribution equipment and lines became obsolete. The coming of the NIPP was a patriotic plan to confront Nigeria's huge energy crisis and to end it. The National Council of State (NCS) and the National Assembly approved an initial funding of $2.5 billion for the National Integrated Power Project (NIPP) from the Excess Crude Oil Account. The Niger Delta Power Holding Company Limited (NDPHC) was thereafter incorporated as a limited liability company to serve as the legal vehicle to hold the NIPP assets.

In 2008, the National Economic Council (NEC) voted $5.375 billion from the excess crude account as Power Emergency Fund (PEF) to complete the NIPP. NEC also inaugurated the NIPP Steering Council in January 2009, chaired by Dr. Goodluck Jonathan, then the country's vice president with six state governors and four ministers as members. The NIPP Steering Council, which has transformed as the board of directors of NDPHC is headed by vice president of Nigeria. In February 2009, the council approved phase I budget of $2.213 billion from the PEF of $5.375 billion to complete the first phase of the NIPP projects. It also approved $423.639 million to PHCN as special intervention fund. In June 2010, the council approved $123.110 million to augment the phase 1 budget and N1.750 billion to buy NDPHC corporate headquarters in Abuja. The NDPHC went on to build several gas turbine plants, distribution and transmission equipment and lines across Nigeria.

Under the NIPP, more power stations have been built in Nigeria for the first time since the country's independence. These plants have added more megawatts (MW) to the national output. However, the journey of the NIPP became longer than expected but then it has become a pillar institution in Nigeria's stability.

Projects completed under the NIPP

According to the NDPHC, under the NIPP, the following power plants have been completed: 750MW Olorunsogo 11, 450MW Sapele, 434MW Geregu 11, 450MW Omotosho 11, 450MW Ihovbor, 450MW Alaoji, 563MW Calabar and 225MW Gbarain. The NDPHC has completed 2,194km of 330KV transmission lines and 809km of 132KV transmission lines; an increase of 46 per cent and 13 per cent, respectively over the pre-NIPP status of grid infrastructure. It has further constructed a total of 2,600km of 11kv and 1,700km of 33kv distribution lines for improving access to electricity. It is trite that there is heavy dependence on the NIPP plants in bringing electricity supply to Nigerians. In grid instability, NIPP plants provide about 265MW of Spinning Reserves to facilitate grid responsiveness during disturbances on the transmission network. Spinning reserve is practiced all over the world. Some power sector stakeholders say the NDPHC assets are the backbone of Nigeria's power infrastructure; of which a transparent privatisation process for credible international investors, will push the NIPP across the finishing line.

Without a very significant appreciation in the supply of power to end users, Nigeria's power generation capacity is said to have risen. This is coupled with a huge exponential growth in population and the demand for electricity supply. But Nigeria's power distribution system has been enhanced with hundreds of injection sub-stations, 11KV lines and 33KV lines added. Work is also in progress in many more transmission and distribution projects. The construction of these power projects by the NDPHC has prevented the total collapse of electricity supply in Nigeria. Although a 100 percent supply is yet to be attained, things have been stabilised while work on incremental power supply is ongoing.

The NDPHC said: "Achieving stable electricity supply from almost nothing is not a day's work. It takes times and huge efforts especially where economic sabotage of gas pipelines persist and transmission lines are being vandalised. When most all of the NIPP projects are completed and are operational, power supply to Nigerians is expected to be better and drive the economy of Nigeria.

"One recurring snag with power supply in Nigeria is in the distribution chain. Despite the targeted increase in generation if there is no efficient distribution to the end users in their homes and businesses, there will still be disappointment with all the efforts made. There has been huge improvement in gas supply to the built thermal power plants, adequate power is being generated and despite some challenges, the transmission network has improved. The most nagging point is power as distributed.

"Power distribution companies should be able to take more than what the transmission gives out. This is to allow reduction of redundancies at the various levels and reduce losses while transmitting power from one location to another. The farther you travel with power, the more the quality and the efficiency of the power is reduced. Another problem with the distribution network has been poor town and urban planning which has made it difficult to regulate power distribution and downstream activities, thus overloading the grid."

Other challenges facing NIPP

An oil industry analyst and don at the Pan Atlantic University, Lagos, Dr. Austin Nweze, said because of the strategic nature of the NIPP, if the government abandons the project, the current contractors handling the project will leave and certainly government will re-award it to fresh contractors at higher cost. The old contractors in view of their commitments to the financial institutions and breach of contract may take the government to court.

He added: "It would be unfortunate for the government to abandon the NIPP programme. There should be continuity in government. Government is a continuum. Therefore whoever is there today may be out of there tomorrow but the most important thing is that projects embarked upon by an administration that are beneficial to the populace, should be continued by successive administrations.

The NDPHC said some other challenges that the NIPP has had to grapple with include security and community issues; right-of-way challenges for distribution equipment and transmission lines; port clearing coordination hitches and contractor performance-related problems. Even though the three tiers of government own the NIPP, equipment imported for the power projects are often delayed or seized at the ports by the Nigeria Customs Service (NCS) because of non-payment of import tariffs thereby stalling the execution of some power projects. Sadly, some of the equipment at the ports were at one time auctioned by the port authorities after demurrage charges had accrued on them, as alleged in some quarters.

The way forward

To fast track the attainment of stable electricity for Nigerians, an Abuja-based energy consultant, who pleaded anonymity, said the Federal Government should seriously consider waving duties on equipment for power projects, adding that: "It needs to seriously educate contractors on their patriotic duty to deliver and on time. There is need for a special para-military unit to ruthlessly tackle the activities of vandals, and address the kidnap of the employees of the contractors. Host communities also need to be educated on the recurring problem of right-of-way for the routes for the 330kv and 132kv transmission lines of the NIPP.

"Once when NDPHC diverted the transmission line to the Ihovnbor station in Edo State at a considerable cost because of the presence of a shrine, a new shrine emerged overnight on the new route and the villagers went on demanding a huge amount to relocate it. These kind of things can be best handed with proper enlightenment of the responsibilities of civic duties. Also, operatives of para-military agencies, especially men of the National Security and Civil Defence Corps (NSCDC) should be adequately motivated and mobilized to protect power installations from vandals across the country.

"An existing asset protection mechanism for the safety of power generation/distribution equipment like pipelines and plants must be established with technologically advanced means applied."

All three-tier arms of Nigeria's government, government parastatals, the ministry of defense, those of trade and of oil and gas, the privately-owned generating and distribution companies as well as all Nigerians are expected to join hands in true patriotism in confronting this multi-faceted problem and totally wipe out this embarrassing situation of inadequate electricity supply. Many Nigerians have made a living for decades from national dysfunction. Other sources of power generation, coal, wind, solar, must also be aggressively pursued. The largest increase in the United States power generation comes from wind, increased by 168 billion KWH and solar by 18 billion at one particular time. Excluding nuclear power, Nigeria is rich in all these other resources.

If the company is continually funded and given free rein and the needed political backing to implement its mission, then the issue of power outage in Nigeria will soon be a thing of the past.

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