Chineme Okafor writes that of the six countries slated to start off the United States broad-based partnership to increase access to electricity in sub-Saharan Africa through Power Africa, Nigeria with on-going reforms in her power sector stands a good chance to exploit the advantages offered in the new initiative
Structural reforms as was recently stated by the Director General of the Bureau for Public Enterprises (BPE), Benjamin Dikki, opens up targeted sectors for growth in efficiency and service delivery.
Dikki in a recent media briefing, noted that in its very character, structural reforms in any sector would always come with an initial somewhat pain which is perhaps magnified, detested and then opposed usually by minority beneficiaries of the old order but eventually accepted by majority beneficiaries whose interests the reforms were intended to protect.
Drawing a nexus from ongoing and completed structural reforms in Nigeria’s economy, Dikki whose agency plays key roles in the various structural reforms that have taken place in Nigeria’s economy, explained that the tempestuous days in Nigeria’s ongoing reform of her electricity market will in a matter of time give way for the real phase of results and expectations which are the ultimate intentions for it.
As suggested by Dikki, reform of Nigeria’s electricity sector has not seen the best of times with regards to adequacy in generation and distribution of electricity across to legitimate users (instances of shortage in gas production and supply, poor transmission systems, attempted policy misdirection, distribution constraints and unresolved legacy challenges have threatened to disrupt the reform process), but it is certainly attracting the right attentions, all of which could at maturation, turn it into one of Africa’s biggest electricity market with the right economic indicators.
The market with its potentials has attracted interests from private, institutional and developmental investors, all of which are good for its growth; Nigerian banks which majorly financed purchases of successor generation and distribution companies created from the unbundling of defunct Power Holding Company of Nigeria (PHCN), World Bank, Africa Development Bank (AfDB), Japan International Cooperation Agency (JICA), United Kingdom’s Department for International Development (DFID) as well as the United States Agency for International Development (USAID) have all committed to the growth of the market.
Even with all the interests, the market has continued to show its sagacity to accommodate various interests and yet without any sign of saturation, after all, this is a market whose current meagre 4,000 megawatts generation capacity is nowhere adequate for its over 80 million legitimate consumers.
One of the most recent interests in Nigeria’s electricity market is that of the United States President, Barack Obama, who through a new platform, Power Africa, has formally agreed to work with the federal government to increase access to and availability of electricity in Nigeria.
The US-backed Power Africa initiative was launched last year in Cape Town, South Africa by Obama. It hopes to double the number of people with access to power in Sub-Saharan Africa, starting with six countries that include Nigeria.
Nigeria’s recent signing of a Memorandum of Understanding (MoU) with the US to formally activate the Power Africa initiative has opened the door for more investors who have shown significant interests in ramping up the country’s power supply profile.
They were the MoUs to construct a $2.5 billion, 1500 megawatts (MW) gas power plant in Anambra State within the Power Africa initiative as well as the Liaoning Efacec Electrical Equipment Company China (LEEEC) MoU for the financing and execution of turnkey Engineering, Procurement and Construction (EPC) projects for power schemes in Nigeria.
The LEEC MoU include the financing and execution of mobile power generations, mobile substations, E-House package substations and power transmission infrastructures such as high voltage transmission lines and associated substations.
Nigeria’s benefits from Power Africa
Obama had at the launch of Power Africa 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 AfDB are expected to improve their power generation by 10,000MW, by unlocking the substantial wind, solar, hydropower, natural gas, and geothermal resources in the continent.
The initiative is primed to further enhance energy security, decrease poverty and advance economic growth by building up clean, efficient electricity generation capacity as well as expanding mini-grid and off-grid solutions.
It is stated that the level of funding needed to electrify Africa far outstrips the capacity of African governments and foreign donors; US Ambassador to Nigeria, James Entwistle in this regard explained shortly after signing the MoU on behalf of his government with Minister of Power, Prof. Chinedu Nebo, that the initiative will strengthen Nigeria’s energy sector through credit enhancement, grants, technical assistance and investment promotion efforts.
Entwistle further noted that Power Africa would work to mobilise affordable and long-term financing for capital and operational expenditure requirements to generation and distribution companies to accelerate the growth of Nigeria’s electricity market.
In his words: “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.”
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 works to leverage 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.
Power Africa will in view of Nigeria’s appetite for electricity, directly addresses constraints to investments to accelerate progress. The US further stated that instead of taking years or even decades to create an enabling environment for energy sector investment, the initiative will take a transaction-centered approach to propel governments, private sector and donors into palpable actions.
MoUs with LEEEC and Global Edison
On the heels of the Power Africa initiative were other arrangements aimed at further growing Nigeria’s power sector.
While providing details on one of the projects that will immediately kick off from the Power Africa platform, the Senior Vice-President for Africa of Global Edison Corporation, Dr. Peter Nwangwu, said 1,500MW power plants as well as a 70MW solar panel manufacturing company will be built within Nigeria for $2.5 billion.
He said: “Two MoUs were signed today for Global Edison. For the first MoU, we are building a 1,500MW gas fuelled power station in Anambra State and for the second MoU, we are building a 70 megawatts solar panel manufacturing company in Nigeria, which will be the largest in West Africa.
“The significance of this is that we will be able to now power our rural areas and villages with reliable solar panels that will last for 30 to 50 years. Imported panels have given solar business a bad name, but when properly designed and installed, they can be almost maintenance free for 30 to 50 years. And that is what we intend to achieve here.”
The other MoU which was signed by the Chairman of LEEEC Nigeria, Chief Samuel Anyamele was meant to upgrade LEEEC’s operation in Nigeria.
Anyamele explained that LEEEC’s focus on hybrid power generation and transmission infrastructure is aimed at increasing the Transmission Company of Nigeria (TCN) electricity transmission capacity to about 10,000MW.
“We are very much interested in participating in the power sector in Nigeria, because we want to be part of the history currently being made to transform the country. It is a win-win situation where we stand to benefit from the immense opportunities available in opening up the power sector as well as deliver quality products that will strengthen the operations of the sector.
“We have a track record of producing high-quality products that will stand the test of time and we have already tested this strength by what we are already providing for the sector at the moment. This agreement is an addition to what we are already doing because we believe in the initiative and the vision of the current drivers in the power sector to reach its destination,” he said.
Anyamele further explained: “Our focus is the financing and execution of turnkey Engineering, Procurement and Construction (EPC) projects in respect of power schemes in Nigeria. They include mobile power generations, mobile substations, E-House package substations and power transmission infrastructures such as High Voltage transmission lines and associated substations.”
Our assurance is that you can count on us to deliver in the match to make the power sector work. We understand your vision that the power sector holds the key to the economic and social transformation of Nigeria to make it take its desired place amongst the strongest economies of the world. We hope that by the time this is over, LEEEC will be part of that envious history. That is why we are here today.”
As frequently echoed by the Coordinating Minister of the Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala whenever she spoke to investors: “If you are not in Nigeria, you are not in Africa,” Nigeria with its economic, demographic and natural resource potentials indicates its eagerness to make the most of the US-backed initiative, it is thus only a matter of time and strict adherence to extant policy thrusts for the 10,000MW mark set by the initiative to be attained and perhaps surpassed.”