DISCOs’ Capacity to Take Power Load From GENCOs Will Boost Electricity – Dr. Udo


Dr. Victor Udo, is the Managing Direc­tor and Chief Executive Officer of Ibom Power Plc. Recently, the 190MW Ibom Power Plant obtained the Nigerian Elec­tricity Regulatory Commission (NERC) licence for additional 685MW genera­tion capacity. In this interview with CHIDI UGWU, he speaks on the impor­tance of the licence to the operations of the company and its expansion plans, among other issues.

Let me congratulate you on the new licence granted to your company for 685MW of electricity. How do you feel about this new achievement?

Thank you very much. First, let me thank His Excellency, Mr. Udom Emmanuel, for the opportunity he has given us to transform Ibom Power Company. We submitted the request for license expansion to NERC in December 2014. Today, we are delighted to receive the license expansion of our plant from 190MW to 685MW.This license expansion will allow Ibom Power to contribute significantly towards solving the national elec­tricity problem. His Excellency’s administration seeks to make Akwa Ibom State a power exporting hub in the federation.

Our immediate next steps will be to continue the site prep­aration for Phase 2 while aggressively pursuing a Power Pur­chase Agreement (PPA) with the Nigerian Bulk Electricity Trading Company (NBET). We will select the best of several in­vestors; complete all other commercial agreements, EPC, O&M and commence procurements along with construction for the project as soon as possible.

We appreciate the role of NERC thus far. We thank the host community in Ikot Abasi Local Gov­ernment area for the mutual coopera­tion. We are grateful to the Akwa Ibom people and Nigeria as a whole for their support and understanding.

In the generation chain, there are complaints about the Discos’ in­ability or refusal to pick up power allocated to them thereby making some plants run below capacity. Does this also impact on your business?

Yes it does. For instance, when Port Harcourt Electricity Distribution Company (PHEDC) takes load, we can gen­erate between 110MW and 113MW but they are not taking load. Their excuse is that they are unable to collect reve­nue from the consumers. This impacts our business adversely because we are not being paid in full for the energy we generate. As a power generating com­pany, we sell our output to NBET while the distribution companies buy from NBET. NBET is supposed to pay us but they don’t have the money to pay us be­cause the distribution companies are not paying them. This is a major prob­lem in the Nigerian power market.

On the solution side, we have writ­ten to NERC. We proposed the devel­opment of a working agreement to ensure effective commercial and tech­nical operations of the distribution assets in the State. The Governor is working hard to improve power dis­tribution and we are committed to making sure we eradicate the issue of PHEDC not taking load. Once we can deal with that, the Governor’s plan for our people to have steady power supply will be accomplished and sustained.

The supply of gas is said to be the major problem of generation com­panies in the country. What strate­gies did you adopt that earned you the licence for additional power generation?

Most people don’t know that gas is not a problem in Akwa Ibom State. The previous administration did some­thing that I believe the Federal Govern­ment should have done. When gas was selling at 40 cents, former Akwa Ibom State Governor, now distinguished Senator Godswill Akpabio paid for gas at $2. Today, the value of that gas is about $3.30. That commitment encour­aged Seven Energy to invest in the gas processing plant at Esit Eket LGA in the State with delivery infrastructure in Akwa Ibom and neighboring States. Gas is not an issue in Akwa Ibom State even though other parts of the country have challenges with gas.

Therefore, when you hear people talk about “uncommon performer” or “superior performer” as the new ad­ministration is branded, it is because people have foresight. Our leaders have foresight. Godswill Akpabio had the foresight to make sure there was gas supply. Before then we depended on Nigeria Gas Company (NGC) based on what is called “best endeavor”. This means if they have gas, they give us, if they don’t supply gas, our plant will not operate. But we now have a gas supply contract that is called “take or pay” which is also a challenge. It means whether we use the gas or not, we have to pay for it.

However, thank God we have gas. We have a pipeline and a gas processing plant that is supplying gas to us here in Ibom power. We are working on the challenges in the commercial aspect in collaboration with Seven Energy to reach a good mutually agreeable framework going forward.

How does the improved power generation impact on business ac­tivities in Akwa Ibom?

The impact is actually enormous. For instance, when we celebrated 114 days of our plant operation without forced outage, during the period, there was improved power supply across the State. However, shortly after, we lost a gear box which resulted in our plant being shut down for about three weeks. The impact was equally felt because there was a drastic reduction in power supply across the State. This implies that improvement in our plant power generation impacts business activities in Akwa Ibom positively. We are back on now; we have been running in the last 27 days and counting.

At the event of receiving the new license, the Executive Governor of Akwa Ibom State, His Excellency Mr. Emmanuel Udom hinted that the state will soon come back for an embedded generation license. Do you target specific areas with embedded generation license?

The policy objective of His Excellen­cy, the Executive Governor, is for the industrialization and sustainable de­velopment of our State. You cannot in­dustrialize without power. Therefore, targeting specific areas with embed­ded generation is one for the ways we can fast track the industrialization of our State. If you recall, His Excellency mentioned that some specific locations have been mapped out as industrial estates to be established along coastal lines. It means the embedded genera­tion will be targeted at those mapped out areas.

The availability of gas supply to the power plants is a major factor to consider in determining the location. Thankfully, we have sufficient gas in Akwa Ibom State. I believe His Excel­lency’s intention is to ensure that this natural resource is harnessed and op­timally utilized to generate sufficient power for the industrialization and sustainable development of our State.

Evacuation of power generated has posed a challenge for the Gen­cos, how are you working with the Transmission Company of Nigeria (TCN) to ensure that the electricity generated by Ibom Power will be ef­fectively evacuated?

As His Excellency stated, we built the transmission line that links Ibom Power to the rest of the national grid at the cost of $22Million. Even though transmission is a Federal Government responsibility under TCN, we have ful­ly commissioned the line to its 200MW capacity. We are expecting TCN to re­fund and take over the ownership of the line consistent with our National Energy Policy. This investment was necessary in order to evacuate Ibom Power output. It will be an effort in fu­tility if we have sufficient power gen­eration with no means of evacuating the energy we generate.

More so, before now, TCN used to deploy staff from Calabar to fix faults on transmission lines. Due to the bad road, a fault that could be fixed within an hour or 2 will take a day or two be­cause TCN does not have a work cen­ter in Akwa Ibom. I wasn’t happy with that so we pushed and they have sent 6 people. We gave them a vehicle and accommodation to make them stay in Akwa Ibom. Now, when we have any transmission failure or outage, the time and the duration will be reduced. We are also partnering with TCN in other transmission capacity enhance­ments across the State.

NERC’s Commissioner, Legal and Licensing and Enforcement, Dr. Steven Andzenge said that the Commission had issued 126 licenc­es with combined capacity for 35, 314mw of on-grid; 428.12mw off-grid and 298mw embedded power generations. Do you see Nigeria having problems with electricity supply if these licences are fully utilised?

Of course not, Like I said earlier, we celebrated 114days of our plant operations without forced outage and it resulted in improved power sup­ply across the State. It simply means, if all the power plants in the country can do the same – run for many days without outages, then the entire coun­try will move towards what everybody has been dreaming of which is steady power supply.

But it should be understood that having a license is just one of several processes before the generation capac­ity is made available to be utilized. For instance, in spite of the combined capacity of 35, 314MW on-grid, Nige­ria’s most recent peak generation was 4,330MW which is only 12 per cent of the combined capacity of 35,314MW thus far licensed by NERC. More so, earlier in the year, NERC revoked some generation licenses that were ‘non-per­forming’. Nevertheless, the problem of electricity supply in Nigeria will be solved when the combined generation capacity is made available on the na­tional grid to be utilized.

Let us talk about lack of energy mix, electricity production in Nige­ria over the last 40 years has var­ied from gas-fired, oil fired, hydro­electric power stations to coal-fired stations with hydroelectric power systems and gas fired systems tak­ing precedence. Will you also con­sider diversification to renewable energy?

Definitely! Recently, His Excellency did groundbreaking for a LED manu­facturing plant at Itam. Both the de­veloped and developing countries are beginning to adopt renewable energy sources in their energy mix. I did my Ph.D. dissertation on sustainable de­velopment. What I discovered from my research was that countries with higher sustainable development capac­ity had adopted the use of renewable energy sources like solar, hydro and other cleaner sources of energy. The adoption of renewable energy sources will not only contribute to our energy mix as a country but it will reduce our dependence on fossil fuels. It will also help to preserve our planet by reduc­ing global warming.

Poor maintenance planning is gen­erally identified as one of problems of Nigeria’s infrastructural investments facilities, including power plants, what are you doing to ensure that Ibom Pow­er is not affected adversely by this lin­gering problem?

When His Excellency, Governor Udom Emmanuel sent me to Ibom Power Company, to be the Managing Director and Chief Executive Officer, one of the things he asked me to do was to build capacity. Consistent with His Excellency’s directive, we insti­tuted an apprenticeship and intern­ship program where prospects are put through a rigorous interview process and the best candidates are selected to be trained.

Today, I am very proud to tell Ni­gerians that the operation and main­tenance of Ibom Power Plant is done by mostly Akwa Ibom people. Gone are the days when we used to depend solely on foreigners as technical advis­ers. When the so called ‘experts’ were here, the plant hardly ran for days or even a week without a forced outage. But Akwa Ibom people ran the plant for 114 days without forced outage. An accomplishment we are very proud of.

We are not oblivious of how poor management of infrastructure can lead to decay overtime. This is the rea­son we continue to develop utility core competency for the effective manage­ment and operations of our assets. We have built a capacity ‘pipeline’ such that if someone comes from Odukpani or Alaoji to hire one of our operators and they are willing to pay better, we encourage them to accept because we have a potential replacement.

Some have argued that poor elec­tricity pricing is also part of the generation problem. Do you agree with this view point and is there need for review of the pricing of the electricity in the country?

Electricity pricing is critical to the success of power generating firms in the country.I believe this is part of the reason NERC is considering a review of the pricing by encouraging the dis­tribution companies to set prudent tariffs. It is the distribution compa­nies that interface with the consum­ers. Therefore, they should introduce cost reflective tariffs. Once the tariff is right and the distribution compa­nies collect the revenue they will be able to pay us (generation companies) through NBET.

Funding is also a problem in most investments in the country, and electricity generation is no doubt capital intensive. Do you have adequate funds to effectively run your plant?

Akwa Ibom State Government has invested significantly in Ibom Power. In the past, the company used to de­pend on Government subventions for basic financial resources. However, we are proud to announce that in last one year under the current manage­ment, Ibom Power Company has not depended on Government support. We have repositioned the Company as an economic asset.

Source:: national mirror

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