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