Nigeria Needs 7,000 to 10,000 Megawatts of Electricity to Keep Lights On

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Nigeria’s biggest power company Egbin Power Plc plans to double its generation capacity to 2,640 megawatts (MW) over the next three to four years at a cost of $1.8 billion to tap growing demand, its chief executive said.

CEO Dallas Peavey said the utility company, operated by state-run Korea Electric Power Corp (Kepco), was also looking at investments in solar energy and transmission lines to help address gaps that have held back the sector.

Power shortages are a major brake on growth in Nigeria, pushing up manufacturing costs and making it uncompetitive as an investment destination, despite a population of 170 million that makes it one of the world’s largest frontier markets.

Egbin Power won its thermal plants with a total capacity of 1,320 MW two years ago under a government-led privatisation scheme which was meant to end decades of blackouts which have blighted Africa’s most populous nation and biggest economy.

The company is 70 percent owned by a joint venture between Kepco and Nigerian conglomerate Sahara Group, which also has interests in power distribution, with the other 30 percent held by the government.

Egbin, which has six 220 MW gas-fired power plants, was producing just 440 megawatts of electricity after it was privatised, Peavey told Reuters in an interview in Lagos.

“We are going through and into the process of developing phase II, to double the capacity of Egbin. In three to four years it would be completed,” Peavey said in his office, overlooking the 30-year-old plant.

He said the company had not turned a profit since Egbin took over, partly due an unpaid government debt of 44 billion naira ($221 mln) for electricity bills. Peavey said he expected Egbin to take up to three years to get into the black.

Egbin provides a third of Nigeria’s electricity, Peavey said, adding that the company was also targeting an increase in renewable energy supplies to the grid over the next 18 months.

He said talks with U.S. Exim Bank, the World Bank and African Development Bank were ongoing to fund the phase II expansion plan and that it has spent $250 million to commission engineering analysis and evacuation studies for transmission.

Nigeria needs 7,000 to 10,000 megawatts of electricity to keep the lights on, and another 3,000 megawatts over the next three to six months as new infrastructure projects come online, but it produces less than 4,000 megawatts, Peavey said.

Nigeria broke up its monopoly on power generation and distribution by privatising the sector in 2013, hoping to attract foreign investors.

But a lack of investment in gas pipelines and transmission lines still owned by government means the amount of power produced has stagnated at about half total capacity.

“The power that we give to the grid is not getting to the (distribution companies). The biggest issue is the transmission constraints … and the gas, and the government is going to have to lead us out of it.”

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