Power Crisis: Firms Import N10bn Worth of Generators to Power Nigerian Industries

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Generator manufacturers and distributors took advantage of the dwindling electricity supply and demand gap in Nigeria  to import 75-375 KVA   diesel generating   sets valued at over   US$51 million(about N10 billion)   to power the country’s   factories, telecommunication towers, homes and offices between 2014 and 2015. Data on Genset Import/Export Trade, obtained by Vanguard from United Nations Statistics Division, showed that manufacturers of generators, the ilk of General Electric, Cummins, FG .Wilsons; Siemens, and other major power firms, brought into the country different brands of generators worth $51.055 million     in 2014/2015, and the figure is projected to hit $450 million by 2020.

Analysis of the data showed that Nigeria is the second biggest market for generator   driven economy in Africa,   after Egypt whose import stood at $58.6 million, followed by   Ethiopia $19.9 million; South Africa $18.6 million and Congo $6.9 million. Others are Zimbabwe $5.4 million, Niger $5.3 million and Mozambique $4.4 million. Investigation further revealed that the demand for generators is being driven by long years of epileptic power supply to industries and homes despite the privatisation of parts of the country’s electricity industry.

High demand is coming from manufacturers especially in the Food, Beverage and cement industries; telecommunication, banks, real estate and construction firms are also driving growth. Vanguard learned that as a result of unreliable power supply from national grids,   manufacturers, the like of   Lafarge, Dangote, Nestle, Pz Cussons; Nigerian Breweries Plc, Cadbury, etc, have invested hugely in self generating plants and are   now having an excess of 700 megawatts to sell to consumers through the Nigerian Electricity Regulatory Commission, NERC.

Investigation further revealed that Lafarge Africa Plc has built  a  90 MW plant, which is used mainly for its cement operations in Nigeria, and is adding  220 megawatt (MW) gas-fired power plant   at it Ewekoro in Ogun state   to boost electricity supplies to plants and host communities.   The plant supplies about 40 MW of excess power already, so once the new plant is built about 260 MW will go to the national grid under a power purchase agreement approved by the NERC.

Dangote Cement Plc also invested a $95 million  on  three gas turbines generating 102 megawatts; it was  built by  Siemens International to power its Ibese Cement plant in Ogun state, while the excess will be added to the grid.  Nestle Nigeria Plc,  also invested in N3.6 billion Tri-generation Power Plant at Agbara factory generates electrical power runs on diesel or natural gas.

Reacting to this development, Mr. Muda Yusuf, Director-General, Lagos Chamber of Commerce and Industry, LCCI, told Vanguard: “The key issue is not the importation of electricity generators, but the factors that led to the importation phenomenon.   The importation is not the problem but a symptom of a fundamental shortcoming in energy policy.” He noted: “The power situation has deteriorated in recent months, worse than the experience under the defunct PHCN.   This is not a good development for the Nigerian business environment, especially for business concerns that have to deal with high cost of production resulting from alternative source of energy.

“The situation had worsened since the official handover of the power infrastructure to the new private owners in November 2013. There are complaints across all sectors about high energy costs especially high expenditure on diesel. This continues to take its toll on the bottom line of investors in the economy as well as the welfare of citizens. There was apparently an underestimation of the challenges of reforming the power sector – labour issues, gas availability, transmission capacity, generation capacity, quality of assets, security of assets, manpower, technical capacity, financial capacity etc.”

According to him, to make progress in the power sector the following should be addressed by government: “Need to de-emphasise the national grid model and concentrate on the promotion of the energy mix approach proposed by the Minister of Power, Housing and Works.   The national grid model is too vulnerable to sabotage and other forms of disruptions. “There should be greater emphasis on captive power plants to facilitate decentralisation of power provision by the private sector. Import duty on all power supply equipment such as solar panels, batteries, inverters, wind mills and other accessories should be scrapped to enable the citizens adopt individual power solutions”

He also suggested that risk mitigation provisions in the Power Reform process must be reinforced to inspire investors’ confidence, and gas sector reform must be put firmly on course to ensure the sustainability of the Gas to Power programme. “There should be security in the Niger Delta that would ensure regular access to gas supply and investors should be supported to reduce technical and commercial losses in the power delivery process.”

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