Light inside: the experience of independent power projects in Nigeria (2012)

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Light inside: the experience of independent power projects in Nigeria (2012)

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This report examines the current electricity environment in Nigeria, with a focus on Independent Power Projects (IPPs)--past, present and future. How have the IPPs come into the power mix and what impact have they had to date? What new IPPs are in the pipeline? What is the interface between current and future IPPs and the reform agenda? Finally, how may the Nigerian IPP experience to date come to represent a lesson learned, for Nigeria, and for other countries, facing similar electricity challenges?

The three ‘legacy’ IPPs, which as at 2012 produced 25% of the country’s electricity supply, have helped to advance the reform process, directly and indirectly. First, they have been among the most visible elements of reform, other than the Nigerian Electricity Regulatory Commission (NERC), over the past 13 years. In this regard, the IPPs provide an important example to potential investors of private power at work in the country. Serious transaction experience has been gained, especially by stakeholders in government, with regard to the overall risk allocation in IPPs. With this has come a greater understanding with interpreting contracts, notably the PPA and fuel agreements. Furthermore, the existing IPPs have helped to reinforce the need for cost-reflective tariffs, together with the urgency to reform the gas supply network. In addition, the importance of international competitive bidding and/or more transparent bidding and contracting procedures has been highlighted.

 

Source: Management Programme in Infrastructure Reform and Regulation

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