Privatisation of the 10 NIPPs must not be derailed

Nigeria is a major economy in Africa with significant oil and gas resources and anticipating robust economic growth that will launch the country amongst the top 20 economies by 2020. But declining electricity generation from a number of domestic power plants over the years sent the country into an energy crisis that governments in recent years have been making frantic efforts to fix.

The National Integrated Power Project (‘NIPP’), is an integral part of Federal Government’s efforts to combat the power shortages in the country. It was conceived in 2004 as a fast-track public sector funded initiative to add significant new generation capacity to Nigeria’s electricity supply system along with the electricity transmission and distribution and natural gas supply infrastructure required to deliver the additional capacity to consumers throughout the country. And the Electric Power Sector Reform Act was enacted in 2005 to provide the legal framework for the reform objectives of the Policy and provide a roadmap and timeframe for the implementation of the reform and privatisation strategy.

It is in this regard that the recent report that gas shortage is responsible for the delay in the conclusion of the privatisation of 10 National Integrated Power Project plants by the Director General of the Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, is unsatisfactory. According to him, concerted efforts were being made to secure reliable gas supply that would enable the signing of the gas agreements necessary to proceed with the process of privatisation of the NIPP plants.

The privatization of the NIPP power plants has been structured as the sale of an 80 per cent ownership interest in each of ten generating companies, or “GenCos,” each of which is a special purpose Nigerian company formed to own and operate one of the ten NIPP power plants. The Niger Delta Power Holding Company (NDPHC) will hold the remaining 20 per cent interest in each of the GenCos following privatization. All of the power plants, most of which are open-cycle but capable of conversion to combined-cycle, will be completed prior to closing of the acquisition. Once completed, the NIPP power plants will collectively add over 5,000 MW of gas-fired generating capacity to the Nigerian grid, nearly doubling the existing installed capacity.

The primary objectives of the reform and privatisation of the power sector, is to reduce the cost of doing business in Nigeria so as to attract new investments through the provision of quality and dependable power supply. It is now clear to all that poor electricity supply is at the core of Nigeria’s poor business environment and high cost of doing business, hence the need to address the issue as quickly as possible. So, why should gas shortage stall the privatisation process of the NIPPs? Was this challenge not considered long before now?

The entire NIPP project included four lots of gas pipeline infrastructure that connects the power plants. No doubt, any investors in the NIPPs must have done their due diligence and must have taken into consideration gas supply issues. For the sake of credibility, the Bureau of Public Enterprises should learn to keep to programme schedule. Delays and postponement give room for speculations that politicians could have hijacked the ongoing privatisation of the 10 power plants built under the NIPP.