Transcorp and the drive to transform Ughelli power plant

The current state of the Ughelli Power Plant is a foretaste of the gains the recent privatisation of the Nigerian power sector can bring about, writes FEMI ASU.

Up until November 1, 2013, the Nigerian power sector had operated for several decades as a state monopoly, with the Federal Government having the exclusive rights to own electricity generation, transmission and distribution facilities, an era characterised by inefficiencies and low investments.

 The purpose of privatising the distribution companies (Discos) and the generation companies (Gencos) was not just to transfer ownership of the assets, Atedo Peterside, chairman, Technical Committee of the National Council on Privatisation, said at the conclusion of the privatisation process, which brought to an end the existence of the government-owned Power Holding Company of Nigeria (PHCN).

 “The primary purpose was to bring into play new owners with ‘deep pockets’ who could finance and/or access financing for the rapid restoration of lost capacity and/or add significant new capacity to make up for decades of government neglect and mismanagement,” Peterside said.

 In the last nine months after the hand-over of the Discos and Gencos to the private investors, the investors have had ‎to grapple with challenges inherited from the era of government-controlled power sector.

But despite having to weather a combination of challenges from gas supply shortages, weak transmission network, lower-than-expected revenue, among others, some of the investors are making progress in upgrading the acquired assets to ensure improved service delivery.

183% increase in capacity of Ughelli power plant

Transcorp Ughelli Power Limited, owner of the Ughelli Power Plant, has been able to achieve a 183-percent increase in the generated capacity of the plant.

 In January, the plant generated 360MW of electricity, up from 160MW on November 1, 2013 when Transcorp took ownership of the plant.

 “We have been able to upgrade the capacity to 453 megawatts (MW) from 160 MW at the time it was handed over to us. Our plan is to reach 720MW by the end of 2014,” Adeoye Fadeyibi, managing director/CEO, Transcorp Ughelli Power, told BusinessDay.

“It takes a lot of focus, vision and execution. We are raising capital from different sources to further our plan,” he said. 

 “We are standardising operations and maintenance (O&M) process per OEM recommendations, building reliable inventory system to support minimal unit down time, investing in the right people for the job, and general face-lift of the plant,” he said in an emailed reply to a question on what the company was doing to drive growth.

  He said besides the 183 percent increase in megawatts, units’ conditions have also improved as regards the operations/maintenance procedure of the equipment.

 “Our short-term goal is to rehabilitate as much units as possible. In the medium term, we plan to sustain the plant’s reliability, and expansion is our long-term goal,” Fadeyibi said.

Tackling gas supply challenge

Few days after the private investors took over the power companies in November, power supply in many parts of the country saw a drastic decline due to gas supply shortfall to power plants.

On how Transcorp Ughelli Power is tackling the challenge of gas supply and how to get more gas that will be required by further increase in the plant’s capacity, Fadeyibi said: “We occasionally experience gas supply challenges. We now have a good professional relationship with our suppliers. We both understand each other’s issues. We have shared our current and projected gas needs with them and are getting their support.”

 An investment of N65 billion has been made in the power plant, according to Transnational Corporation of Nigeria Plc, the core investor in Transcorp Ughelli Power Limited.

 The company plans to gradually increase the plant’s output such that the original installed capacity of 1,000MW would be achieved by the end of 2015.

 Transcorp Ughelli Power is also working on the “expansion of plant capacity by the installation of a 1,000MW Greenfield power plant by the end of 2018,” according to Fadeyibi.

 The company had in November 2013 said it would significantly raise output, from the then 160MW to at least 1,500MW, over the next three to five years, adding that with a dedicated pipeline supplying gas to the plant and a long term off-take agreement, with the Bulk Electricity Trader, the return profile of this investment is compelling.

 Ughelli Power, now Transcorp Ughelli Power, is among the 18 electricity successor companies unbundled from the defunct PHCN last year. ‎ The Ughelli power plant is Nigeria’s largest gas-fired electricity generation asset. 

FEMI ASU