NERC set to approve of 94mw embedded power plant for Lagos
The Nigerian Electricity Regulation Commission (NERC) has reached advanced stages in the process of approving a 94 megawatt embedded power project to be sited in Apapa, Lagos.
People with knowledge of the proceedings say the commission would give its approval to the partnership between Eko Electricity Distribution Company (Disco) and Power House International, a Nigerian infrastructure consulting company this week. NERC officials working on the project were expected to have concluded due diligence checks on the documents filed for the partnership by the week ending October 26, so that the documents can be presented to the commissioners for approval.
The $93 million project will be dedicated to Apapa to serve both residential and commercial purposes at affordable tariff.
Unlike previous arrangements where embedded power projects in Lagos have stalled after the bid process, this one according to NERC has taken into consideration all the necessary shortfalls and improved on them, and it is good to go.
James Momoh, the chairman of NERC, who spoke exclusively to BusinessDay on the matter, praised the arrangement between Eko Electricity Distribution Company and Power House International, the promoter of the project, assuring the public that the project would fly this time around.
“I think what I will just say is to cheer you up and give you some good news. For the first time the commission is going to consider one of the applications that the Eko Disco has submitted under the competitive procurement, the procurement of 90 megawatts from Power House International. The timeline for this project to come on-stream has not being specified.”
Momoh said they have done the procurement, bid and everything. “The commission is only checking to ensure due diligence. This is between Eko Disco and Power House International. This is just one out of several IPPs. We really appreciate what Eko did to allow us to at least have a winning good story to tell about this effort to collaborate competitively and cooperatively. They have allowed this new market.”
Embedded power generation projects in the past have ran into challenges because investors saw the risks outweighing rewards. Potential investors want guarantees, first, from the DisCos.
“This is because once a generating plant is developed it cannot be moved. When an investor looks at the financials of the DisCo and is not comfortable with what they see then chances are that they will not go ahead with the project. This is why investors interested in embedded generation seek power purchase agreement (PPA) with Nigeria Electricity Bulk Trading Company (NBET) because with this there is federal government guarantee and there is also World Bank guarantee”.
Chuks Nwani, vice President, Power House International Limited, told BusinessDay on phone that the project is dedicated to Apapa alone so as to show that there can be 24 hours of uninterrupted power supply in Nigeria.
Nwani said the company is not just generating power alone but it will also attempt to enhance the existing infrastructure within it operational areas. Such infrastructure as distribution lines, substations and feeder pillars would be enhanced or reinforced to perform better.
“We want to ensure that power supplied to the homes and companies are stable and reliable. In fact what we are putting in Apapa is an improved Smart Grid System,” he said
On the tariff, Nwani said it will be affordable for those operating within the area the project covers, stating that NERC would give approval for the tariff to be changed.
He added that as soon as NERC gives it a nod construction of the project would start.