The Power Sector: Transplanting Lagos at the Center
Proem
It is not unlikely that the new minister of power would very well be the revered Babatunde Raji Fashola (BRF) erstwhile Governor of Lagos State; and if rumors are anything to go by (and they usually are, in Nigeria) it’s almost certainly the case that he would be. Interestingly, Lagos State which he governed does have a unique place in the history of the electric power sector in Nigeria, as the first power generating station in Nigeria, with an installed capacity of 20MW, was constructed in Lagos State.
Further, the first serious private sector involvement in the electric power sector with State government support was the Enron/AES project, involving the project company, the LASG, the Federal Ministry of Power and Steel and defunct National Electric Power Authority (NEPA). To the extent that the legal and regulatory regime permit, the Lagos State Government (LASG) has made achievements in the sector which outweigh, in the writer’s views, those of other states and BRF has played an integral role in this regard. Hence, whether or not he becomes the next minister of power, it may be worth reviewing some of the achievements of his administration in Lagos State, as far as the electric power sector is concerned so as to give an indication of what may be done on a larger scale to improve not just power available to government owned institutions, but to the populace, generally.
Planning and Audits
More often than not, in this part of the world, leaders take decisions without counting the costs of such decisions or even understanding the problem or the magnitude of same. Many times, therefore, the action taken is clearly inadequate. That has not been the case with LASG’s efforts to improve power supply. LASG did not just tackle the problem of inadequate power supply, but planned and conducted a power audit such that it was revealed that the requirement of the state was well over 10, 000mw by the beginning of the year 2014. The power audit conducted by LASG revealed that 7, 241 MW of power was required for homes, 2,350MW for commercial purposes and 600MW for the industrial sector. Therefore, it was clear to LASG that there was a large power generation gulf that needed to be plugged. It was realized that for a State like Lagos, there was the need to provide 24 hours of uninterrupted electricity, to public institutions such as hospitals, courts, police formations, public water supply corporations, waste management corporations, light rail, street lights amongst others. Upon understanding the magnitude of the problem, the government sought to work with the private sector and also employed some very young, but talented, knowledgeable and hardworking men and women who supported LASG in coming up with strategy for improving the state of the power sector at least as far as LASG facilities and institutions were concerned. This was especially the case, because of the inhibitions caused by the legal and regulatory regimes and the difference between the government at the federal level and that in Lagos State at that time.
The writer has highlighted below, some of the other positive steps taken by the BRF led LASG.
Captive Power Plants
To nib in the bud, the challenges faced by Lagos State, LASG, under BRF, developed a 10 Point Agenda. On the Lagos State 10 Point Agenda, for the development of the State, was electricity supply, which was regarded as the bedrock of the state’s development agenda as the provision of other aspects of the Agenda, such as portable water supply, healthcare and education; did (and still does) require efficient electric power supply to be achievable.
Specifically, the intention of LASG, under BRF, was to make electricity supply more readily available to civil servants and LASG owned institution, particularly through Independent Power Projects. On Thursday, October 17, 2013, the LASG commissioned a 10.6mw Alausa Power Project, which was to supply power to the State Secretariat in Alausa. The plant, a gas fired plant, was a public private partnership developed by Oando Gas and Power Limited. The project, was however, financed by a leading financial institution in Nigeria.
With the power plant, LASG was well able to decommission about one hundred and twenty (120) diesel powered generators within the LASG secretariat. Prior to the commissioning of that plant, there was a very high inefficient usage of electric power, loss of time, lack of accountability, diesel supply and transport cost. The power plant now supplies 62 buildings made up of, up to 1,000 offices each. The plant is captive as it serves the LASG owned buildings and offices etc.
Prior to the commissioning of the plant at the Lagos State Secretariat, Energy Company of Nigeria (Encon), a subsidiary of the Negris Group had developed the 10MW Island Power Plant to supply electricity to the LASG House at Marina, Lagos Island and by that dispensing with the use of 136 diesel fired power generating sets. The plant runs on Compressed Natural Gas (CNG) with diesel back up. The project also includes a dedicated 18 km distribution network.
Another power plant, the Akute Power Project with a 12.15mw capacity was developed by Oando to supply electricity to the Akute water company, also owned by the LASG. The plant supplies power to the Akute Intake Facility of the company. The Akute water company is responsible for 80% of water supply in Lagos. With improved power supply, the company increased the volume of water pumped, to over 130 million gallons daily.
Renewable Energy & Encouraging Robust Energy Mix
It is the writer’s view that in spite of Nigeria’s substantial renewable energy resources (solar and wind power potential in particular), efforts to disseminate renewable energy technologies (RETs) are yet to gain sufficient traction. If properly harnessed, RETs, could meet a sizeable portion of energy demand from the agricultural, industrial, transport and commercial sub-sectors of the Nigerian economy.
As things stand, almost the entirety of Nigeria’s current generation capacity is skewed to hydro or thermal (particularly methane) feedstock. RETs, however, continue to gain greater utilization in manufacturing and the global energy mix. Insufficient policy support and uncertain policy environments affect the investment prospects in the Nigerian power market. Where the enabling environment is created through bespoke, yet robust policies, RETs have the potential of providing profitable, environmentally sound technology options for Nigeria’s electricity industry.
In addition, renewables can be modularized (can be expanded incrementally) and are well suited for meeting decentralized rural energy demand. Most renewable energy technologies are labor-intensive: utilize locally available resources and expertise, and would, therefore, provide employment opportunities for the locals.
Despite the not too encouraging story of renewable energy in Nigeria generally, the LASG under BRF had, however, through its Lagos Solar program made a huge difference compared to Nigerian States that are even more solar friendly. Some public secondary schools and primary healthcare centers now run on solar, particularly those located in rural areas. It is also the case that in Lagos, individuals now connect some of the appliances in their homes, to solar sources. As electricity tariffs increase in Nigeria, the importance of a more robust energy mix would be more significant.
The above highlights some of the efforts that have been made by the LASG especially during the tenure of BRF and we expect that many of these can be done on a larger scale and at the federal level, to generally improve the electric power sector in Nigeria, regardless of who becomes the next minister of power. For more information on the power sector, read the text, the “Nigerian Electric Power Sector: Policy. Law. Negotiation Strategy. Business by Ayodele Oni”.
Ayodele Oni
Ayodele Oni, (ayodeleoni@outlook.com), a solicitor specializes in international energy (oil, gas & power) investment law and has a mini MBA in power & electricity. You can follow me on twitter @ayodelegoni.