By Adewale Sanyaolu
Nigeria’s quest to improve electricity supply to homes and industries has yet to suffer another setback as a 495MW power plant has failed to take off due to the absence of a Power Purchase Agreement (PPA).
Managing Director/Chief Executive Officer of Century Power Generation Limited, Mr Chukwueloka Umeh, stated this during an interactive session with select energy editors on the state of the Nigerian Electricity Supply Industry (NESI) held via Zoom.
A PPA is generally the primary contract between the public and private sector parties which underpin a power sector PPP.
It is typically between a public sector purchaser “offtaker” (often a state-owned electricity utility, in jurisdictions where the power sector is largely state operated) and a privately-owned power producer.
According to Umeh, the Century power plant located in Okija, Anambra State, conceptualised in 2011 was originally designed to be a 1,500MW IPP gas-fired power facility, saying the challenges in NESI forced the company to re-evaluate and changed its focus, scaling down operations to 495MW.
He explained further that the plant earlier scheduled for commissioning in 2021 recorded a major setback because the company was not able to execute a PPA with Nigeria Bulk Electricity Trading (NBET) company.
He said NBET had initialled the PPA in 2015 and again in 2017 but failed to execute the same as a bankable PPA to kick off the funding for the power plant.
Umeh added that Century Power had secured investment from its partners at that time to the tune of $700 million to be injected into the power plant, saying the funds were never released due to the absence of a PPA executed by NBET.
‘‘Every part of the development work for the plant has been completed. All the land documentation and environmental and social impact assessment works have been approved by the World Bank in addition to gas agreements and gas source secured.
We also secured plans and funding to build a gas pipeline leading to Okija to supply gas to the project in addition to an agreement with the Transmission Company of Nigeria (TCN) for us to upgrade our network from Okija to the Onitsha sub-station.
All these, he said, are tied and waiting for a bankable PPA, stressing that if the PPA is executed today, the project will immediately kick off again and within a period of three to four years, it will deliver the 495MW electricity to the national grid.
He lamented that NESI is severely broken due to its attendant challenges which, he said will continue to impact the industry as being experienced in the frequent grid collapse recording its seventh downtime in nine months.
Umeh maintained that the national grid is still very fragile coupled with inadequate power generation.
Umeh who also doubles as the Group Chief Operating Officer of Nestoil said the country has an installed capacity of about 13,000MW but struggles with a paltry 5,000MW electricity generation while the transmission network could only accommodate about 7,000MW, saying the distribution arm of the value chain was equally battling with obsolete equipment and a lot of inadequacies.
‘‘So what you constantly see is that anytime there is a disturbance in the network such as load drastically increase in load and generation cannot keep up or there is a problem along the line and there is a trip in the transmission line, the system is not able to quickly balance itself, the grid collapses.
The power expert also pointed out that, there are challenges around gas supply, saying we don’t have enough gas suppliers in the country coupled with an inadequate gas transport system.
He argued that the country will continue to face a myriad of challenges in the power sector, except if the government privatises the entire power sector value chain.
He said if this is done every participant in the value chain which included; gas transporters and producers, Gencos, Discos and the transmission company would be forced to do business with one another on a willing buyer, willing seller type of agreement which would create efficiency in the system.