NNPC’s power generation proposal

THE Nigerian National Petroleum Corporation (NNPC) recently announced  that it had perfected plans to generate 4,000 megawatts of electricity for the country. The disclosure was made by the corporation’s Chief Operating Officer (COO), Gas and Power, Saidu Mohammed, at the 2017 retreat of his Autonomous Business Unit (Gas and Power) in Kaduna, Kaduna State. Mohammed said that this would be achieved through the construction of independent power plants “in the next three to ten years” by incorporated joint venture companies that would involve NNPC, international power companies and other Nigerian investors to be structured after the Nigerian Liquefied Natural Gas (NLNG) business model. He added that  the new thinking involved the extension of the corporation’s major gas pipeline infrastructure into a robust network to connect various parts of the country.

He said: “As at today, NNPC has interest in two power plants, one in Okpai, Delta State and the other in Afam, Rivers State, which were respectively built by our Joint Ventures with Nigerian Agip Oil Company (NAOC), and Shell Petroleum Development Company (SPDC). These two power plants collectively generate up to 1,000 megawatts and they are the most reliable and cheapest source of power to the national grid in Nigeria today. The main base-loads to justify such infrastructure are power plants that would consume the gas and for that, we are planning to build about 2,000 to 3,100 megawatts, combined, in these three cities. The partnership will involve players who will bring in their various capacities as operators, builders of power plants and as investors. NNPC will also bring its strength of being a dominant player in the    Nigerian gas value chain.”

Given the precarious power situation in the country, any step taken towards a reversal of the status quo is welcome. There can be no debate over the NNPC’s contention that if you generate enough power, the multiplier effects will revive most of the moribund industries across the country.  Since the Federal Government in effect owns 40 per cent of the distribution companies, there is nothing basically wrong with the NNPC entering into partnerships with the aim of generating electricity for the national grid. However, because the liberalisation of the power sector emanated from the failure of the government to generate power, Nigerians can only hope that the latest plan by the NNPC is not just another gimmick.

It is indeed saddening that the country has for years been stuck with generating only 4,000 megawatts of electricity despite the billions of naira expended on the sector by successive administrations, particularly the Olusegun Obasanjo administration. Even before the return to civil rule in 1999, the Federal Government had adopted a policy of liberalisation of the power sector, but had to enact the Electric Power Sector Reform Act (EPSRA) in 2005 in a bid to attract investors. It later transformed NEPA into the Power Holding Company of Nigeria (PHCN), and then unbundled it into 18 successor companies. However, when the new owners took possession of the power producing assets on November 1, 2013, they complained bitterly about the rot in the sector which they said had exceeded their expectations. Sadly, power supply in the country remains abysmal, in part because the power transmission network in the country remains rigid, and under state control.

Happily, however, the Muhammadu Buhari  administration has indicated its unhappiness with the current power situation in the country. For instance, speaking at the fifth European Union (EU)-Nigeria Business Forum in Lagos in November last year, the Minister of Power, Works and Housing, Mr Babatunde Fashola,  had indicated that the government would welcome any move aimed at improving the power situation in the country, although he reiterated its unwillingness to revoke the privatisation of the nation’s power sector.  According to him, “The Federal Government will respect and uphold the contract it has been committed to and inherited from the past administration. If those calling for revisiting of the privatisation of the power sector meant to say improving the governance, performance and efficiency, then I am here for that. If revisiting it will mean that Distribution Companies (DISCOs) should open up and investments should come in, I am for that.”

Given the foregoing, we urge the NNPC to ensure that  its present plan is executed to the letter. Its vaunted strength of being a dominant player in the Nigerian gas value chain can only come to be appreciated by Nigerians if they witness improved power supply. The ball is firmly in its court.