Nigeria Content Online

Barth Nnaji,
professor of Robotics engineering and special adviser to the president
on power, in this interview, outlines prospects for the electricity
sector and how he can only promise stable improvement in Nigeria’s
power sector.

Power agenda

A lot is different
this time around. First, this government has produced a holistic plan
on how to drive the reform process to completion. That reform plan
comes from an Act made in 2005 called the Electricity Power Sector
Reform Act of 2005. So government now has a plan for electricity and
the plan includes everything from generation of the power, transmission
of power, to distribution of power, to the regulatory issues
surrounding all these. That is different. Now, as part of the
implementation of the Act, generation and distribution will be private
sector driven from next year. That’s also a major shift because that is
now bringing the will of government to bear on the Act in moving it
forward. So you are going to see actual private sector participation
not just by talking about it, not just by going to various countries of
the world and saying come to our country to invest but actually getting
the private sector to become investors and drivers of the power sector.

Power generation

Currently,
Nigeria’s installed capacity is over 5,000 megawatts while actual
generation is in the neighbourhood of 3,500 but sometimes we get up to
3,800 megawatts. That is available generation. You have installed
capacity, you have available generation capacity, and you have actual
generation capacity. The installed capacity is the amount of power that
the plant is supposed to generate but is not able to generate because
it has one turbine damaged or some equipment damaged. That lowers it.
But what is available for generation is what the plant can actually
generate if everything is okay, in terms of say gas supply. The actual
generation is when for instance you have enough gas to generate and you
can evacuate what you generate as installed generation. Sometimes you
have available generation but you are not able to evacuate it, maybe
due to problems with the transmission network. Sometimes the power
plant can actually generate this but it doesn’t have enough gas. That
is the sort of problems we encounter. So what you end up having is the
actual generation. What we would like to have as government is for the
actual generation to match installed generation. When you have prepared
your plant, you have the gas and you can evacuate what you produce.
Then the actual will match the installed.

Specifics

The country needs
close to $5 billion per year on the average over the next 10 years to
reach where it wants to go for Vision 2020. You are right, we require
foreign investment in this sector but foreign investors are sceptical
as they have all the world to invest in. They look at Nigeria, they
look at Brazil, they look at India, they look at Japan, they look at
China and there are so many other countries. But Nigeria is now saying
we are going to make the various indices for investment such that they
attract what an investor would be looking for internationally. It’s a
different ball game. Part of it is that the tariff for gas should line
up with the tariff for generation of electricity. When you have a whole
value chain incentivised to perform, then investors will be listening.
When you say the regulatory commission is legally constituted and given
authority to perform then something different has happened. When you
say that you are privatising generation and distribution so that
distribution will become credit worthy, then people will begin to
listen to you.

Central Bank Intervention fund

The intervention
fund is a very good one. It is a way of showing that government is
serious and saying I put my money where my mouth is. But of course,
that is a stimulant because we require many times more than what the
CBN is putting down. That amount would not address problems of the
power sector. Don’t forget the amount is for both power and aviation
and it amounts to just about $2 billion. It is good but it is not
enough and it shows the will of government. But there is a lot more the
government is doing in terms of policy approach. All what the
government announced has shown the will of government to tackle the
problem. An example of what government should be doing in the future is
research, to seek ways of improving the sector so that we can help the
private sector to improve this sector because it benefits this country.
Government needs to lead the way in developing renewable energy to
build power plants, nuclear energy, solar, wind and others.

Challenges

The good thing is
that everybody in Nigeria knows that the country does not generate
enough electricity so it does not need a lot of convincing to let
people know that something needs to be done. But what is difficult is
getting them to understand specifically what needs to be done. In that
regard, we have sometimes encountered problems but that is normal. It
is our responsibility to explain clearly and transparently how the
policies would be implemented to achieve the goal and the need for them
to go along with us.

The PHCN workers
have two unions, senior staff union and junior staff union. The senior
staff union is manned by actual workers of PHCN and the junior staff
unions are manned by professional unionists. All in all, the intention
is to listen to what the union officials are saying in order to satisfy
the workers. Government is listening to them. The payment of arrears of
monetised benefits is an indication that government is listening
because for seven years these arrears had remain arrears. But this
present government has found the will and found the money to pay them.

What is
disappointing is that at the point of doing this, the PHCN officials
ordered their workers to go on strike and that was on the day before
the president was to announce the road map.

Interest groups

We don’t need to
overemphasise it but these various interest groups incite the union.
Unfortunately, it is not the workers that have this problem. The
workers have been extremely wonderful. All the workers want to earn a
better living and for their interest to be protected. But there are
various interests at work. These interests are yet to get to the
realisation that they can do better by rechanneling their interests
into more productive endeavors in the power sector. The power sector is
opening up. We have so many business opportunities. You don’t have to
be selling generators. You could be selling transformers, capacitors,
switch gears. You could even be manufacturing these things here. There
are many companies now manufacturing transformers in Nigeria. That is
the sort of things we expect. Re-channel your business rather than
cause obstructions. If you are a diesel importer, you could get into
gas production and transportation. These are things that are opening up
now. So there is really no need to hold the country to ransom, or try
to keep us in darkness because of personal interests. There is no
reason for that.

Stable power supply

I will not give you
date but you will begin to see improvement. Going to next year, end of
next year, 2012, we will continue to see improvement. It is better to
see improvement than promise and get disappointed. People have to see
that there is competent management of the power sector and competent
management will translate to better and efficient power with time.

Other sources of power

The government is
doing feasibility studies for eight plants, be it hydro or coal or gas.
Government is doing feasibility study for Mambilla Hydro, for Zungeru
and for Gurara. These are three key power plants that government is
undertaking. In the case of Mambilla, it will be initiated by the
beginning of next year and by the time it is completed in six years
time; it will generate about 2,600 megawatts. The project will consist
of a dam, power plant, high voltage transmission line to substations.
Then you also have the Zungeru power plant which is a 700 megawatt
power plant and Gurara which is 300 megawatts power plant. Then we have
coal-fired power plant which we are beginning to initiate which we hope
will come on in the next five to six years. Then there are plans but
they have to be initiated by the private sector.

Background

It’s because I have
worn the shoes and I know where it pinches. I know what it takes to
conceive, design, construct and operate a power plant. I know about
distribution networks and I know the challenges that the private sector
will encounter when doing this. One of the key challenges, especially
for the private sector is getting money. You can buy anything but
getting the money requires having bankable project and bankable project
means that that thing has to have been worked out to a level that a
lender will give you money or an equity investor will give you money
and it is very challenging. When government is doing it, all it does is
go to the treasury and allocate the money and build. When private
sector person is doing it, he has little money. Every real investor in
power will not use his money but will source for money. For instance,
to build a hundred megawatts power plant costs at least $100 million,
that is about N15 billion. What they do is to put down some equity and
go borrow the rest. And for somebody to get a lender to give you money
many of the things we are doing now have to be in place.

Affordability

That is the whole
idea. Reliable quality electricity that is affordable, to have enough
reliable and affordable supply so that the small entrepreneur, the
urban poor and rural dwellers will be able to have power at the flick
of the switch.