Exit Of Power Purchase Agreements Stalls Emergence Of New Power Plants – Nnaji

A return to power purchase agreements (PPAs) with private sector investors is germane to ramping up Nigeria’s electricity generation, says former Minister of Power, Professor Barth Nnaji.

According to Nnaji, no new plants have been built by the private sector since the suspension of the PPA in 2015.

According to various available data Nigeria currently has about 13,000-megawatt nameplate capacity but generates only about 5,000MW due to a number of factors, including insufficient natural gas availability for the country’s gas-fired plants, which account for 80 per cent of national grid electricity.

Nnaji, founder and chairman of Geometric Power, told a forum of professionals in the electricity value chain, at a large meeting organised by the Udo Udoma and Belo-Osagie law firm in Lagos that, without the resumption of the PPAs, ‘it will be very difficult for any investor to provide money for grid power generation.’

He said, the PPAs ‘provide comfort to investors,’ citing the example of the 450MW Azura power plant in Edo State which cost about $900m to build.

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Creditors, he noted, were able to provide the long-term funds because of the partial risk guarantee (PRG) provided in 2012, when he was the power minister under President Goodluck Jonathan.

ExxonMobil and General Electric of the United States, which has been trying to develop a thermal plant of 1,000MW in Aba in partnership with Geometric Power, have since paused action on the projects after spending hundreds of millions of dollars.

It costs between $1.3m and $1.5m to build just a one-megawatt gas plant, according to Cliff Eneh, a former engineer with Texas Power and Light in the United States who is now an energy consultant in Lagos.

The Federal Government and various state governments don’t have enough resources to close the well over 50,000MW gap in the country, said Eneh, also a former manager with the defunct National Electric Power of Nigeria (PHCN).

Egypt and South Africa, which are among Africa’s largest economies, generate 58,000MW each, but South Africa has since 2007 been experiencing load shedding because of inadequate power availability.

“This shows that 58,000MW can’t be enough for us”, Eneh asserted, supporting Nnaji’s call for the reinstatement of PPAs. Nnaji also told the gathering about the great urgency to address the paralysing supply gas crisis bedevilling the country.

A situation where Nigeria, the world’s 9th largest gas country, can’t provide gas for domestic consumption isn’t justifiable, he said.

He revealed that, his 188MW Geometric Power Plant, commissioned last February 26 by vice president, Kashim Shettima, on behalf of President Bola Tinubu,  has been grappling with gas scarcity, sometimes staying weeks without supplies, despite building a 27-kilometre gas pipeline from the plant’s location in the Osisioma Industrial Layout in Aba to Owaza in Ukwa West Local Government Area of Abia State.

He observed that the challenges in the power sector ‘are, to a large extent, a reflection of the broader economic crisis in Nigeria,’ advising the political class to embrace patriotism to solve the problems.

“When I was the Minister of Science and Technology in 1993, all government officials and government establishments were using locally assembled Peugeot vehicles which provided thousands of citizens and businesses with direct and indirect jobs,” he recalled?

“Government officials in the United States, France, the UK, Italy, Germany, and other places use only vehicles manufactured in their countries.

“At Geometric Power, we made it a policy to patronize only locally produced vehicles like Innoson and Peugeot, just as we use Cutix and Coleman wires and cables made in Nnewi, Anambra State, and Arepo, Ogun State, respectively,” he noted.