NDPHC: Building The Power Backbone For 21st Century Nigeria

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Mr. James Olotu, Managing Director, NDPHC
Mr. James Olotu, Managing Director, NDPHC



NDPHC: Building The Power Backbone For 21st Century Nigeria,

…And YOU Can Make Good MoNey From It Too!



By OSIGBESAN, Sultan Luqman


If all you watch on television, listen to on radio or read in print and online platforms is the baleful bickering of Nigerian politics, you may be forgiven if you conclude that the country is either irreparably stuck in the mud orhast turned a wonky, wayward runaway wagon heading for the rocks, where it would surely smash into smithereens. Beneath the cacophonous chaos, however, many professionals and technocrats are sitting in a multitude of offices across the country silently and tirelessly hammering away, building the needed infrastructure and services to right the course of Nigeria on the path of 21st Century modernity.

At the core of this subterranean, largely unsung hard work being done by many Nigerians are the multi-billion-dollar National Integrated Power Projects (NIPP). Conceived in 2004 as a fast-track government-funded initiative, the NIPP has been adding significant new generation capacity to the country’s electricity supply system. It is also expanding the country’s transmission and distribution infrastructure on a scale never before contemplated or executed in Nigeria.

Originally designed around seven medium sized-gas fired power stations in the oil producing states, the NIPP was also meant to stabilise the electricity supply system while the reforms captured in the Electric Power Sector Reforms Act of 2005 take effect.

In 2005, the Federal Government incorporated the Niger Delta Power Holding Company Limited (NDPHC) as a limited liability company to serve as the legal vehicle to hold and manage the NIPP assets using private sector-oriented internationally accepted best business practices.

Funded by the three tiers of government, the NIPPtoday consists of engineering, procurement and construction (EPC) of:

  • 10 new gas-fired power plants with a combined installed capacity of 4,774 megawatts (MW);
  • Gas pipelines, gas metering and regulating stations grouped into 7 lots for the delivery of natural gas to the power plants;
  • 125 high voltage transmission network projects for evacuation of electricity from the new power plants and the reinforcement of various segments of the national grid network to increase its capacity to wheel 10,000MW of electricity around the country at 330kV and 132kV voltage levels;
  • Provision and integration of grid-wide telecommunication and Tele-protection infrastructure; and
  • 250 electricity distribution network projects at 11kV and 33kV voltage levels with injection substations and HVDS transformers. These projects are grouped into 43 lots spread over every state of the Federation.

Despite intensive legal, political and funding hiccups leading to a two-year suspension, the NDPHC has delivered on these and more, completed 15 power generation project  in Olorunsogo, Ogun State, Sapele, Delta State, Alaoji,  Abia State and Omotosho, Ondo State. Cumulatively, these have increased the country’s power generation capacity appreciably.

Equally impressive, the NDPHC has also added 274 kilometres (Km) of transmission lines to the national carrying capacity through the completion of six transmission projects namely, the 330KV DC Ajaokuta-Lokoja-Gwagwalada lines, 222Km; 330KV DC Ihovbor-Benin Main-Oshogbo Line A, 17km; 330KV DC Papalanto-IkejaWest-Ayede line, 16KM; 330KV DC Ganmo-Jebba-Oshogbo SC-Turn In/Turn Out Line, 12KM; 330KV DC Omotosho-Ikeja West Line, 5Km; and the two-kilometre, 132KV DC Ganmo-Ilorin-Oshogbo Turn In/Turn Out line.

Furthermore, the NDPHC has strengthened the transmission capacity of 12 substations, built three new ones from the scratch and rehabilitated two of across the country, with a cumulative capacity of 2,370MVA.

In putting up the third leg of the power tripod – Distribution – the NDPHC also has an impressive haul of 30 completed zonal projects as follows: Abuja zone, 2; Benin zone,2; Eko zone,9; Ibadan zone,6; Ikeja zone 6; Kaduna zone, 3; and Jos/Yola zone, 2.

Getting The Private Sector On Board

Friday, March 7, 2014 has gone down in history as a significant date in the annals of the country’s power sector. On that day in the Federal Capital Territory, a consortium of investors – foreign and local – successfully put up their financial bids for the 80 per cent equity of the 10 thermal power plants built by the NDPHC under the NIPP.   It was a realisation of a vision conceived way back in the year 2004 when the NIPP was initiated, albeit to much scepticism. With the infamous “Nigerian factor” weighing on the minds of many then, not a few citizens expressed misgivings that the NIPP was another white elephant project conceived to waste the nation’s resources or even siphon it.

But today, the NIPP is a realised $8 billion investment spanning construction of 10 power stations with total capacity of 4,774MW; over 125 high voltage transmission network, gas pipelines and metering stations for the power stations; provision and integration of grid-wide telecommunication and tele-protection infrastructure; and over 290 electrical distribution and network projects at 11kv and 33kv voltage levels with injection substations and transformers.

The success our country has made of the NIPP is obvious. This was clearly brought home with the successful financial bids for the 10 power plants, from which the three tiers of government stand to recoup $5.8 billion of their investments by selling 80 per cent equity in just the generation arm of the tripod.

In line with global best practices, the power plants were offered to the highest bidders. Sixty-six companies initially applied to bid for the 80 per cent equity in them. After a diligent screening process, 42 of them were approved to take part in the exercise. The bid for Alaoji Generation Company was won by AITEO Consortium, which offered $902,000,000 for the 1,076 megawatt facility. Benin Generation Company was won by EMA Consortium with its $580 million offer. EMA Consortium also won the bid for the Calabar Generation Company with $625 million.   Dizzy Integrated Power Limited secured the Egbema power plant with the highest bid of $415,075,000 while KDI Energy Resources bought the Gbarain Generation Company with $340 million. The Geregu Generation Company bid was won by Seoul Electric Power Limited through the offer of $690,200,000 and Daniel Power Consortium bagged the Ogorode power plant after bidding the highest for it with $531,777,777.   ENL Consortium Limited were the preferred bidders for the Olorunsogo Generation Company with a bid of$751,240,000 while Omoku power plant bid was won by Shayobe International Limited Consortium with the highest offer of $318,710,840. Lastly, the Omotosho Generation Company went to Omotosho Electric Power, with a bid of $659,999,000.

The new owners of these power plants have since taken charge of them, save for two plants that are subjects of litigations in which all parties involved are currently working on to settle amicably out of court.   The financial bid process also produced 10 reserve bidders who waited in the wings to displace any of the preferred bidders that would have failed to meet up with extant transaction guidelines in the power plants’ privatisation process.   It is noteworthy that all the power plants were overpriced by the bidders, a development experts and stakeholders in the power sector say is a reflection of the facilities’ quality and their viability as business entities. And by constructing these power plants from the scratch and simultaneously, the NDPHC and Nigeria have pulled off a feat no other organisation or country has done till date.

Appraised with the fact that the NDPHC built these 10 plants alongside its massive work in expanding the country’s power transmission capacity, gas and distribution networks, it is no surprise that the power sector and indeed the NDPHC is the bride of the current federal administration, often cited by officials as one industry where the success of President Goodluck Jonathan’s Transformation Agenda is indisputable.   Chairman, Joint Technical Transaction Committee of the bid who is also the Benue State Governor,Gabriel Suswam, expressed delight at the successful conduct of the bid. He said: “All the plants are in good condition, the investors who bid for the plants have done their own due diligence and inspection of the plants before submitting their bids.” Managing Director, NDPHC, Mr James Olotu, said that with the privatisation of the GENCOS under the NIPP, the power situation in the country would improve significantly and steadily over time in the near future. On his part, Director General, Bureau of Public Enterprise (BPE), Mr Benjamin Dikki, said: “This NIPP privatisation process will usher in the last step of the session. At the conclusion of this, all the generation companies (Gencos) will now be in private hands and it is a historical landmark.”

NIPP Phase II:  16 Hydro Power Stations In The Works The sale of the 10 thermal stations brings to culmination the first phase of the NIPP and opens up for implementation the second phase of the initiative, which encompasses a transformation of the country’s power infrastructure in other locations not fully captured under the first phase of the NIPP, especially in the northern region.

This will involve the construction of at least 16 large, medium and small hydro power plants on dams in the country as follows: a 3,050MW Mambilla Dam hydro power plant (HPP) in Taraba State and the 360MW Gurara II Dam HPP in Niger State. Others are Itisi Dam HPP, Kaduna, 40MW; Bakolori Dam HPP, Zamfara State, 3.0MW; Challawa Dam HP, Kano, 7.5MW; Tiga Dam HPP, Kano, 10MW; Kampe Dam HPP, Kogi State, 0.5MW; Zobe Dam HPP, Katsina, 0.30MW; Jibia Dam HPP, Katsina, 4.0MW. The rest are Doma Dam HPP, Nasarawa State, 1.0MW; Katsina Ala Dam HPP, Benue State, 40MW; Oyan Dam HPP, Ogun State, 10MW; Ikere Gorge HPP, Oyo State, 6.0MW; and Owena Dam HPP, Ondo State, 0.45MW. The NDPHC would also a small dam-based HPPs at the Ahmadu Bello University (ABU), Zaria, Kaduna State and a Jado Dam HPP in Adamawa state. In total, these HPPs would increase the country’s power generation capacity by about 4,000MW.   In addition to these power generation projects under the second phase of the NIPP, the NDPHC is also expanding transmission infrastructure in these areas, leveraging on invaluable experience garnered in the course of executing the first phase of the NIPP.   The challenges to be met under NIPP Phase 2 are many. In the North, for instance, Transmission Transfer Capability is constrained to less than 4,000MW or about 40 per cent of the line capacity. The long radial lines that characterise the three northern planning regions results in a cascading voltage instability that degenerates further north.   In the North East, high and low voltages are the usual experience of residents. The region also suffers from high voltage during light load condition and low voltage at times of heavy load condition. Some of the weakest system nodes are located in this region due to long electrical distances from generating station. Power transfer capacity to the region is reduced to less than 30 per cent of the line capacity because of voltage regulation problem. The entire North Eastern region transmission capacity is limited to less than 150MW because of voltage regulation problem. Also, due to voltage regulation problem in the North West, transmission power transfer capability is constrained to less than 30 per cent of the 330kV line capacity of 660MW, which translates to less than 200MW. A significant percentage of the $5.8 billion proceeds of the partial sale of the 10 thermal plants would be spent on the second phase of the NIPP even as government has said that it would seek a $10 billion worth of investments in collaboration with power sector private investors to build the new hydro power stations across the North.   While the first phase of the NIPP has, in no small measure, increased the country’s capacity in power generation, transmission and distribution, experts are of the view that the nation would need to explore the combination of various energy sources to achieve optimal capacity and energy security. Thus, a diligent approach to executing the second phase of the NIPP, which is largely hydro, is imperative if the country is to meet its energy needs.   Meanwhile, following spates of acts of vandalism against gas supply infrastructure, gas supply remains a challenge in the optimisation of the 10 thermal plants. However, the federal government and the Nigerian National Petroleum Corporation (NNPC) are working hard to meet this challenge.

A growing debt challenge among the players in the power sector is also of concern here. For instance, the NDPHC, which runs its operations on internally generated revenue (IGR), is being owed a whooping N36 billion for electricity supplied to the Transmission Company of Nigeria (TCN) as at the end of December 2013. Industry stakeholders say this is an issue government needs to address in order not to send the wrong signals to investors in the sector. The government, through its regulatory agencies, must ensure that a culture of debt does not gain ground in the power sector as privatisation takes root in the industry to the benefit of all Nigerians.

What Is In The NIPP For You?

The Ideal Reader of The Dream Daily will not pass off what he or she has read above and flip to the next page. You will want to explore the immense business opportunities latent in the NIPP and the on-going power reforms, for your personal, legitimate financial comfort. How? You, the reader of The Dream Daily, could have missed out on buying into the 10 NIPP power stations and other privation exercises in the sector for reasons beyond your control. This may have ranged from a lack of information or the financial wherewithal to be part of these concluded processes. But, regardless of your financial status today, you can still cut a slice of the power sector pie for yourself and your family.

If you have the financial muscles, or the clout and creativity to source funds, you can also buy into one or two of the hydropower plants the NDPHC is building now and would offer in a matter of months to private investors.

Before then, there are other opportunities you could explore in the power sector right now. Do you have a registered company in your portfolio? Do you currently run any size of shop somewhere? Do you at least live in a room on a street where there is electricity supply, however epileptic still? Then you can start asmall scale business in the power sector.

For instance,you can start a business of direct sub-vending of power sector accessories like prepaid meters and recharge them for your neighbours. Private electricity distribution companies are looking for partners in this regard and you do not have to have millions to be part of this, just like ordinary folks are doing good business on a small scale in the telecoms sector printing and vending recharge vouchers in corner shops across the country.

If you have not done so, go to the Corporate Affairs Commission (CAC) today to register a company. Learn more about the power reforms going on in the country today. The NDPHC, NIPP, Nigerian Electricity Regulatory Commission (NERC), the BPE and Ministry of Power websites are some of the free online resources you can visit and explore to gain valuable insights into business opportunities in the power sector, and stimulate your creativity towards investing and generating additional income for your personal and family financial progress. Google them right away and prepare for a better future for yourself and family members. Our country’s Power Sector is about to explode. Be part of it. Start today!



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