Federal Government must expand existing power transmission grid and review the terms of its management before Africa’s biggest economy can effectively boost electricity supply, said David Ladipo, chief executive officer of Azura Power West Africa Ltd.
While Nigeria sold 17 state-owned power utilities three years ago, it retained control of the transmission grid and signed a short-term management contract with Manitoba Hydro Electric Board of Canada to run the entity now known as the Transmission Co. of Nigeria, or TCN.
The power grid is going to be the “big bottleneck” as it can only carry about 5,000 megawatts, less than a third of what the country needs to end blackouts, Ladipo, who runs the Lagos-based power-generating company, said in a Jan. 25 interview in Abuja, the capital. “A proper concession is doable or the alternative is just to have a bigger management contract” that enables Manitoba to do more, he said.
Azura Power, backed by Amaya Capital Partners, based in Port Louis, Mauritius, is investing about $900 million to build a 450-megawatt natural gas-fueled plant in Edo State, located near a transmission line and on a gas-pipeline route.
The company, which announced on Jan. 21 it had secured $876 million for the project, wants to take advantage of the growth of Nigeria’s electricity market, where demand is more than three times the current output of about 4,000 megawatts. Azura estimates that electricity from its facility will get to the grid by June 2018.
“There’s money sitting and available, waiting to be invested into the grid,” he said. “It can’t be expended because there’s insufficient execution capacity.”
Hakeem Bello, a spokesman for Works, Power and Housing Minister Babatunde Fashola, didn’t immediately respond to two calls seeking comments.
Nigeria’s electricity companies have been hindered by inadequate capital for expansion and erratic supply of gas, the fuel that accounts for 70 percent of the country’s power generation. Even though it has Africa’s biggest gas reserves of more than 180 trillion cubic feet, the West African nation has struggled to ensure regular supply. It has been plagued by pricing disputes and unrest in the Niger River delta, where most of the gas is produced, resulting in frequent pipeline sabotage.
Nigeria is also Africa’s top oil producer and relies on crude sales for 70 percent of government revenue.
“At the moment, the transmission constraints are masked by the gas supply shortages,” Ladipo said. “The gas supply shortage, we believe, will eventually be alleviated and then all the spotlight will be on TCN.”