RETURN POWER PURCHASE AGREEMENT TO PRIVATE SECTOR INVESTORS – EX-MINISTER BARTH NNAJI
Former Minister of Power, Prof. Barth Nnaji, has urged the Federal Government to resume signing of Power Purchase Agreements (PPAs) with private sector investors to enhance Nigeria’s electricity generation.
Currently, Nigeria has a nameplate capacity of about 13,000 megawatts but generates only around 5,000 MW, primarily due to insufficient natural gas for the gas-fired plants that supply 80% of the national grid.
Nnaji, founder and chairman of Geometric Power, addressed a gathering of professionals in the electricity value chain, including bankers and lawyers, at a meeting organized by the Udo Udoma and Belo-Osagie law firm in Lagos. He emphasized that without resuming PPAs, it would be challenging for investors to finance grid power generation, stating that these agreements “provide comfort to investors.” He cited the example of the 450 MW Azura power plant in Edo State, which cost approximately $900 million to construct.
He noted that creditors were willing to provide long-term funding due to the partial risk guarantee (PRG) established in 2012 when he served as power minister under President Goodluck Jonathan.
Nnaji pointed out that no new plants have been developed by the private sector since the PPA was suspended in 2015. He highlighted that ExxonMobil and General Electric have halted their plans for a 1,000 MW thermal plant in Aba, despite investing hundreds of millions of dollars.
According to Cliff Eneh, a former engineer with Texas Power and Light, constructing a one-megawatt gas plant costs between $1.3 million and $1.5 million. Eneh, also a former manager with the defunct National Electric Power Authority (PHCN), stated that the Federal and state governments lack the resources to address the over 50,000 MW power gap in the country.
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While Egypt and South Africa each generate 58,000 MW, South Africa has faced load shedding since 2007 due to inadequate power supply. Eneh argued that this indicates that 58,000 MW is insufficient for Nigeria, echoing Nnaji’s call for reinstating PPAs.
Nnaji also stressed the urgent need to resolve the ongoing gas supply crisis. He remarked, “A situation where Nigeria, the world’s ninth-largest gas producer, can’t provide gas for domestic consumption isn’t justifiable.” He mentioned that his 188 MW Geometric Power Plant, commissioned on February 26 by Vice President Kashim Shettima on behalf of President Bola Tinubu, has faced gas shortages, at times going weeks without supply, despite a newly built 27-kilometer gas pipeline from Aba to Owaza in Abia State.
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He observed that the challenges in the power sector reflect Nigeria’s broader economic crisis and urged the political class to embrace patriotism in addressing these issues. He recalled that when he was Minister of Science and Technology in 1993, government officials used locally assembled Peugeot vehicles, creating jobs for many citizens and businesses. He noted that officials in countries like the U.S., France, and Germany primarily use domestically manufactured vehicles.
“At Geometric Power, we prioritize locally produced vehicles like Innoson and Peugeot, and we source Cutix and Coleman wires and cables made in Nnewi and Arepo, respectively,” he said.
Participants at the forum included Dafe Akpeneye, a commissioner with the Nigeria Electricity Regulatory Commission (NERC); Kola Adesina, chief executive of Sahara Energy; and Nicholas Okafor, head of the energy team at the Udo Udoma and Belo-Osagie law firm.