Nigeria’s privatization of 10-independent power plants (IPPs) that could fetch up to $5.6 billion is stalling due to a lack of gas supply, Ransome Owan, the chief executive of Aiteo Power and Gas said.
Africa’s biggest economy broke up its monopoly on power generation and distribution by privatizing the sector two years ago, hoping to attract foreign investors.
“A lack of gas is stalling the deals,” Ransome Owan told a power conference in Lagos late on Tuesday. Since that privatization, the amount of power produced has stagnated, failing to reach a 2012 peak of 4,500 megawatts of electricity owing to gas constraints, plant outages and tripped circuits, according to Transmission Company of Nigeria.
About 3,346 MW of power was distributed to consumers during this year, it said. The government also blames gas pipeline vandalism. Owan said the power sector in Africa’s most populous nation was going through teething problems, majority of which had to do with the change of ownership, which would stabilise with time.
The IPP plants were developed by Nigeria’s three tiers of government – federal, state and local governments. Six new power plants have been built and another four are being constructed, but output remains poor as the plants do not get sufficient supplies of natural gas and the transmission lines cannot handle the power.
Nigeria has capacity to transmit just 5,500 MW of electricity on its grid, the sector’s regulator NERC said at the conference, adding that it was finalizing a framework which should be ready by year-end to allow private firms build and operate transmission lines. Older plants, privatized in 2013, are in dire need of an upgrade but the fledgling generating firms lack the cash to carry out repairs while distributors struggle with non-paying consumers and electricity theft. In some cases, consumers pay for only 40 percent of the monthly bill.
