53 Years of Epileptic Power Supply

 Prof Chinedu Nebo, Power Minister

Nigeria, with a population of about 170million people, is generating only less than 4,000megawatts of electricity, which translates to a per capita of 1.26kilowatt hour.

Ejiofor Alike writes that Nigerians have really suffered long years of epileptic power supply since independence
Electricity was first generated in Nigeria in 1896 when a 20-megawatt capacity power generator was installed by the British at Ijora area of Lagos, under the Public Works Department (PWD).

In 1929, the Nigeria Electricity Supply Company (NESCO) was established as a power utility company by the Europeans, resulting in the construction of a hydroelectric power station at Kuru near Jos, and the installation of more generators in Kaduna, Ibadan, Enugu and Kano, under the same PWD.

During this period however, electricity supply was confined to government quarters and homes of influential citizens.
It was not until 1950 when the Electricity Corporation of Nigeria (ECN) was established, that it was given a mandate to supply electricity to all Nigerians, who could pay the bill.

This was followed by the construction of the first 132KV transmission line from Ijora in Lagos to Ibadan.

Hydro Power Stations
With rising demand for power supply, the ECN in 1951 commissioned a study of the hydro-electric potentials of River Niger.
The federal government also commissioned Netherland Engineering Consultant (NEDECO) in 1963 to carry out hydrological survey of the Niger and Benue Rivers.

In 1958, the ECN contracted Balfour Beatty Company Limited to specifically study hydrological potentials of the Niger, around Jebba in the present day Kwara State.

The two Engineering Consulting Firms – NEDECO and Balfour Beatty, published their joint reports in 1961 with a recommendation that the first dam be built at Kainji.

The outcome of these reports led to the establishment of the Niger Dams Authority (NDA) in 1963 by an act of parliament to develop the hydropower potentials of the country, specifically, the Kainji project.

Consequently, IMPREGILO, a consortium of three Italian companies- Impresit, Giriola and Lodigiani was contracted almost immediately to execute the project.

The project commenced in 1964 with a foundation stone laid by the then Prime Minister, late Alhaji Abubakar Tafawa Balewa.
Funding for the Kainji project was provided by the federal government; Government of The Netherlands; International Bank for Reconstruction and Development; Institute Di credito per le imprese Di publica Utilita and U.K. Export credit Guarantee Department.
The project was first commissioned in 1968 by retired Gen. Yakubu Gowon, with more units coming on stream in 1976 and 1978 to bring the total capacity to 760megawatts.

The survey on hydropower potential in the country further led to the implementation of the 540-mw Jebba Power Station on the River Niger, and the 600-mw Shiroro Power Station on the Kaduna River, which is also one of the tributaries to the Niger.

The Shiroro Hydroelectric Power Station, built 550 metres downstream of the confluence of Kaduna River in Niger State, was officially inaugurated by the then military president, retired Gen. Ibrahim Badamasi Babangida on June 20, 1990.

Technical commissioning had started with Unit 411G4 being synchronised to the National Grid on October 3, 1989, while Jebba was completed in 1984.

To consolidate efforts in boosting electricity supply, both the ECN and NDA were merged in 1972 to form the National Electric Power Authority (NEPA).

The ECN and NDA were merged through Decree No. 24 of June 29, 1972 and on January 6, 1973 it became NEPA.
The sector witnessed a boom in the 1970s and 1980s in the sense that the privileged few, who had access to electricity, enjoyed uninterrupted supply.

However, during this period rural areas were not connected to the grid.
Period of Neglect
Electricity supply however witnessed a downward decline from the late 1980’s due to government’s neglect.

During this period, supply from the hydro power stations in Kainji, Shiroro and Jebba was declining, while electricity consumers increased in astronomical proportion.

With obsolete equipment and lack of maintenance, generation from the hydro stations continued to drop, without any deliberate effort by the federal government to build additional power stations.

Long years of neglect continued in the power sector and by 1999, Nigeria with a population of over 100million was generating 1,500megawats of electricity.

During the same period, countries like Iran, South Africa and Indonesia that have less population and were generating the same quantity of electricity with Nigeria in the 1960s, had over 30,000megawatts each.

Period of Reforms
During the years of military rule- 1966 -1979 and the period of civilian rule between 1979 and 1983, very few Nigerians had access to electricity supply.

In other words, supply was constant until access to power supply was opened for more Nigerians, including the rural dwellers.
With increasing demand for electricity supply by more Nigerians and without corresponding increase in power generation, the power infrastructure collapsed in 2000 shortly after the commencement of the current democratic rule in 1999.

The crisis in the power sector prompted the then President Olusegun Obasanjo to sack the NEPA board and to set up a nine-man technical committee, headed by the current Governor of Cross River State, Senator Liyel Imoke.

The setting up of the committee to probe the inefficiencies of NEPA signalled the beginning of the current power reform, which actually started in 2001.
During his second term, Obasanjo again dissolved the NEPA board headed by Alhaji Umaru Ndanusa and replaced it with a new technical committee, also headed by Imoke, who was then Minister for Power and Steel.

The committee had a mandate to run the affairs of NEPA and see it through the privatisation process.
Members of the technical committee include the then Director General of Bureau for Public Enterprises (BPE), Dr. Julius Jubril Bala, who was deputy chairman; Senior Special Assistant to the President on Budget Monitoring and Price Intelligence, Mrs. Oby Ezekwesili and the then Managing Director of NEPA, Mr. Joseph Makoju.

Others were the Managing Director of Nigerian Gas Company, and Mrs. Irene Chigbue also of BPE and a director in the Office of the SGF, Dr. B.Y. Abubakar.

With the National Electric Power Policy produced from the works of Imoke’s first committee, NEPA was transformed into the Power Holding Company of Nigeria (PHCN) with 18 successor companies.

The Electric Power Sector Reform (EPSR) Act of 2005 was signed into law on March 11, 2005 to support the power reform.
The Act created the Nigerian Electricity Regulatory Commission (NERC) and also seeks to privatise the PHCN successor companies.
Obasanjo started the implementation of the Act before he handed over on May, 2007 with power generation hovering around 3,000megawatts.

However, the administration of the late President Umaru Musa Yar’Adua suspended the reform as well as all the power projects initiated by Obasanjo, under the National Integrated Power Project (NIPP), targeted to inject over 4,000mw into the national grid.

The current administration of President Goodluck Jonathan revived the NIPP projects, with most of the 10-medium-sized gas-fired NIPP power plants at over 80 per cent completion.

President Jonathan also resumed the implementation of the EPSR Act of 2005 with the sale of the PHCN reaching advanced stage, which will be completed this October, while electricity generation hovers around 4,000mw.

The sale of the PHCN assets would reach the final stage this month after the National Council on Privatisation (NCP) at its sixth meeting in 2013 held on September 20, 2013 approved the payment of the remaining 75per cent of 14 out of the 15 bidders for the acquisition of the 15 PHCN successor companies.

An estimated N304.82 billion ($1.957 billion) was paid into the coffers of the federal government by 14 of the preferred bidders that met the deadline, bringing the total money realised from the sale of the assets to N425.830 billion ($2.733 billion).

The 12 companies which made payments on or before the August 21, 2013- due date include Amperion Power Co. Ltd (Geregu); Transcorp/Woodrock (Ughelli); Integrated Energy Company (Ibadan); NEDC/KEPCO (Ikeja); Vigeo Power Ltd. (Benin); Aura Energy Ltd. (Jos); Integrated Energy Company (Yola); Mainstream Energy Ltd. (Kainji);
Others are West Power & Gas (Eko); Kann Consortium (Abuja); 4Power Consortium (Port Harcourt); and Sahelian Power SPV Ltd. (Kano).

The NCP also approved the late payments by North South Power and Interstate Electric Limited for Shiroro Power Plc and Enugu Distribution Company Plc respectively, bringing the number of successful investors to 14.

However, the case of CMEC/EURAFIC consortium, the preferred bidder for Sapele Generation Company, which had paid $119,887,156 of the $201,000,000 bid consideration was referred to the Office of the Attorney General of the Federation and Minister of Justice for advice.
The physical handover of the successor companies to the bidders that have fully paid the remaining 75per cent for the acquisition cost has been scheduled to take place soon.

Gas Development Since Independence
Crude oil exploration started in 1908 when a German company, Nigerian Bitumen Corporation commenced exploration activities in Araromi and Okitipupa areas of the old western region.

But until recently, no attention was paid to gas exploitation as focus was targeted at oil.
In 1947 after the World War I and II, Shell resumed exploration and with an investment of about N30million, Shell discovered crude oil in commercial quantities at Oloibiri in the present Ogbia Local Government Area of Bayelsa State in 1956.

The company recorded first shipment of oil from the Oloibiri fields in 1958, with initial average production of 5,100barrels of crude oil per day.

Shell’s success attracted other multinational oil companies from the United States, Italy and France to join the search for crude oil in the country.

The Petroleum Profit Tax Act, 1959, which was amended in 1967, 1970, 1973 and 1979, and the Mineral Oils (Safety) Regulations, 1963 were parts of the deliberate moves by the government to have a firm grip of the industry.

The colonial government had earlier enacted the Oil Pipeline Act 1956, as amended in 1965, after independence.
Other legislations include the Petroleum Act 1969 and the Petroleum (Drilling and Production) Regulations, 1969 with amendments in 1973, 1979, 1995, 1996 and Petroleum (Amendment) Decree 1996.

The Nigerian National Oil Corporation (NNOC) Decree No 18 of 1971; Nigerian National Petroleum Corporation Decree 1977; Associated Gas Re-injection Decree 1979, as amended in 1985 were ambitious attempts by the government to boost crude oil production.

NNOC and NNPC were essentially set up to compete with the foreign multinational companies in the exploitation of hydrocarbons.
The Production Sharing Contract Decree of 1999 was aimed at relieving the government of funding obligations in the joint venture with the International Oil Companies.

The Petroleum Products Pricing Regulatory Agency (PPPRA) Act of 2003 was also one of the laws regulating activities in the industry.
By 1990’s however, gas was increasingly becoming relevance in the global energy dynamics and the federal government enacted several legislations to regulate gas exploration and exploitation.

The Associated Gas Framework Agreement (AGFA) of 1992; Financial (Miscellaneous Taxation Provision) Act of 1998; Financial (Miscellaneous Taxation Provision) Amendment Act of 1999; Nigeria Liquefied Natural Gas (NLNG) Act of 1999; Downstream Gas Act (DGA) and NAGFRA of 2005, and more recently, the Nigerian Gas Master Plan, were part of the recent efforts by the government to regulate activities in the gas sector.

A more recent development in Nigeria’s gas sector was the launching of a gas revolution by President Goodluck Jonathan to attract $25 billion worth of investment for the development of the country’s critical gas infrastructure and also create over 600,000 new job opportunities.

Nigeria has proven gas reserves estimated at 187 trillion cubic feet (tcf) and a further undiscovered potential of about 600 trillion cubic feet (tcf).
The gas revolution seeks to fast-track Nigeria’s industrial rebirth through a programme that would raise domestic gas supply to over 10 billion cubic feet per day by 2020 from the current level of 1.0 billion cubic feet per day, and also end gas flaring.
Based on the agenda, Jonathan said government’s expectation was that by 2014, Nigeria would be the regional hub for gas-based industries of fertilisers, petrochemicals and methanol.

Under the Nigerian Gas Master Plan launched by the federal government in 2008, oil companies operating in the country were required to make available a certain percentage of their gas production to the domestic market for electricity generation and fertiliser plants.

In 2009, the federal government shortlisted 15 firms including Russia’s Gazprom, E.ON Rhugas of Germany and Royal Dutch Shell to build three major gas-processing facilities in the country.

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, said the country would spend $1 billion on an aggressive oil and gas exploration campaigns in the Chad, Gongola/Yola, Sokoto and Anambra Basins, as well as the Benue Trough over the next five years.