Power plants built under the National Integrated Power Projects (NIPP) are yet to offer any form of returns to the government, after investing more than $5 billion in the last ten years.
The NIPPs are managed by the Niger Delta Power Holding Company (NDPHC) which was established in 2005 to hold the assets and implement the projects, following their conception as Nigeria’s most ambitious intervention to stabilise the nation’s power system.
The initial fund for this venture came from the excess crude account, meaning that the money belongs to the three tiers of government, which are the Federal Government, the 36 states of the federation and 774 local governments.
This robust investment resulted in the establishment of ten power plants and electricity evacuation lines from the generation points, as well as gas infrastructure to ensure that there is gas in the plants.
However, operational inefficiencies in the Nigerian electricity value chain, particularly the inability of power distribution companies (Discos) to pay the NDPHC, for energy received from the company and distributed among consumers, has kept NDPHC and the NIPPs it operates pepertually in debt.
“After ten years, we are unable to make appreciable returns on the investments, so we are not able to make any returns to any state government, not to talk of local governments, because of lack of liquidity in the sector,” said Chiedu Ugbo, who is the CEO of NDPHC.
At the end of 2015, the estimated aggregate expenditure on the NIPPs was $5billion, according to NDPHC data.
Another challenge is that the NIPPs have a designed capacity to produce 4,774 megawatts, but that capacity is grossly underutilised, as eight of the ten power plants are already generating and supplying energy but at an average capacity of about 1,700 megawatts only.
This low capacity utilisation challenge is aided by either unavailability of gas to system operators, or incessant vandalism of energy installations.
BusinessDay findings show that revenue generation from the sale of energy by NDPHC since the first NIPP power plant at Olorunshogbo, in Ogun State, was synchronised in August 2011, amounted to about N235 billion.
Out of this figure, about 55.3 percent was paid, while about 44.7 percent remained as outstanding debt.
“As I speak today, as at August 2016, we are owed by the market about N105 billion. This is not imaginary, it is invoice as settled by NERC, which has the statutory role to do that, as the market operator, and we are owed about N105 billion as at today,” said Ugbo.
YANGE IKYAA
