Why investors are not coming with large power projects like Azura

Nigeria  may have to wait to experience another large power project like Azura, on account of  transmission and distribution challenges.

This will slow down economic growth and job creation because electricity services across the country will still remain largely in short supply . Electricity supply will remain concentrated in the city centres.

Minister of Power,  Babatunde Fashola on Monday  in Ikorodu, Lagos, stated that  transmission and distribution and infrastructural challenges  are the major factors inhibiting  investors  from coming up with large projects like Azura, despite the fact  that there is an already existing template that they could work with.

He lamented that at the moment, the country is able to generate 7,000 mw but only able to distribute 5,000, stressing that if you don’t distribute your inventory, your warehouse would be full.

“Unfortunately, you can’t store power, so there are losses down the line,” he said.

According to him, where the country needs more capacity in the immediate, is in the distribution and transmission sides.

“As you mentioned, Azura would start commercial operations sometime in June, that is 459 mw that is being added to the 2,000mw that is on ground. In addition to this, Afam is coming with 240mw. So, where investment should go, my advice to investors now, is that we need more activities and capital on the distribution and transmission sides of the business, so that we can make the whole business venture worth the while. If people are producing what people cannot sell, then the business will struggle”.

The Transmission Company of Nigeria had stated plans to inject U.S.$8 billion to upgrade its operations to achieve 20,000 megawatts of electricity supply.

On why investors are not capitalising on the opportunity the Azura template has provided, by building big projects, he said that he does not think so,  stating that one of the briefs he got when he resumed as minister of Power, was that there are power generating licenses that had been issued.

“But I think that we encourage investment in the power sector but we would like to see more investment in the distribution side and I think it is important to emphasise this.

He said: “You know power cannot be stored when it is generated.  It must be evacuated to the end user and as far as the problems of transmission and distribution remain it may be a challenge for investors to come forward with another project as large as Azura”.

According to him, the government is doing everything possible to remove transmission challenges, just as it is working to see the problems of distribution is resolved.