Electricity is the backbone of modern society, driving everything from homes and businesses to industries and government services. A reliable power supply is essential for a nation’s growth and prosperity.
However, Nigeria’s power sector faces significant challenges, including inadequate funding, ageing infrastructure, regulatory obstacles, and operational inefficiencies. Olufemi Bakare, group chief executive officer of Fenchurch Group, in this interview with Abubakar Ibrahim, energy reporter at BusinessDay, discusses challenges in Nigeria’s power sector, solutions, and the low-hanging fruit in metering, generation, and local content.
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Can you give us an overview of Fenchurch Group’s involvement in Nigeria’s power sector?
Fenchurch Group operates through its subsidiary, Fenchurch Power, which develops and manages independent power plants (IPPs). We own an 8.5 megawatts (MW) plant and a 25-kilometre underground distribution network in Asaba, Delta State.
Additionally, we have a 3.6 MW IPP in Ado Ekiti with an 11-kilometre network and are developing an 8 MW plant in Otta, Ogun State, as well as a 5 MW project in Ohalera, Delta State. We also own Fenchurch Energy, which provides consulting services in both the oil and gas sectors, as well as advisory support for power projects.
From your experience, what are the biggest challenges facing Nigeria’s power sector?
One major challenge is funding. These projects are capital-intensive, and access to foreign exchange (forex) is critical since much of the equipment is imported. While the government has improved policies through NERC, there is still a large infrastructure gap. We need a stronger financial sector to move things forward more quickly.
Could you describe some specific obstacles Fenchurch Power has encountered and how they were managed?
During our Asaba project, the main hurdles were administrative and regulatory. Engineering is only about 40 percent of the job—the rest is navigating permits, power purchase agreements, exco approvals, and house of assembly ratifications.
We faced similar challenges in securing funding and political risk. For instance, on an 8 MW project in Ogun State, funders requested we hire an international consultant, which was an overreach considering the project’s scale. We pushed back and found a local expert instead.
Lack of local expertise is also a recurring issue, especially when funders don’t fully understand Nigeria’s operating environment.
However, through continuous stakeholder engagement and better project structuring, we’ve been able to address these issues and move forward.
What opportunities do you see for growth in Nigeria’s power sector?
The opportunities are vast. There’s a huge demand for additional generation and distribution capacity, especially given the frequent grid collapses and stranded power across the country.
Decentralised, localised generation is one area with immense potential. There’s also growing interest in software solutions, where consumers can track and manage their electricity usage in real-time.
Equipment supply and financing also present promising opportunities, particularly as technology continues to integrate with the power sector.
What could the government do better to improve power generation and distribution?
The government, through the minister of power, is making some progress, especially with tariff reviews and efforts to ramp up capacity. However, power is still largely subsidised, which deters investment.
The Transmission Company of Nigeria (TCN) remains a bottleneck, with a lot of stranded power across the grid. TCN needs to step up its game, and while the government is funding improvements, these projects take time.
Gas infrastructure is also critical. Many power plants are not receiving adequate gas supply, which is why the government’s push for more gas pipelines is a great initiative.
Compressed natural gas (CNG) is another area with huge potential, especially with the removal of petrol subsidies. The customs process for importing equipment is another pain point. Delays at the ports slow down infrastructure projects significantly, so that’s an area where greater efficiency is needed.
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How do you see the private sector contributing to solving Nigeria’s power challenges?
The private sector is already at the forefront. Companies like Fenchurch Power, Utilita, and ElectronNigeria are driving localised power generation and distribution.
In the past, distribution companies (Discos) viewed us as competition, but now there’s a shift towards collaboration. We’re being invited to be embedded partners, supplying power to commercial clients.
Our pricing is competitive—cheaper than diesel but more expensive than Band A tariffs due to the cost of CNG. We target large commercial customers and have recently begun selling night loads to hotels in Ekiti. This relieves the grid, as we provide dedicated power for critical services like hospitals and schools.
What is Fenchurch Group doing to impact local communities?
We’re committed to Corporate Social Responsibility (CSR). For instance, during our power plant development in Ekiti, we sourced all materials locally and employed local artisans, promoting skills transfer.
We also established Bremen Operations and Maintenance Limited to manage our power plants and provide training for local engineering graduates. Additionally, we supply power to local government schools and healthcare facilities, ensuring access to reliable electricity.
What’s the future of renewables in Nigeria’s power sector?
Renewables will play a significant role, but challenges remain, particularly with storage costs. As battery production becomes more localised, costs will decrease, making renewable energy more viable.
We’re optimistic about the role renewables will play in complementing Nigeria’s energy mix soon.
How can Nigeria’s energy consumption become more efficient?
We need better enforcement of building permits and zoning regulations. For example, streets designed for residential use often end up hosting commercial enterprises like nightclubs and supermarkets, which overload existing transformers. We all have a part to play—developers, government, and the public—in making the power sector more efficient.
How is Fenchurch Group approaching renewable energy in Nigeria?
We are working to expand our renewable energy footprint. While our plants primarily run on gas, a clean energy source, we’re now introducing hybrid solutions that combine solar and gas.
For example, we’re negotiating with an industrial client to use solar for non-essential loads like lighting and administrative tasks, while gas would power the heavy machinery. This hybrid model is something we’re looking to expand.
How crucial are partnerships and collaborations for power projects?
Partnerships are essential because power projects are capital-intensive. Sharing the risk makes sense. We regularly engage with financial institutions like Stanbic Infrastructure Fund, United Capital, and Chapel Hill.
Equipment suppliers and local communities are also critical stakeholders, as we need their support to maintain security and prevent power theft or vandalism. Choosing the right partners is crucial; we avoid charlatans who could derail projects.
What is your vision for the future of Nigeria’s power sector, and how does Fenchurch fit in?
The future is bright, with access to electricity being key to national development. Energy security is vital, as even healthcare depends on reliable power. Fenchurch Power aims to be a major player in this space.
We’re planning to develop a gas pipeline and compression station to ensure a steady supply for our plants. We’re also open to working with other stakeholders like PowerGen, American Towers, and Oando Clean Energy to support the country’s industrialisation.
