Strong, enforceable financial guarantees essential to boost investment in power sector

With significant supply demand imbalance in the Nigerian power sector and the growing challenges of liquidity, industry operators insist that only strong and enforceable financial guarantees will encourage further private sector investment into the power industry.

Concerned operators in their general assessment of Nigeria’s power market and regulation in relation to the current economic realities observe that grid availability is currently not sufficient to meet both industrial and residential demand.

They once the right incentive is provided by government, additional investment into the Transmission and Distribution infrastructure will ensure minimise power losses and boost the confidence of the Generation companies (GENCOs).

Deepak Khilnani, Chairman of Cummins Power Generation Nigeria and Powergas Africa believe the challenges in the power industry may see some level of improvement on the back of government strong commitment and action plan to improve grid power.

Khilnani disclosed that private sector companies such his has as it medium-term strategy to work with the Federal Government of Nigeria and local distribution companies to develop a portfolio of 100 MW national power plants that pump clean and reliable electricity into the grid.

He further opines that private sector collaboration with Nigerian Bulk Electricity Trading Plc (NBET) would develop national power plants, adding that he has noticed a strong alignment towards private sector co-operation in the power industry and ‘bankable’ PPA’s (Power Purchase Agreements) to make the projects commercially viable.

Industry analysts are of the opinions that to tackle the power sector challenges, there is the need for continues efforts to develop reliable and localised energy solutions that supply electricity.

  According to them, “This requires continuous enhancement of technology such as remote monitoring software to analyse plant performance and people training and development”.

“The pipeline gas infrastructure in Nigeria to transport natural gas to the point of use is relatively small given the size of the nation and high demand for natural gas. The pipeline network is limited to just a few cities Lagos, Port Harcourt, Aba and Benin City”. Khilnani said.

He insists that pipeline development costs are high and usually part of long-term infrastructure projects hence local investor let his company pioneered the ‘virtual pipeline’ business to transport gas by truck to any location across Nigeria not connected to a pipeline.


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