The inability of Azura Power Holdings to move ahead with its planned expansion of its Azura power plants that would have added additional 1,000 megawatts of electricity to the national grid may have compounded Nigeria’s power woes.
The phase I of the Azura project, the 461MW open cycle gas turbine Azura-Edo power station, was completed and became fully operational in May 2018.
The phase II, which industry stakeholders believe should have started thereafter, is expected to generate over 400MW.
Inadequate power generation and weak distribution and transmission networks have over time meant that power supply in Africa’s biggest oil producer remains epileptic, crippling businesses.
The delay in the take-off of the Azura phase II adds to these woes as it comes as a further setback for Nigeria with a population of about 200 million, which stakeholders say should be adding about 3,000MW to the national grid every year.
The Azura-Edo power plant near Benin City already delivers up to 10 percent of the country’s on-grid power, and industry watchers had believed the phase II would take off immediately. It, however, has failed to take off over a year after completion of the first phase.
Edu Okeke, chief executive officer, Azura Power Holdings, told BusinessDay that based on original plans of the project, there was no intention to demobilise the construction crew and that if work had continued immediately after the completion of the phase I in May 2018, work on the phase II would have reached an advanced stage, meaning the project would have been completed towards the end of 2020.
Azura, Nigeria’s first privately-financed independent power project, was meant to be a model for other independent power plants financed by international investors. However, the difficulties it encountered when it came onboard relating to payment for power purchased from it affected the commencement of other projects like the 540MW Qua Iboe plant.
Okeke said insolvency in the market, arising from the inability of the industry regulators to work out things with the electricity distribution companies to get a cost-reflective tariff, was responsible for the delay in the execution of phase II of the project.
Until the insolvency is over, he said, no investor would like to embark on such a project like Azura.
Ayodeji Dada, president, Association of Energy Engineers, said although Azura is a negative to the government at the moment because it is not supported by the market, executing the phase II of the project would facilitate foreign direct investment (FDI) into the country. It will also increase generation which will enable the government to meet its generation target.
He said Nigeria is a big market that investors would like to come and play in.
“Nigeria needs 10,000MW. Even though we may not be paying the true price for power, if there is more power generation coming in, the industry shall be able to get the money. We need more generation. Let’s keep generating,” he said.
But some analysts said unless the issues of transmission and distribution networks were sorted out, no investor may want to come into the country’s power sector.
John Uwajumogu of Ernst&Young Nigeria said he does not see any negative impact the delay of Azura II would have on the power sector. He said the two critical areas that needed to be sorted were transmission and distribution networks. If these areas are not sorted out, he said, there would not be any project like Azura.
Chuks Nwani, , an energy lawyer, said Nigeria has 12,000MW installed capacity but the major problem confronting the industry, apart from cost-reflective tariff, were the weak distribution and transmission networks.
He said if these are not fixed, Nigeria as a country would just be wasting its time as investors would not come to the power sector.
Olusola Bello
