Eko, Ikeja Discos embark on embedded power generation

Power supply to Lagos State is poised to get a boost as the Eko and Ikeja distribution companies (Discos), which serve Nigeria’s commercial capital, are set to embark on embedded generation of power to boost their energy supplies to customers.

“We have started the process of trying to improve power generation to Lagos by doing embedded generation of power,” said Charles Momoh, chairman, West Power & Gas, the private company that acquired Eko Disco, at a sideline plenary session at the Lagos State Ehingbeti 2014 investment summit, yesterday.

“We have identified 45 companies we would like to work with and are talking to two. The longer-term plan is to bring in 500 MW into our local grid for distribution,” Momoh said.

Embedded generation is the term used for any electricity generating plant that is connected to the regional electricity distribution networks.

Eko Disco has the capacity to distribute 700 MW, but currently gets a maximum of 240 MW from the grid since the private sector owners took over about five months ago, according to Momoh.

Nigeria completed the first phase of an ambitious privatisation programme last November through the sale of 18 companies unbundled from the former PHCN, comprising six generation companies (Gencos), 11 distribution companies (Discos), and a transmission company (TCN).

The new private companies, however, have had to deal with issues of unavailability of gas for power plants and gas pipelines vandalism, leading to a continuation of the rolling blackouts that was the norm pre-privatisation, for homes and businesses.

“Gas needs urgent attention if we are to deliver power to people. Ikeja has a distribution capacity of 950 MW; however, since we took over, only an average of 406 MW is being received from TCN,” said Kola Adesina, MD, Sahara Power, who was part of a consortium that paid $131 million to acquire controlling stakes in Ikeja Disco.

Lagos is estimated to need up to 20,000 MW of electricity for its 20 million people, but only an average of 1,000 MW is delivered to the state from the national grid.

“Lagos needs power plants dedicated to the state alone,” said Bart Nnaji, former minister of power.

Nigeria has the world’s ninth-largest proven gas reserves at 188 trillion cubic feet and potential gas reserves of 600 trillion cubic feet (TCF). However, much of that gas is flared. At least $3 billion in revenue is lost annually due to flaring, according to the Petroleum Ministry, while lack of gas for power plants has stunted Nigeria’s double-digit growth potential.

The prospects of building more gas infrastructure – pipelines, gathering plants – have been stymied by government’s control of the gas pricing environment, which made investors less willing to participate in the sector in the past.

“Gas pricing will be at export parity at the end of the year,” said David Ige, group executive director, gas and power, Nigerian National Petroleum Corporation (NNPC). “We have grown gas production capacity from 300 m/cubic feet a day in 2010 to over 1 billion CF/day today. However, the consumer has not felt the benefits of that increased supply, mainly due to vandalism of our gas pipelines.”

It is estimated that Nigeria needs an annual investment of $3.5 billion to achieve its generation capacity target of 40,000 MW by 2020.

Nigeria’s current peak grid power generation stands at about 3,849 MW with a per capita electricity usage of 136 kilowatt hour (KWH). This compares with an average per capita electricity usage of 4,803 KWH in South Africa, which generates about 41,000 MW.

“The Discos are working on doing embedded generation,” said Eyo Ekpo, commissioner, rates and market competition, National Electricity Regulatory Commission (NERC). “Power will start coming into Lagos earlier than you think.”

PATRICK ATUANYA,  BALA AUGIE & FEMI ASU