Written by Claire Volkwyn, Director:  Content and Strategy, Spintelligent

Lagos, Nigeria: For many, the announcement of the preferred bidders for the  GenCos (generation companies) and Discos (distribution company) in Nigeria would appear to be the culmination of years of planning for the total reform of the Nigerian power sector.  Yet, in many ways, the race is only now starting, as bidders work to meet their financial obligations to the Nigerian government.

In his presentation during the opening of the 9th annual West Africa Power Industry Convention in Lagos, Engineer Dagogo-Jack, Chairman of the Presidential Task Force on Power in Nigeria spoke to attendees about the reform process and the task that now lies ahead for the power sector.  

With an ambitious target of a 7GW per annum new build, and a plan to achieve the same GDP per capita as Brazil by 2030, the Nigerian government is setting its sights high – especially coming from an installed capacity of 4 800MW.

The reform of the power sector has two broad objectives:

  1. To improve service delivery and improve availability, supply and relisability of the supply in Nigeria in the short term
  2. To move ownership of the power sector from predominantly government, to a private sector driven industry.

Already, as part of the improvement to the sector, power supply in many of the major towns has increased by 2 – 4 hours per day over the last 6 months;  and overall peak capacity has increased from 3 700MW – 4 200MW.

However, serious consideration needs to be given to the risks which are now potentially facing the sector, namely

  • What if the bidders fail to meet the scheduled conditions for take over?
  • How to protect megawatts dropping off during the asset handover period?
  • Justification of investment into assets which are earmarked for sale
  • Pressure to improve transmission and distribution infrastructure to cope with increasing generation capacity

While regular meetings are held with various stakeholders to this process, these questions are now going to be the determining factors to the success or failure of this reform process.  With additional challenges around  revenue collection, vandalism and funding, Nigeria still has a long way to go before the reform process can be said to be successfully on its way.