The Chairman of Heirs Holdings, Tony Elumelu, expressed his views concerning Nigeria’s power sector, particularly the power transmission sector. Elumelu was addressing the media yesterday after the conclusion of the World Bank Group/International Monetary Fund meetings in Lima, Peru.
He pushed for the privatisation of the transmission arm of Nigeria’s power secotor. He said the power sector is currently struggling to meet the expectations of consumers, due to the manner in which the sector is structured.
Is privatisation an option?
He said if the option of privatisation appears to be extreme at the moment, then commercialising could be a better option compared to the existing arrangement.
Elumelu continued: “I will support its privatisation, or in the alternative, commercialise it because the way it is now, the transmission lines will not help us achieve our goals of adequate power supply.
“Even today, my power plant has the capacity to generate more than we are generating, but they will tell you to reduce your capacity,” he said.
The Transmission Company of Nigeria (TCN) is currently operated by Manitoba Hydro International of Canada. In July Manitoba Hydro had its contract extended by 12 months, after approval by the Federal government.
Between December 2013 and the end of 2014 the Ughelli Power plant increased generation capacity from 343MW to 610MW.
The exchange rate and tariffs
Elumelu commented “My experience [of] the power sector [has not been] very good. My target was to do 2,500MW, but I have slowed down because of so many reasons”.
According to him these reasons include the exchange rate and tariffs, which he says are “not cost effective.”
“If they increase [the] cost of gas, what they pay me in return is not adjusted, it remains the same. The exchange rate is another issue because our earnings do not reflect the adjustments to the changes in the exchange rate regimes,” he explained, continuing that these issues were “killing the sector.”
There’s still hope for the sector
However, Elumelu’s opinion is not all doom and gloom. In a recent interview with West African Power Industry Convention (WAPIC) he said the company was encouraged by the bold steps which the government had taken to develop the sector.
Heirs Holdings which is the main investor in Ughelli Power, had promised to provide $2.5 billion in funding to the Power Africa Initiative, which will benefit both Nigeria and the African power sector as a whole.
“The Power Africa Initiative is an amazing opportunity to democratize access to power for Africans, and the $2.5 billion investment commitment we have made reflects exactly how excited I am about it.
Elumelu continued: “The present administration made a bold decision when it decided to affect the changes envisaged by the Power Sector Reform Act legislation that had been on the books since 2005.
“And that bold step was reinforced during President Barack Obama’s last visit to Africa. We felt more strongly than ever, the need to help power Africa.”