In order to improve electricity supply around Ibeju-Lekki area in Lagos and Agbara Industrial area in Ogun State, the Niger Delta Power Holding Company (NDPHC) and Eko Electricity Distribution Company Plc (Eko Disco), have signed a bilateral agreement for the sale of up to 300MW of power from NDPHC’s power plants to customers in these areas within Eko Disco’s franchise areas.
The Lagos State Governor, Mr. Babajide Sanwo-Olu who
hosted the signing of the agreement for these projects at Lagos House, Marina
recently, commended the initiative by NDPHC and Eko Disco, and stated that “he
will monitor the implementation of the agreement.” The Governor expressed his
confidence that the collaboration between NDPHC and Eko Disco will complement
the current policies of the state government in economic and infrastructure
development.
NDPHC and Eko Disco have committed to work together to
deliver safe, reliable and steady supply of power to customers in the areas of
collaboration. The project will be structured to remove the commercial and
technical inefficiencies in the Nigerian electricity market and will mobilise
significant capital investment in transmission/distribution infrastructure and
metering technology.
In his remarks, the NDPHC Managing Director/CEO, Mr.
Chiedu Ugbo stated that the challenges in the industry inspired NDPHC to
“source alternative means to sell and ensure dispatch of its stranded power
generation capacity and explore innovative ways to unlock investment in
infrastructure for improved supply to customers.”
In turn, the MD of Eko Disco, Engr. Adeoye Fadeyibi
said that the partnership aligns with the efforts of the Eko Disco to bridge
the metering gap and improve the quality of electricity supply to customers. He
appreciated customers for their continued support for the Company in its quest
to continue to empower the quality of lives of all stakeholders.
The agreement signed between NDPHC and Eko Disco is
only the latest milestone in NDPHC’s innovative and ambitious programme to
tackle the industry-wide challenges in the Nigerian power sector. These
challenges have resulted in the inability of the operators in the industry to
fulfil their investment and industry payment obligations, and a continuing low
access to reliable power for industry, businesses and homes.
Despite a significant installed generation capacity –
estimated to be more than 13,000 MW – access to electricity remains acutely low
because much of this installed capacity is stranded and cannot be conveyed to
customers because of inadequate transmission and distribution capacity.
Operators insist that tariffs remain at a level that cannot guarantee returns
for investors in the sector and as a result, an estimated $20 billion capital
investment required to upgrade the transmission and generation infrastructure
is not available. Insufficient investment in metering, collection and
surveillance, among other factors, has also made collections by the
distribution companies inefficient, thereby causing revenue loss across the
value chain. A combination of these factors has led to severe liquidity
shortfalls and a ballooning deficit in the market, and there simply is not
enough collections from customers to cover the cost of power generation and
delivery. The Federal Government has on several occasions intervened with
financial bailouts to the sector, but this solution is only short term and is
becoming an increasingly heavy burden on a cash-strapped government struggling
with low oil prices and a struggling national economy.
The operators in the industry have had to innovate or
go out of business. It is in this regard that NDPHC is blazing a trail in
structuring deals that are solving many of the industry-wide challenges
affecting its business. NDPHC, holds a portfolio of 10 power plants with
aggregate installed capacity of more than 4,000MW and growing. To ensure that
much of its capacity does not remain idle, NDPHC, with support from Electric
Utilities Nigeria Limited, is now targeting to work with discos and other
project developers to, in the first phase, sell more than 1,000MW from its
power plants in manner that resolves the current commercial and technical
inefficiencies in the market without a need for government funding
intervention.
In addition to the agreement signed with Eko Disco,
NDPHC has executed similar agreements with Port Harcourt Electricity
Distribution Company Plc, Enugu Electricity Distribution Company Plc, Kaduna
Electricity Distribution Company Plc and Benin Electricity Distribution Company
Plc. In each case, the parties will mobilise investment in the expansion of the
distribution network of the discos to enable increased offtake of power and in
metering technology including smart meters in order to increase the collection
rate of the discos.
For NDPHC, these collaborations will lead to greater
offtake of power from its under-dispatched power plants, thereby increasing the
company’s revenue. For the industry generally, these collaborations will
attract the requisite investment in the industry and increase liquidity that
enables higher payment receipts across the value chain. Now that NDPHC has
executed the agreements with 5 discos and more in the pipeline, it is projected
that the impact on the Nigerian power sector will be massive in improving
electricity access, market payments and attracting more investments to the
industry.
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