Bloomberg News by Yinka Ibukun and Eleni Giokos
September 15, 2014
Nigeria is considering offers of more than $20 billion for the assets of its national electricity transmission company as it struggles to provide adequate power toAfrica’s largest economy, Power Minister Chinedu Nebo said.
The sale of state-owned Transmission Co. of Nigeria may start “in a few years,” Nebo said in a Sept. 12 interview with Bloomberg Television Africa in Abuja, the capital. The government will also focus on developing renewable energy projects to diversify its supply of electricity, he said.
“The interest now for transmission is over $20 billion,” he said on Sept. 12. “People are coming from everywhere.”
Transmission is the only segment of the power industry that the government still controls as it seeks to curb regular blackouts in Africa’s largest oil producer. The country generates about a 10th of the power that South Africa does even though its population of about 170 million is more than three times larger.
The government of President Goodluck Jonathan is spending $3.5 billion to boost transmission capacity by 50 percent. Nigeria sold 15 state-owned generation and distribution companies to raise funds.
The current transmission capacity of Abuja-based TCN is 5,500 megawatts compared with an installed generation capacity of 8,000 megawatts, Nebo said. This means that if generation companies were operating at full capacity, the grid would be unable to transmit all of the power to homes. The government wants transmission capacity to exceed 6,000 megawatts by 2016, Nebo said.
Power generation is significantly lower than capacity, partially due to problems of transporting gas to power plants. Many companies and individuals are compelled to use diesel-powered generators to ensure adequate electricity.
“Gas supply has been a limiting factor,” said Nebo, who is working with Minister of Petroleum Resources Diezani Alison-Madueke to make enough gas available to generation companies to match the transmission capacity by the end of next year.
“Nigeria is moving in the direction of trying to have a robust energy mix,” he said.
Coal is another resource that could generate 3,000 to 5,000 megawatts of power “in the next several years” after government reclaims unused coal blocks, the minister said.
“We are working on making sure those coal blocks are taken away from those who have refused to develop them over the decades and are given to those who can actually develop them,” he said.
Officials are deciding which model to adopt for the company’s sale. Manitoba Hydro-Electric Board of Canada’s three-year management contract ends next year. The process could take the form of a public-private partnership, a concession or a build-operate-transfer, Nebo said.
While divesting from most other parts of the power industry, the government is planning to invest more in renewable energy such as solar and hydro power, Nebo said.
“The government is very intent on making sure that the renewable energies kick off because we cannot continue to depend on only one or two means to continue giving electricity to our people,” the minister said, citing the planned 700-megawatt and 3,050-megawatt hydropower plants in Zungeru and Mambila. Both plants are in central Nigeria.