September 30, 2013 4:22 pm Nigerian power facilities turn private By Xan Rice in Lagos. NIGERIA has officially handed over legal control of 15 state-owned electricity companies to their new owners, capping a $2.5bn privatisation process that has raised hopes of an end to years of chronic power shortages. Africa’s most populous country has one of the continent’s lowest per capita power supplies, with half of the 160m people off the grid. Daily blackouts force companies to rely on diesel-fired generators, pushing up business costs by 40%. Goodluck Jonathan, Nigeria’s president, has made power privatisation his main priority. On Monday, he handed over the share certificates and licences in Abuja, the country’s capital, to the consortiums made up of local investors and foreign partners that will now own 10 distribution companies and five generation plants. “To the Nigerian people, who have demonstrated such great patience and confidence, putting up often with darkness, noisy power generating sets, the related pollution and the daily disruption in their lives, I say better days are coming,” he said. Though the country has vast natural gas reserves that could be used to generate cheap power, its production averages about 3,200MW. South Africa, by comparison, has more than 40,000MW capacity for a population less than a third of Nigeria’s size. The privatisation process, which has received technical support through the UK’s Department for International Development, attracted strong interest and investment from international companies, including Symbion Power from the US, Siemens of Germany, India’s Tata Power, the Shanghai Municipal Electric Power Company and Russia’s RusHydro. The involvement of some of Nigeria’s wealthiest businessmen in the winning consortiums is likely to help overcome resistance to electricity reform from local tycoons, who earn billions of dollars every year importing diesel to fuel generators. beyondbrics Emerging markets: news and comment from more than 40 emerging economies Under the privatisation process, companies run by the Power Holding Company of Nigeria were put up for sale in December 2010. The poor state of the existing plants, and shortcomings in the transmission network means it may still take a few years before Nigerians see the results of the privatisation. Simply restoring the formerly state-run plants to full capacity is expected to cost more than $4bn. The government has targeted 20,000MW capacity by 2020, which it says will require an investment of $3.5bn a year. Analysts say this appears overambitious, given the history of failed and delayed infrastructure projects. Erik Fernstrom, senior energy specialist at the World Bank, in Abuja, said that an increase of at least 1,000MW a year should be possible. “The full transformation of the power sector remains a few years away,” he said. “But even to have 6,000MW or 7,000MW of electricity would be a huge driver of the economy.” Additional production in the short term is expected to come from the 10 natural gas-fired plants that are being completed as part of the government’s National Integrated Power Project. These plants are expected be sold off to private investors in 2014. Other privately-funded power projects are also under way, and the Nigerian government on Sunday announced a $1.3bn deal with China to build a 700MW hydroelectric plant in Zungeru, Niger.- Financial Times
Posted on: Tue, 01 Oct 2013 08:52:26 +0000
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