THE ROLE OF INDEPENDENT POWER PROJECTS FOR POWER SUSTAINABILITY IN NIGERIA

ABSTRACT

This study investigates the role of IPPS in the current sector unbunding.  This liberalization in the power sector is to allow private sector participation.  The coming of the private sector will help to improve services (generation, transmission and distribution).  IPPS arose through the need to attract investment for new electricity generating capacity which may be privately held.  IPPS in Nigeria focus on development and investments outcomes, namely the extent to which reliable and affordable power has been provided for Nigeria and satisfactory returns on investments and new investments opportunities to be achieved.  IPPS are important because they help to generate electric power for safe  utilities and end users, and they contribute a greater percentage to the Nigerian power generation.  This research reviews the role of Independent Power Projects for power sustainability in Nigeria and proposes proper IPPS maintenance to promote performance.  The government/private participation for the building of IPPS is recommended.

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND

            Electric power availability enhances economic development of any country, while non- availability of power or power outage creates discomfort and implies negative economic growth.  Electric power sustains the society in almost all its ramification, it is therefore imperative for any Government to sustain electric power available to its citizens.  Since the inception of electricity in 1896 till date [1], electricity has never been adequate to the Nigerian populace.  One wonders why, with huge natural resources endowment, Nigeria is still suffering from epileptic power supply or total blackout for the past 120 years. Power generation which was rated at 60kw then has risen to 5000mw with the promise that by 2020 power will rise to 20,000Mw.  This is interesting.  The population of Nigeria is increasing at an alarming rate due to infrastructural development, and the power sector is unable to match supply with demand of electric power.  Nigerians whose immediate electric power solution is the petrol/diesel generator is faced with the problems of substandard generator sets that breaks down within one year of useful life, cost of fuel, environmental hazards from fuel related incidents, emission of green house gasses that pollutes the atmosphere, sometimes causing health hazards or contribute to global warming.  Though, this alternative is seen as generally acceptable and cheap, it is at all not cost effective [2]. To solve this power problem the government should by legislation provide adequate power generation and supply utilities.

            President Muhammadu Buhari. Has acknowledged the critical linkage between the countries economy and the power sector, he reportedly said: ‘without power and energy we cannot build a modern economy.  We cannot make the economy to grow the kind of growth that is required and that is why power is the highest priority of this administration’.  He added that we plan to generate 20,000Mw by December 2020[3].

            Nevertheless, the generation of 20,000Mw electric power will not have an impact on consumers except they can use it.  The transmission and distribution capacities have to be available to accept and deliver the power to end users. This was one of the points recognized by the minister of power, as he assessed the nation’s power generation capability as being close to 6,000Mw.  However, he noted that actual generation currently stands at about 60%, with hopes that restoration of gas supply through the Escravos gas pipeline should raise the capacity to 75% power generation before the end of the year.  More relevantly, the minister also disclosed that the national transmission capacity has increased from 4,000Mw to 5,500Mw, while distribution capacity was near 6,000Mw.  He explained that the Federal Government has approved massive installation of new transformers to enhance the transmission capacity and  also improve the discos to enhance the distribution capacity to improve power supply in the country [3]. 

1.2       FACTORS THAT AFFECT IPPS

            Several factors affect IPPS;

            1.         Poor power sector planning and coordination

            2.         Drought

            3.         Civil Strife

            4.         Poor currency convertible, where firms are unable to repatriate profits.

            IPPS were developed with the immediate cause of alleviating electricity shortages due to drought (in largely hydro-based systems).  Thus reliance on hydro power goes a long way in explaining IPP developments documented above which is linked with climate, Africa is endowed with significant natural resources, many of which fuel is its electric power generation.

            This section briefly explains Africa’s coal, natural gas, hydro-power and oil resources, together with electric power production and consumption patterns.

            Coal contributes most significantly to Africa’s power generation or about 50 percent of total electric generation 70 percent for Sub-Saharan Africa and approximately 7 percent across North Africa [4].

            Natural gas ranked second in terms of electric power generation for Africa at approximately 25 percent of total electricity generated; as with coal, a wide disparity may be seen with present usage, with natural gas accounting for about 70 percent of total generation for North Africa.

            Hydro power is presently contributing nearly 30 percent of electric generation for Africa, 21 percent in Sub-Saharan Africa and about 9 percent in North Africa.

            Finally, oil which amounts to about 8 percent of electricity generation across Africa.  North Africa has seen electricity generated by oil drop.  Since 1990 as natural gas becomes increasing ubiquitous.

The pie-chart shows contribution of electric generation by fuel source in Africa [5].

            In effect, the federal government should set itself to achieve the following by the end of 2020 as regards to the Nigerian power sector.

            1.         Sustainable electricity supply of 20,000Mw.

2.         Provision of the required transmission equipment such as approving the building of more IPPS and ensuring they are functional and they operate at their installed capacity.

            3.         Enacting policies that will enable the discos provide necessary distribution equipment to ensure effective utilization of the supplied electricity by the nation.

            In order to achieve sustainability, the government should provide the following equipment and systems in the medium and long terms.

            a.         Use of various types of power generation: in the medium term, the minister of power said that the government is planning to establish new hydro, coal and renewable plants across the country within a five year period.

            b.         Use of other types of fuel: in the long term, he explained that government is planning to diversify into other types of fuel such as the low pour fuel oil (LPFO) and liquefied petroleum Gas (LPG).  This is to ensure regular fuel supply to the power stations and limit unpredictable failures caused by the failure of gas supply.

            c.         Reduced dependence on thermal power generations: while it is a fact that gas is one of the cheapest sources of generating electricity, the experiences of the past two to three years have shown that it is clearly the most vulnerable in our environment.  For inspite of whatever security arrangement is in place, it takes an aggrieved militant group a few hours to destroy a major gas pipeline supplying gas to the nation’s electric power generators.  It is certainly practically impossible to man every pipeline effectively in order to prevent such a costly and devastating eventuality.  This is why, for the purpose of energy security and stable power supply, the nation should diversify to other electricity sources like hydro, coal, solar, and other renewable energy.

            d.         Institutions and organizational changes:  the solution to the deficiency in the power supply will not be wholly and only determined by the infrastructural installations such as power generators, transmission and distribution transformers, circuit breakers and other ancillary equipment.  It is also dependent on the institutional and organization arrangement of the processes and people in the industry.

1.3       AIMS AND OBJECTIVES

            1.         This research investigates the role of independent power projects in Nigeria.

            2.         IPPS under construction and functioning IPPS

            3.         The essence of private sector partnership in the power sector.

4.         Essence of Federal Government funds in improving power generation and transmission.

1.4      SCOPE OF STUDY

            This research project shows the role of independent power project for power sustainability in Nigeria.  It also reveals the number of IPPS in Nigeria both functional and those under construction, and power generated in Nigeria from 2005 – 2015.

Order the full materials for this project from chapter one to References.

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