According to Sam Amadi, chairman of the Nigerian Electricity Regulatory Commission, Nigeria is currently producing 2,000 megawatts, or half its total capacity, due to gas shortages caused by sabotage of pipelines. “That’s a serious challenge for a country that has to get all the power it can to the grid to improve the performance of the new market,” Amadi said. “Part of the problem is also making gas supply to power more competitive through proper contractual framework and incentivizing the producers.” At least 70 percent of Nigeria’s total power output is supplied by gas-fired plants.
Nigeria recently concluded a power privatisation process through the sale of 18 companies unbundled from the former PHCN (or NEPA) comprising of six Generation Companies (GENCO’s), 11 Distribution Companies (DISCOs), and a Transmission Company (TCN). It is estimated that Nigeria needs an annual investment of $3.5bn to achieve its generation capacity target of 40,000 megawatts (MW) by 2020.
An interim power market will begin soon and last until gas shortages end, probably before the second half of 2014. The following five- to 10-year transitional phase will see the Nigerian Bulk Electricity Trading Plc, which acts as a clearing house for power-generating and distribution companies, guarantee all purchases. “The transitional phase will be declared when the market is ready,” Amadi said. “We’re not fixated on a date; we want to ensure that the market moves to 100 percent performance.”