Nigeria Promises Additional Power Amid Supply Chaos

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The Nigeria Electricity Regulatory Commission (NERC) has issued licenses to private power plant operators for the generation of more than 20,000 megawatts (MW) within the next three years, but the move should be viewed with caution. The target would appear to be optimistic, given turmoil among unions and labor in the sector and that the power grid is unable to hold much more than 4,000 MW.

The situation was highlighted by a blithe comment by the chairman of the NERC, Sam Amadia: "Life has taught us that nothing is impossible--we can make 30,000 MW within the next year if we want. Already, we have issued licenses to investors to generate over 20,000 MW before 2016. I am sure that with all the efforts put in place, our power generation will surpass our target by 2016."

Amadi said that the major foreign investment in the sector in recent times was a product of the reforms and regulations put in place by the government. He said that the power sector had been without framework and any cost-related terms, which were accompanied by inconsistency in policy, but that it is now being regulated.

Amadi said the sector had suffered decades of neglect and appealed for understanding, adding that the NERC had directed consumers not to pay any service charge to the distribution companies any time power was not supplied for two weeks.

The chaotic power supply situation in some areas may worsen, as workers in the sector have threatened to stop the supply of power to the south and southwest regions by the end of the month. The threatened action is to protest the degraded power supply in most parts of the country, in addition to anti-labor practices, such as de-unionization, victimization of union leaders and poor working conditions.

The industrial action followed the expiration of the seven-day ultimatum issued by the Nigeria Labor Congress (NLC) and leaders of the National Union of Electricity Employees (NUEE) to the federal government and operators to address the power situation and labor issues. The unions called on the federal government to immediately call the investors to order, stating that the actions by the power producers are a constitutional breach, as employers are expected to allow for the unionization of their workforces.

The unions also complained of exploitation by the power distribution companies, who they say deliberately charged fees without supplying power.

The Nigerian power sector has seen funds disappear and the government break promises for 20 years. One can only hope that with entry of GE (NYSE:GE) (Fairfield, Connecticut) and other international companies, the new regulations will bite and real development will take place through 2020.

For related information, see February 12, 2014, article - Nigeria Seeks 200,000 Megawatts of Generating Capacity.

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