Eko Electricity Distribution Company (Eko Disco) has commenced work on a plan to grow generation by 20 percent each year to 1,000 megawatts (MW) for its electricity networks by 2020.
The company would, however, give supply to only those customers willing and able to pay the set price which is likely to be between N24 and N30 per kilowatt hour, an informed industry source told BusinessDay.
Some stakeholders, however, say the 1,000 in six years is still below the required energy for the economic growth of Lagos State, which already requires 10,000 MW of energy for its economy.
The generated power would come through series of arrangements facilitated by the embedded power generation scheme being put in place by the company.
The distribution network, which has the capacity to take in over 1,000 MW, is currently getting supplies of between 200 or 300 MW on a daily basis from the national grid because of lack of gas to generate sufficient electricity in power plants across the country.
Eko Disco is planning to put out a bid for the second phase of small plants that would generate approximately 150 MW. Informed sources said the company would concentrate first on small plants which would eventually be phased out after supply from the national grid improves.
The breakdown of this figure indicates that a 60-MW plant would be sited in Orile, while Kirikiri would get a 20-MW plant, Agbara 50 MW, and Apapa 20 MW. There are also proposals for 10 MW each for Lekki and Victoria Island, bringing the total figure for this phase of the projects to about 170 MW.
The plant at Orile might attract international investors. The ‘phase 1 plan six’ facilities have been developed and agreed upon with the National Electricity Regulatory Commission (NERC), while draft request for proposal documents for the six lots has been sent to NERC for approval.
The source further stated that the signing of a power purchase agreement (PPA) between Eko and other stakeholders would be carried out in the last quarter of 2014.
The projects are in phases, said the source, with Phase 1 coming up in 2015, Phase 2 in 2016, and Phase 3 from 2017 to 2020.
The company would, however, strategically position larger power plants for the long-term purpose to form the anchor of its embedded power generation scheme. The smaller plants are adjudged to be less efficient and would be phased out within five to seven years of operation.
Brent Hampton, the company’s former vice president, services, in charge of embedded generation, said the regulatory framework to enable transfer of excess power generated into the national grid was being worked out.
Hampton said some of the challenges facing power distribution included very limited human capacity, legacy issues such as the attitude of the customers, dilapidated networks and limited gas supply.
He, however, stated that it was unlikely that the country would have sufficient power supply in the next five years from the national grid, even though there would be improvement.
Eko Disco, he said, inherited an outdated distribution network with high losses in the region of 45 percent, adding, “This situation has adversely affected the business of the company, especially its revenue and investment profiles.”
Ayodele Oni, a lawyer, said even though the 1,000 MW was small compared to what is required by the city of Lagos in terms of electricity supply, it was still a good move by the investors.
“It is a good step and better than not planning. I, however, believe the targeted capacity should increase. Once investors see profitability, they would invest in power generation,” Oni said.
Dolapo Kukoyi of Detail Commercial Solicitors argued that with embedded generation in view, Nigeria should be able to achieve its national aspiration within a short time, reduce technical losses because of proximity to networks system, and deepen the electricity market.
She said with embedded generation in place, distribution companies would have access to power supply and get more cash flow as more customers would be ready to pay for steady and regular electricity supply.
Goddy Duru-Oguzie, managing director, PowTech Nigeria Limited, said the move was encouraging, adding that the good thing about it was that the promoters were investors who are competent and are well aware of the issues of safety.
He expressed confidence that they would put in place a system that would contribute to greater efficiency in the power industry.