presented at: the 9 th cii exim bank conclave on india – africa project partnership,

Presented at:The 9th CII EXIM Bank Conclave on India – Africa Project Partnership,

Taj Palace, New Delhi India.

Keynote Address by:

Engr. Beks Dagogo-Jack FNSE

Chairman, Presidential Task Force on PowerMember, Presidential Action Committee on Power

Federal Republic of Nigeria

17 - 19th March 2013

PTFPhttp://[email protected]

Outline

The Reform Agenda

Timeline & Introduction

Delivery of Reform Milestones.

Service Delivery.

Current and Prospective Opportunities (in the Nigerian Electricity Market)

Generation

Transmission

Off-Grid

Other

The Political Will

Reconstitution of PACP

Outstanding Milestones

Role of the PTFP

Presidential Task Force on Power 2

The Reform Agenda: Timeline & Introduction

Before Power Sector Reform:

Vertically integrated government-owned monopoly entities in the power value

chain .

Growing inefficiencies and leakages; annual capital drain from the federal

budget

Uncoordinated investments in generation, transmission and distribution.

Huge widening gaps between demand & supply ; massive industry flight

leading to worsening unemployment .

High suppressed demand throughout Nigeria



The Power Sector Reform has two broad missions :

Service Delivery :

Relying mostly on the completion of the new NIPP projects & the recovery of installed capacities in the up, mid and downstream , grow the availability , supply and reliability of electricity in Nigeria to an acceptable short term level during the divestment.

Reform:

Move the sector from the position of government ownership/management of the assets to a private-sector driven Nigerian Electricity Supply Industry in line with the EPSR Act 2005. .




Presidential Road Map on Power – a short history.

Pre – May 2010

The Electric Power Sector Reform Act enacted ( EPSRA 2005 ).

NEPA unbundled into Successor companies with PHCN as the holding company

Nigerian Electricity Regulatory Commission NERC created .

A multi-billion dollar National Integrated Power Projects ( NIPP) started and later

stalled

Reform stalls until President Goodluck Jonathan assumes office in May 2010.

Post – May 2010

President Jonathan chooses Power as one of his cardinal programmes .

The stalled NIPP program resumes in earnest .

President Jonathan inaugurates the Presidential Task Force on Power & the

Presidential Action Committee on Power .

President Jonathan launches the Nigeria Power Sector Reform RoadMap in

August 2010.

The Reform Agenda: Delivery of Reform Milestones


Milestones from RoadMap 2010 Achievement

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

þ Establishment of cost-reflective tariff G G G G G G G G G G

þ Establishment/ operationalising the Nigerian Bulk Trader G G G G G G G G G G

þ Provision of FGN Credit Enhancement to the Bulk Trader

G G G G G G G G

þ Operationalizing the NELMCO G G G G G G G G G G

þ Reconstitution of NERC to strengthen regulatory regime G G G G G G G G G G

---------------------------------------------------------------------------------

þ Substantial increase in quantum of power delivered A A A A A A A A A

þ Ensure that power supply is steady and predictable G G G G G G G G

þ Double the Aug-10 power supply by Dec-13 A A A A A A A

---------------------------------------------------------------------------------

þ Engage Management Contractor for the TCN G G G G G G G G G G

þ Execute privatisation of generation and distribution assets

G G G G G G G G G G

þ Resolve labour issues associated with divesture A A A A A A A A

---------------------------------------------------------------------------------

þ Implement a framework to guarantee increased gas supply

G G G G G G G G

þ Implement the Emergency Gas Plan (short term) G G G G G G G

þ Develop and launch National Gas Master-plan A A A

þ Develop implementation framework for strategic energy mix

R

R Significant issues.

A Minor issues

G Negligible issues

The Reform Agenda: Service Delivery


Current & Prospective Opportunities: Generation


Power projection is underpinned by several MoUs with the following organisations.

General Electric•Facilitating and promoting private sector investment up to 10,000MW

Siemens AG•Facilitating and promoting private sector investment up to 10,000MW

Electrobras•Facilitating and promoting private sector investment up to 10,000MW

Daewoo•Facilitating the development, financing, procurement, manufacture, commissioning and operations of 10,000MWEDF/ETDE•Promoting power sector investments by sponsoring feasibility studies for approved projects.

Multilateral G-to-G Agency Support•Promoting the development of small / medium hydro-power plants as embedded generation for rural communities

Current & Prospective Opportunities: Generation


Privatisation of NDPHC Power Plants•10 medium-sized power generation plants under

construction by government – rated to produce 4771 MW of power – to be privatised after completion of construction program.

•6 plants to be completed by 2013; remaining 4 by 2014

Development of IPPs• 3 IPPS currently active in country – date pre-Reform• Project-finance IPP development pipeline now well in

progress. • PPAs with government-backed electricity buyer• Securitisation with World Bank Partial Risk

Guarantee program under development

Captive & Embedded Generation•Small IPPs dedicated to captive clients. Power plants

sited at Free Trade Zones and various Industrial Zones/ Parks around the country.

• “NERC Regulation on Embedded Generation 2012“ defines market rules for selling power to (soon-to-be-divested) Electricity Distribution Companies

• “NERC Regulation for IEDN 2012” defines market rules for setting up an Independent Electricity Distribution Network

Current & Prospective Opportunities: Transmission


Contractor-Financed Infrastructure•The transmission network will require significant

investment to keep pace with the expected growth of the soon-to-be-privatised generation and distribution power sectors. For the next 5 years, approximately 1 to 1.5 Bn USD will be required per annum to turn the grid from the current weak radial system to the robust mesh network presented below.

•Financing models being currently investigated include EPC contractor-financed infrastructure where investment will be paid back over a pre-determined period of time upon completion and handover of transmission asset to the government-owned Transmission Company of Nigeria (TCN). Framework to be established 2013-Q2 to allow for important network gap-closure projects to begin in 2014 for 2016 delivery

TO SAKETE

ONITSHA

KAINJI

JEBBA/GS

JEBBA/TS

SHIRORO

Ikeja

Akure

Uyo

BirninKebbi

Minna

Kaduna

Abuja

Jos

Bauchi

Gombe

Damaturu

MaiduguriKano

IIorin

AdoEkiti

EnuguAkwa

Ibadan

Sokoto

Gusau

Katsina

Hadejia

Jalingo

Yola

Abakaliki

Calabar

JIGAWA

KANO

KATSINA

SOKOTO

ZAMFARA

KEBBI

KWARA

KADUNA

NIGER

NASSARAWA

TARABA

YOBE

PLATEAU

EBONYI

CROSSRIVER

OSUN

BAYELSA

EDO

DELTA

ONDO

OYO

IMO

ADAMAWA

BORNO

GOMBE

BAUCHI

EKITI

LAGOS

ATLANTIC OCEAN

NIGER

REPUBLICOF BENIN

REPUBLICOF CAMEROON

REPUBLICOF

CHAD

SAPELEP/ST.

DELTAPOWER ST.

OGUN

Osogbo

NIGERIA

Potiskum

Niamey

132 kV

Mambila

Bali

AFAM POWER ST.

AsabaBenin

EGBINP/ST.

Lokoja

ABUJA

AJAOKUTA

Lafia

Makurdi

MAKURDI

BENUEKOGI

ENUGU

Aliade

ABIA

AKWAIBOM

Owerri

AN AMBRA

PortHarcourt

RIVERS

Umuahia

2

2

2

22 2

2

4

3

TRANSMISSION LINE LEGEND

BULK SUPPLY POINT

HYDROELECTRIC POWER STATION

THERMAL POWER STATIONS

330 KV

H

330KV LINES (EXISTING) – MULTIPLE CIRCUITS

330KV LINES - EXISTING

2

2

2

330KV LINES (FGN) – MULTIPLE CIRCUITS

330KV LINES (PROPOSED PROJECT) – MULTIPLE CIRCUITS

330KV LINES (NIPP) – MULTIPLE CIRCUITS

330KV LINES - FGN

330KV LINES - NIPP

330KV LINES - PROPOSED PROJECT

2

ALAGBADO

Abeokuta

Olorunsogo

Existing (2012) 330 kV Radial Grid

11

Weak system with high risk of collapse

~60% total load

~50% total generation

Northern Region Low Generation

Poor Voltage Profile

MW transfer ability(Est. 5,630 MW)

Limited hydro generation

TO SAKETE

ONITSHA

KAINJI

JEBBA/GS

JEBBA/TS

SHIRORO

Ikeja

Akure

Uyo

BirninKebbi

Minna

Kaduna

Abuja

Jos

Bauchi

Gombe

Damaturu

MaiduguriKano

IIorin

AdoEkiti

EnuguAkwa

Ibadan

GusauHadejia

Jalingo

Yola

Abakaliki

Calabar

JIGAWA

KANO

KATSINA

ZAMFARA

KEBBI

KWARA

KADUNA

NIGER

NASSARAWA

TARABA

YOBE

PLATEAU

EBONYI

CROSSRIVER

OSUN

BAYELSA

EDO

DELTA

ONDO

OYO

IMO

ADAMAWA

BORNO

GOMBE

BAUCHI

EKITI

LAGOS

ATLANTIC OCEAN

REPUBLICOF BENIN

REPUBLICOF CAMEROON

SAPELEP/ST.

DELTAPOWER ST.

OGUN

Osogbo

NIGERIA

Potiskum

Niamey

132 kV

Mambila

Bali

AFAM POWER ST.

AsabaBenin

EGBINP/ST.

Lokoja

ABUJA

AJAOKUTA

Lafia

Makurdi

MAKURDI

BENUEKOGI

ENUGU

Aliade

ABIA

AKWAIBOM

Owerri

AN AMBRA

PortHarcourt

RIVERS

Umuahia

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

1

11

4

22

22

2

2

2

2

2

2

2

2

2

2

22 2

2

4

3

ALAGBADO

Abeokuta2

Olorunsogo

TRANSMISSION LINE LEGEND

BULK SUPPLY POINT

HYDROELECTRIC POWER STATION

THERMAL POWER STATIONS

330 KV

H

330KV LINES (EXISTING) – MULTIPLE CIRCUITS

330KV LINES - EXISTING

2

2

2

330KV LINES (FGN) – MULTIPLE CIRCUITS

330KV LINES (PROPOSED PROJECT) – MULTIPLE CIRCUITS

330KV LINES (NIPP) – MULTIPLE CIRCUITS

330KV LINES - FGN

330KV LINES - NIPP

330KV LINES - PROPOSED PROJECT

2

12

MESH GRID STRUCTURE BY 2020 Improved northern voltage

Many major loops improve reliability

MW capacity(Est. 28,000 MW)

Sokoto

330KV LINES - PROPOSED PROJECT UNDER STUDY

4

4

Current & Prospective Opportunities: Off-grid


Background • Remote and off-grid

projects are to be implemented in locations where it is technically and commercially unviable to implement grid extension projects

• The Rural Electrification Agency (REA) was established in 2006, via EPSR Act-2005. Historically was involved in

• In March 2012, in conjunction with MDGs a baseline data survey was commenced for the 774 Local Government Areas. The survey has concluded and collected information on:

• Grid reach; Functionality of power supply; Status and quality of power supply; Energy payment

Off-Grid Generation • Pre-feasibility & feasibility

studies for remote and off-grid locations.

• Load profiles & forecasts for remote and off-grid locations.

• Development of commercial framework for implementation of remote and off-grid power.

• Funding and technical support for pilot project implementation.

• Staff training.

Current & Prospective Opportunities: Market Services


Training/ NAPTIN•The un-bundling of the

Power Holding Company of Nigeria has aggregated all previous training services into a single body National Power Training Institute of Nigeria (NAPTIN). This body has a well-defined footprint of facilities across the country but no monopoly. Opportunities exist to

•either partner with NAPTIN or

• set up training facilities independently in anticipation of private-sector requirements

Technical Support Services/ EMS

•Similarly affected in the unbundling were the common technical support services – such as meter testing and certification. These services have been brought together into a new company Electricity Management Services (EMS). Like NAPTIN there is the advantage of incumbency but no monopoly, providing opportunities to:

•either partner with EMS, or•develop independent

companies providing support services in a growing and competitive private-sector power market

Current & Prospective Opportunities: Market Services


Products and Services•PTFP is co-sponsoring 2013 NIGERIA POWER

SECTOR INVESTOR SUMMIT:• “Connecting Investors to Emerging Opportunities in

Nigeria's Privatised Power Sector”•Eko Hotel & Suites, Lagos, Nigeria, September 18 -

20, 2013“….a gathering of investors to explore potential commercial opportunities in Nigeria’s privatized power sector; discuss policies guiding the sector and discover government programmes that support private investment in the sector. It is anticipated that the soon-to-be concluded privatisation process will increase competition in the Power sector, which will make the eventual owners of the power companies to focus on their core businesses and outsource the non-core businesses.”

Technical Consultancy and Advisory

• 11 Distribution Companies and 7 Generating Companies are being privatised. Requirements for specialist technical and engineering needs:

• Technical studies: distribution network performance studies;

• Software/MIS: Customer Relationship Management

• Technical/ non-power training.

Political Will: Reconstitution of PACP/PTFP Sep-2012


“One Leadership, One Sector, One Mission” the imperatives of which are laid out below:

ONE LEADERSHIP

ONE SECTOR

Policy Consistency &

Programme Control

Federal Ministry of Power

Hon. Minister of Power

Political Will &

Mandate

Presidential Action Committee on Power

(PACP)

Mr. President

ONE MISSION

Performance Management for

Timely Delivery of Roadmap Targets

Presidential Task Force on Power

(PTFP)

Chairman

Mandate

Reform of the Sector in line with the provisions of the EPSR Act of 2005

Monitor the performance of the MDAs charged with the day-to-day responsibility for ensuring that Service Delivery levels remain “steady and relatively predictable” and that there is a “noticeable increase” in the average number of hours of electricity supplied to consumers.

Political Will: Outstanding Milestones


Current Status of Outstanding Reform Milestones as at Sep 2012

Achievement

Divestment of Successor Companies 10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

þ Conclude on Preferred Bidders G G G G G G G G G G

þ Sign Share-Sale Agreements G G G G G G G G G G

þ Conclude Negotiations with Preferred Bidders A A A A A A A A

þ Payment of 25% Share Purchase Price G G

þ Conclude on Labour issues associated with Divestment A A A A A A A A A

þ Receive full 100% Payment & Handover

Conditions Precedent to Transition Electricity Market 10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

þ Sign Industry Agreements - GSAs, GTAs, PPAs, Vesting Contracts

G G G G G G G G G G

þ System Operations: Systems and Processes implemented G G G G G G G

þ Ring-fence System Operations and Market Operations G

þ Adequate (Grid) Metering G G G G G G G G

þ Testing and Implementation of Settlement System G G G G G G G G G

þ Update of Grid Code and Market Rules A

R Significant issues.

A Minor issues

G No issues

Political Will: Role of PTFP


By the end of 2013, the majority of components of the Power Sector Reform are expected to be completed. At which time, the PTFP’s job would be essentially completed: “Delivering The Reform”.

At this point, The Nigerian Electricity Market will be a commercially-focused, contract-driven market led principally by private sector participants. The Government would have withdrawn from its traditional roles to focus on the critical roles of Policy and Regulation

In this year, 2013, the work of the PTFP is as critical as ever as it is necessary that the infant market starts off in the right direction. The PTFP is currently conducting a review of the original RoadMap to assess what was achieved, to record what was learnt and to propose a path for the Power Sector into 2020 ensuring that what was started will be sustained.

Thank You

19

PTFPhttp://[email protected]

presented at: the 9 th cii exim bank conclave on india – africa project partnership,

Documents

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