The country’s yearning for improved electricity generation inches close to reality at the weekend when Azura Independent Power project (IPP) successfully deployed all it three turbines with combined generating capacities of 450 megawatts on the national grid.
This is expected to improve power generation a great deal and subsequently impact positively on electricity supply generally across the country.
This happened a day after the power sector suffered partial system collapsed and a severe generation drop by 606 megawatts hour (MWh/h) leading to making all the generating stations sending out on the average 3,370602MWh/hour last week Thursday. There was nothing to suggest that the situation was much better on Friday even after the Azura had deployed its 450mw to the national grid, as power supply to Lagos and its environs has been poor in the last few days
According to a presidency source 1325.5MW was not generated due to unavailability of gas while lack of transmission infrastructure was responsible for 40MW not generated.
Another 485MW was not generated due to high frequency resulting from unavailability of distribution infrastructure just as reduced water level at the hydro at power stations also caused the loss of 190 MW, thereby indicating that there is a shortfall of 1940mw in generation.
On the whole the power sector lost an estimated N979,000,000 on April 12, 2018 due to insufficient gas supply, distribution and transmission infrastructure as well as water reserves.
The Federal Government through the Nigerian Bulk Electricity Trading Plc (NBET) recently paid Azura Power the sum of N8m being twelve percent of about N66 million for test power sent to the national grid in January, sources with knowledge about the transaction have told BusinessDay.
Meanwhile, Nigeria’s other generating companies (GenCos) will today hear judgement on a suit they filed against the Federal Government for prioritising settlement of its commitment to Azura Power in the N701billion power guarantee instituted to assuage DisCos failure to settle market invoices.
The rest of the GenCos have received settlement up till October 2017 and since then their invoices have remained unsettled according to Joy Ogaji, the executive secretary of Association of Power Generation Companies (APGN).
“The situation remains the same, we still have not received payment for our invoices since October last year,” she told BusinessDay by phone.
Ogaji said that the legacy power plants which have the capacity to generate over 7,000MW of electricity were denied a sovereign risk guarantee only for the Federal Government to give Azura the same guarantee including a partial risk guarantee from the World Bank even when it has capacity to generate only 450MW.
But Jubril Kareem, energy analyst at Ecobank does not agree with this view.
“Part of the reason the Azura project was able to get funding and construction started was because the government committed to it and it has a very solid power purchase agreement based on the realities on ground.
“Nigeria is one of the most expensive places to generate power and if they are being paid according to the terms of the power purchase agreement, there is nothing wrong with that.
Kareem further said, “The agreement with Azura was so tight that if government defaulted on payment it has serious implications. This is unlike the other power plants which were mostly acquired from the government, it was built brand new and they had the time to mitigate all risk about not being paid.”
Azura Power is the first Nigerian power project to benefit from both the World Bank’s “Partial Risk Guarantee” structure ($237 million of debt used to build the plant) and the political risk insurance supplied by the Multilateral Investment Guarantee Agency.
Azura delivered on budget ahead of schedule by 7 months and could increase Nigeria’s peak generation from 5,155MW to over 5,500MW.
However, analysts are concerned about the ability of the Federal Government to sustain payment for Azura Power considering the huge cost involved in settling the test power for one month.
Azura secured a $900m debt financing from a consortium of 15 banks from 9 different countries, including most of the European development finance institutions to build a 450MW Open Cycle Gas Turbine in Benin City, Edo State,
Last month, it sent NBET, the market bill for test power from a single turbine of 153MW delivered to the grid on December 20, 2017.
