AZURA – Edo one billion dollar power project is a clear demonstration of the confidence of the international community, including World Bank in the economy of Edo State led by Comrade Adams Oshiomhole. It is an indication that Edo State is investor friendly as the Government under Comrade Adams Oshiomhole has put in place the necessary infrastructure to attract investors to the state. This is another project conceptualized by the Edo state Government under the Public private partnership programme to unlock the industrial potentials in the state and make the state the nation’s energy hub”.
The project is located at Ihovbe/Orior Osemwende Communities, off Benin Lagos bypass, Benin City. The foundation laying ceremony of the $1 biliion Azura-Edo 1,000 megawatts gas-powered independent power plant was performed by President Goodluck Jonathan at Ihovbe/Orior Osemwende communities, off Benin-Lagos Bypass, Benin City. The first phase of the project, which was conceptualized in 2010 and jointly incubated by the Edo State Government under comrade Adams Oshiomole and Amara Capital, the key promoters of Azura power west Africa Ltd, is 450-500 mega watts to be scaled up to 1,000 megawatts in the second phase.
The Azura project is the first Nigerian power project to benefit from the World Bank’s “Partial risk guarantee” structure which was specifically created to meet the developing needs of emerging markets globally. The Azura-Edo IPP is expected to create the template for the successful development of IPPs in Nigeria and Edo state is playing a pioneering role in determining the future of Nigeria’s power sector. Azura-Edo IPP will provide over 4,000 direct and indirect jobs for the people of the state from the construction to the post-construction period of the project.
Nigerians laud the cooperation between the governor of Edo State, comrade Adams Oshiomole, the World Bank and the private sector over the remarkable partnership in the power and energy sector between the FG and the state. Work on the $1 billion Azura Edo State Independent Power was flags-off last year as President Goodluck Jonathan turned the sod for the commencement of construction work on the project.
President Jonathan who assured that the Federal Government will work with the private sector to grow the economy hailed the project which was conceptualized in 2010 and jointly incubated by the Edo State Government under Comrade Adams Eric Oshiomole and Amaya capital, the key promoters of Azura Power West Africa Ltd as a first in many ways. According to the President, “We are happy to associate with Azura in this private investment. This project is a first in so many ways. It is the first financed private power plant, it is also the first power project to see the world bank financial guarantee agencies”. He said, “This 450 megawatts of new generation capacity will attract almost $1 billion mainly in foreign investment into the power sector. This is made up of $700 million in the construction of the power plant and $300 million associated with the gas infrastructure.
Oshiomhole is concerned about contradictory positions of the Federal Government on the operations of the electricity distribution companies. The Federal government had unbundled the Power Holding Company of Nigeria, in order to radically transform the power sector. Unfortunately, the outcome belies the effort. Abuja’s fresh desire to inject $350 billion into the sector for facilities upgrade over a 15-year period and the predilection for making excuses for non-performance of the electricity distribution companies expose the underbelly of the power privatisation scheme.
Nigerians are worried that in the 10 years to 2012, the PDP led Federal Government had sunk $35 billion into the power sector, according to Nebo. Nobody has been held to account for this huge expenditure even when there is no result to show for it. This is most shameful. Statistics from the Ministry of Power show that peak generation as of January 25, 2015 was 4,291 megawatts, while energy consumed or sent out was 3,791MW. The highest peak generated was 4,517.6MW in December 2012. Definitely, this output does not exemplify progress, or justify the investment made so far.
Nigeria missed its way on the power privatisation road when foreign firms with pedigree were schemed out due to corruption and vested interests by PDP led Federal Government. It also explains why the well known Canadian firm, Manitoba Hydro International, with a management contract for the Transmission Company of Nigeria, has not had it easy.
More should be done to get our transmission right by subjecting it to a transparent privatisation. The TCN’s critical role in a successful power reform is underpinned by the fact that out of 4,291MW generated as of January 25, 2015, only 3,791.66MW was sent out. Thus, independent providers such as ALSCON with 100MW; Ajaokuta Steel Company 85MW; Lafarge Cement 40MW; Obajana Cement Plc, 35MW; Kaduna Refinery 33.5MW; Geometric in Aba 22MW; and NESCO, 26MW, have not yet been linked to the national grid.
Both Nebo and Sam Amadi, the chairman of NERC, must make the DisCos perform. The six-month moratorium on the implementation of the new Multi-Year Tariff Order to private electricity consumers is just a veneer response to a gargantuan problem. Only the adoption of global best practices in the privatisation scheme will do.
Repeatedly, the firms have ignored the Nigerian Electricity Regulatory Commission’s directives to provide customers with prepaid meters to ensure that they only pay for what they consume, instead of the corrupt regime of estimated billing. The government is creating the impression that the DisCos cannot discharge their fundamental obligation because of financial imperatives. This is barefaced falsehood. It is not cash crunch that influenced the DisCos’ refusal to distribute the prepaid meters they inherited from the PHCN, which the Federal Government had procured with N2.9 billion. Many consumers had paid for them since 2011.
The 45-day compliance deadline given to these errant DisCos in October to meter this set of consumers has lapsed without any of them being sanctioned. Instead, what is now in vogue is to “allow the DisCos to fix the time” when they would provide Nigerians with meters. Nebo’s charge to these firms on the consequences of non-performance on November 24, 2014 is instructive: any culprit would be sanctioned “or its licence withdrawn.” For a privatisation programme to achieve its set objectives, fidelity to agreed principles is critical. But this is not what Nigerians are witnessing.
We don’t believe that the Federal government carried out proper due diligence on the DisCos that bought the 11 unbundled PHCN distribution firms. Most of them were, in fact, “special purpose vehicles” – companies hurriedly registered just to corner public assets – without the financial and technical expertise to deliver. To allow this debilitating regime to reign means giving credence to the widely held belief that the powers-that-be sold these assets to their “friends and families.”
The patchwork in the power sector being encouraged by Federal government in the guise of its botched privatisation will not end the country’s nightmare. What is required, therefore, is a critical review of the extant contractual agreements like Adams Oshiomhole Azura power project which allows foreign investors with the technical, managerial and financial capacity to key into the power reform programme.
Inwalomhe Donald, Justice Research Centre, Benin City. [email protected]