A Review of the Nigerian Energy Industry

Nigeria issues licenses to IPPs to generate 6,258MW from coal, others

Oscarline Onwuemenyi

6 December 2011, Sweetcrude, ABUJA – The Federal Government yesterday made good its promise to drive the new era in the power sector with the private sector as it issued a total of twenty licenses to independent power producers.

They are expected to add a total of 6258 mega watts of electricity to the nation within the next 36 months. A distribution license was also issued to Aba Power Limited for tenure extension in Aba.

Perhaps the most remarkable of the licenses was the one issued to Zuma Energy Nigeria Limited to produce 1200MW from coal deposits in Itobe, Kogi State. The license represents a concrete manifestation of government’s resolve to utilize the nation’s mix for power generation.

Eight of the licenses were for off-grid generation, 10 for grid connected licenses and two for embedded generation.

Presenting the licenses, Minister of Power, Barth Nnaji expressed joy that government had addressed most of the challenges independent power producers were facing in the country.

He noted that, “From the budget of the Ministry of Power, we are giving N20 billion to the bulk trader so that they will have money to pay for power from power producers. We are also giving N20 billion to NELMCO to assist in buying over most of the liabilities of the government power operators in preparation for the privatization.

“The privatization is moving forwards and we expect that by second or third quarter of next year, we should have concluded the process and handed the sector over to private concerns.”

On the challenges with the electricity workers, remarked that, “The federal government is addressing all the concerns of labour. We want to once again assure them that it is from their midst that the workforce for the sector would come. The operators will no doubt require the immense experience many of them have gathered over the years.”

Also speaking at the event, the Chairman of the Nigerian Electricity Regulatory Commission, NERC, Mr. Sam Amadi, stressed that 5 other licensees were waiting undergoing scrutiny for the possible issuance of similar licenses.

He described the issuance of the licenses as a landmark event for the sector, noting that the license to the bulk trader to commence operations is also a major boost to the reforms in the sector.

Chairman of the Independent Power Producers Association of Nigeria, Prof Jerry Gana expressed joy that some of the impediments that had hindered independent power producers from operation in the last one year had been resolved by government.

He tasked the owners of the licenses to ensure speedy commencement of work ‘such that Nigerians will begin to enjoy stable power sooner than expected.’

He charged the federal government to fund the bulk trader, pointing out that, “That is our key agency. We sell to them when they produce and they make the investment worthwhile.”

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