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Power Sector Opportunities in Nigeria

Dolapo Kukoyi, Partner (Power)

UKTI TRADE DELEGATION TO LONDON – SESSION WITH BRITISH EXPERTISE AND

THE CITY UK

11th FEBRUARY, 2013

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1. Brief History of the Nigerian Power Sector

2. Nigerian Power Sector Outlook

3. Power Sector Opportunities

4. Legal, Regulatory and Contractual Framework

Outline

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Brief History of the Nigerian Power Sector

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A monopoly run by a single government owned utility company handling generation, transmission and distribution of Electricity.

Single Utility Company progressively incapable of handling power demands with rising population.

By 1999, NEPA at the time had an imminent complete system failure

Power Sector Reforms in 2005; creation of PHCN, unbundling of Generation, Distribution and Transmission businesses and creation of successor companies and regulatory framework

Privatization Process suspended in 2007 restarted in August 2010

Brief History of the Power Sector

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Nigerian Power Sector Outlook

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Gombe

Kogi

Plateau

Abia

Akwa-Ibom

OndoOgun

Lagos

Edo

Delta

Bayelsa Rivers

Cross River

,bDKDKO

Power GenerationLegend

FGN Gencos

Non Operating IPPs

Enugu

Niger

Operating NIPPs

Imo

Non Operating NIPPs

TARABA

Operating IPPs

FGN NON OPERATING GENCOS

EMBEDDED GENERATION

KADUNA

BORNO

YOBEJIGAWA

KASTINA

ZAMFARA

SOKOTO

KEBBI

KWARA

OYO

OSUN

EKITI

ABUJA

NASARAWA

BAUCHI

ADAMAWA

BENUE

FUEL SOURCESSOKOTO

ZAMFARA

KASTINA

JIGAWA

YOBE

BORNO

KEBBI

NIGER

KADUNA BAUCHI

GOMBE

Plateau ADAMAWAKWARA

ABUJA

NASARAWA

TARABA

BENUE

KOGIOYO

OSUNEKITI

ONDOOGUN

LAGOS

EDO

DELTA

ENUGU

CROSS RIVERIMO ABIA

BAYELSARIVERS

AKWA IBOM

ANAM- BRA

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Alternative Fuel Sources Legend

Coal Deposits

Hydro Projects

Colours:

Water

Coal

Gas

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Nigerian Power Sector Outlook – National

Power Sector Road Map aspiration – 40,000 MW by 2020

Presidential Taskforce on Power – 30,669 MW by 2020

Daily Peak Delivery as at December 2012 – 4300 MW ( ± ),

32 Licensed On -Grid IPPs with a total installed capacity of ±1879 MW total licensed capacity 12,324 MW

21 Licensed Off – Grid IPPs with a total installed capacity of ±111.15 MW; total licensed capacity 284.5 MW

3 EG Licenses with a total licensed capacity of 263 MW – All Non-Operational

4 NIPP Projects currently operative with a total installed capacity of 5,625MW,

Generating Capacity of 4 NIPPs 1,687.5 MW – Dec 2012;

7 FGN Successor Generation Companies (Hydro and Thermal Stations) with a total installed capacity of 5,980 MW

3 big Hydro projects (Gurara, Zungeru and Mambilla) at different stages of development proposed capacity of 3,300 MW

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Nigerian Power Sector Outlook – Hurdles

Access to gas, gas prices and gas supply framework

Transmission Network – Losses and dilapidated Infrastructure

Bulk Trader – Credibility , Standard PPA Template

Cost Reflective Tariff

Maintenance/ Turnaround of existing FGN Discos

Funding for NIPP Projects

Liquidity and Regulatory Risks -World Bank Partial Risk Guarantee

Financing for IPPs

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Power Sector Opportunities

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Power Sector Opportunities Investing in Power Privatization (Commercial, Technical and Financial)

Power Transmission Infrastructure

Gas Transportation Infrastructure

Technology and Engineering

Independent Power Projects (on grid and off grid)

Embedded Generation

Independent Electricity Distribution Networks

Technical capacity and Knowledge – capacity, standards, contracts.

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Power Sector Opportunities – Lagos State

Population as at 2012 – 20.5 million

2,000 industrial complexes, 10,000 commercial ventures and 22 industrial estates.

Requires over 12,000 MW of electricity

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Power Sector Opportunities - Lagos State

No Area No. of Location

s

No. of Sectors Installed Capacity

(MW)

Number of Generators

1 Somolu Printing Community 271 15 11 300

2 Matori Industrial Estate 148 20 40 105

3 Ilupeju Industrial Estate 144 18 25 105

4 Ikorodu Industrial Estate 11 4 135 31

5 Lagos Island (broad street & Marina only)

599 25 100 252

6 Ikeja GRA 789 31 68 8047 Oba Akran 516 32 69 5488 Agindingbi 645 36 70 8209 Omole 1 936 10 13 8910 Omole 11 1531 12 43 241011 Dolphin Estate 1544 12 22 1089

Source: Presentation on Power Sector Development: Lagos State Economic Summit April 23-25 2012

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Legal, Contractual & Regulatory Structure

Ministry Of Power

Energy Commission of

Nigeria

Nigeria Electricity Reg Commission

Min of Water Resources

National Inland

Waterways

Gas Aggregation Co of Nigeria

Nigerian Bulk Electricity Trading Plc

Nigerian Elect Liability

Mgt Co

Niger Delta Power Holding

Co

Independent Power

Producers

Successor Generation Companies

National Integrated

Power Projects

Successor DistributionCompanies

Independent Elect Dist. Networks

Off Grid On Grid Embedded FGN Plants

NGC GTC IOCS

GO

VERN

MEN

T EN

ABLE

RSPO

LICY

&

REG

ULA

TIO

NS

IND

UST

RY P

ARTI

CIPA

NTS

Level 1

Level 2

Level 3

Transmission Co of Nigeria

M.O S.O TSP

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Enabling Legislation for Power Sector Reforms

Independent Regulator – NERC

Licensing Framework

Tariff Framework – MYTO I & II

Robust Regulatory Framework – Regulations and Codes

Bulk Trader set up and funding in progress

Contractual Framework in progress

Gas Contractual Framework in progress

Notable Milestones

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The Nigerian Power Sector is bursting with opportunity

Challenges exist but can be overcome

Consistent Government political will is evident in the current privatisation process

Conclusion

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BREAKING NEWS!!!!!

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Thank You for Listening