A global technology and technical services company, GE supplies equipments and collaborates with independent power producers in Nigeria. In support of the country’s ongoing reforms of its power generation sector, GE plans too invest $1billion in Nigeria by 2020 and create some 2,300 jobs in manufacturing.
How does GE expect the Nigerian power sector to progress over the next five years? What are the anticipated challenges?
While it is good to be optimistic, it may be a bit unfair to expect a complete solution to all the problems in the power sector in five years. Reforms are still in the developmental curve and there are a number of constraints to surmount. For example, Nigeria is still perceived as a high risk investment destination. So the process of structuring a project financing deal with international financing institutions is usually complicated and daunting. It takes a lot of time-two to three years to complete a single deal.
The truth is, the power generation sector is capital intensive with a fairly long gestation period. For example, a 100MW thermal power plant costs about $100Million and is just about the energy needed to power 100,000 urban homes. To deliver a power plant from Greenfield to commissioning takes around three years. It therefore means that the industry would need about $36billion in investment to an additional 36GW over the next 20years to have a meaningful impact on the economy. Policies must be consistently directed at improving confidence in the investment environment. It is very important that the electricity regulatory agency be fully cognizant of its responsibility from the onset.
Is Nigeria’s power pricing model attracting the investment needed to rejuvenate the sector?
The multi-year tariff order, a tariff path for the Nigerian electricity supply industry that spans a period of 15years is a fantastic pricing model. This does not make it absolutely perfect but it is a good starting point. It considers all the various points in the electricity delivery value chain based on the principle that sensible electricity pricing and providing affordability for consumers are critical factors to industry success.
How important will the conversion of Nigeria’s power plants from open cycle to combined cycle be in providing future energy efficiency? Are there cost benefits?
it doesn’t matter whether a thermal plant is open cycle or combined cycle in a place such as Nigeria. The country is very fortunate in that it has the cleanest form of natural gas in abundance compared with anywhere else around the globe. It is also very cheap at around $2 per million British thermal units.
The simple technical reason for conversion is to reduce fuel consumption. If you consider the cost of conversion-that is, the cost of providing the additional infrastructure needed for conversion versus the cost of fuel in Nigeria, you would definitely opt for multiplication of open cycle plants in short and medium term development. In the long term, conversion might become a necessity.
How are original equipment manufacturers able to transfer their technology to Nigerian companies that are currently operating in the power generation sector?
The gap between electricity supply and demand in Nigeria clearly represents a huge business opportunity. To expand the current 6GW of installed capacity to the 40GW estimated demand by 2025 requires major sustained investment over the years as well as commitment by all the stakeholders.
GE is building manufacturing, servicing and training infrastructure in Nigeria. Today, more than 98 percent of the employees across Nigeria’s GE offices are Nigerians. To enable technology transfer, we have organized supplier fairs in Lagos, Abuja, Calabar, Amsterdam, New York, Chicago and China. The aim of these fairs is to connect local companies with their foreign counterparts such that their combination ultimately results in improved capacity.