NEPA is upgrading transmission and distribution, as well as billing and revenue collection

The privatisation of Nigeria’s energy sector is expected to lead to an inflow of foreign investment in core strategic areas such as electric power, refining and other downstream industries.
At the forefront of this initiative is the privatisation of the state-owned National Electric Power Corporation (NEPA), which underpins much of the government’s development agenda.
Since the Obasanjo administration came to power in 1999, NEPA has been working flat out to improve efficiency levels and deliver more power to the country.

Joseph Makoju, managing director and chief executive of NEPA, says the turnaround has been dramatic. This includes not only improvements in generating capacity levels but also in streamlined and more transparent business practices within NEPA itself.
“Certainly NEPA is one area of the public sector that has benefited most from democracy,” he says. “The president has placed a special priority on reviving the power sector and has backed this up with massive funding.”

Indeed, lack of investment throughout much of the past two decades resulted in a weak electrical infrastructure, typified by shortages and blackouts, which forced industrial users to invest in expensive stand-alone generators to support their business operations.
But things are changing. Under emergency power initiatives, NEPA has brought in additional capacity to meet short-term needs while it draws investment into longer-term generation projects, including the rehabilitation and overhaul of existing plants.
The government has set tough targets to improve the national power system, including a commitment to beef-up generation to 4,000 megawatts (MW) by the end of this year. In 1999, output was just 1,400MW – serving a country of more than 100 million people.
NEPA is also investing in the upgrade of the nation’s transmission and distribution systems, as well as billing and revenue collection procedures and staff training It has established a special relationship with South African utility Eskom to pursue joint co-operative ventures. The two organisations have already established a long-distance telecommunications business.

Since 1999, a lot of work has gone into the reform of the electricity sector, including tariff revisions, to enable private companies to operate, and in restructuring NEPA in readiness for eventual sell-off. This will involve breaking it into separate generation and distribution units to be sold to the private sector, a process which is expected to begin by the end of 2002. A new regulatory body will also to established.
Mr Makoju believes that a more reliable electricity supply is the best thing that Nigeria can offer investors. “We have a big part to play in attracting investors into this economy,” he says.

‘New rules based on open competition’ Olusegun Agagu

Nigeria has already attracted significant levels international interest from players such as AES Corporation of the US and British firm Aggreko. In addition, some of Nigeria’s joint venture oil companies, Shell, Mobil and Agip, are each pursuing independent power projects that will feed electricity into the national grid.
Dr Olusegun Agagu, the minister of power and steel, says there are new rules in the Nigerian power sector based on open competition driven by efficiency and market forces. He says that as much as 85 per cent of the industry will be in private hands by the end of 2003.
“In two or three years we should have more than 20 different companies out of what are the present day NEPA generating and distribution companies,” he says.