Chairman of the Heirs Holdings, owners of the Ughelli Power Plant, Mr. Tony Elumelu, is billed to deliver the keynote address at this year’s West African Power Industry Conference (WAPIC) scheduled for Lagos in 18-19 November. In this interview with ANNMARIE ROODBOL of WAPIC, Mr. Elumelu discusses questions on power challenges in Nigeria and the prospects its hold.
The Power Africa Initiative is an amazing opportunity to democratize access to power for Africans, and the $2.5 billion investment commitment we have made reflects exactly how excited I am about it.
The present administration made a bold decision when it decided to affect the changes envisaged by the power sector reform Act, a legislation that had been on the books since 2005. And that bold step was reinforced during President Barack Obama’s last visit to Africa. We felt more strongly than ever, the need to help power Africa.
Our experience so far at Ughelli power plant is testimony to the size of the opportunity. Our amazing team has taken that plant from 150mw capacity when we took over in November 2013, to 450mw today. We expect it to increase 700mw by October and to achieve 1000mw by the second quarter of 2015.
At that rate, we will be contributing 20 percent of Nigeria’s total power generation. To push the possibilities further, we are working on a greenfield project that will expand the capacity of Ughelli by an additional 1000mw in the next 3 to 5 years and we have signed an MoU with General Electric (GE) and Symbion Power to facilitate this.
I must add, however, that gas is an integral part of power generation and we are pleased that our oil assets in the Niger Delta will eventually produce gas to meet our gas needs at Ughelli.
At current production projections, by the end of 2015, 150 mmscf per day will be produced and that will meet about 40 percent of the gas demands for Ughelli.
As you can imagine, working to literally power Africa is truly exciting.
Main challenges in Africa’s power industry
Locally, the major challenges we have are unreliable transmission, infrastructure and access to uninterrupted gas supply and timely settlement of invoiced payments.
In Nigeria, one of the biggest challenges to power generation is transmission and in fact, while Ughelli Power Plant generated at full capacity for the first time in July, we were asked to scale down generation because of the outdated transmission systems. For every 100mw generated and sent to transmission companies, 40 percent is lost, in part because of this infrastructure issue.
And the challenges go beyond transmission.Many plants in the country can produce more than they currently do, but the limited availability of gas makes it difficult to produce according to the companies’ individual capacities, which affects the total supply and explains why the average Nigerian hears reports of increased capacity which is yet to be translated to increased power availability in homes and places of work.
Also, power generation is capital intensive and as it stands, we send the power we generate to the transmission company as soon as it is generated and we count on the government to pay in a timely manner, but that has posed a bit of a problem.
What is more, while regulation isnot a key challenge, it is an issue within the sector that if addressed, has the potential to speed sector growth exponentially.
We need pragmatic regulation that recognizes that within Nigeria, the sector is nascent and so policies must be designed to encourage growth.
In fairness, the federal government is confronting these challenges head on. It has introduced incentives for gas producers so that they can invest more in production; it is improving the gas pipelines and planning a transmission market for October.
The federal government is also making on-going investments in upgrading the transmission infrastructure and that will make all the difference. So while the challenges exist, one must continue to plod on in anticipation of the changes to come.
His vision for the industry
I believe the power industry is a catalytic sector and the development of our country and our continent cannot happen without fixing it.
Our group has the ambition to generate at least a quarter of Nigeria’s power consumption needs in the next five years. I realize that as we steadily increase our output, the base will change, but we are committed to keeping pace.
I am an avid believer in the capacity of the private sector and the discipline it can bring to bear. I know that we will deliver on the promise of abundant power, which in turn will help address the pent up demand for access to electricity that our vibrant economy needs to keep growing at an even faster pace.
A healthy, well regulated, and largely private power sector is possible and will form one of the cornerstones of true economic development.
What to discuss as a WAPIC keynote speaker in November
I will discuss the opportunities that I have discovered in the power space and the efforts of African power sector leaders through the West African Energy Leaders Forum to improve access to electricity across West Africa.
I will also speak briefly about how Heirs Holdings’ $2.5 billion commitment to Power Africa is helping to improve access to electricity, to mention but a few.
Surprise about doing business in Africa
It is less about surprise and more about what spurs me to do more and invest more. For perspective, we are invested in oil & gas, agribusiness, hospitality, real estate, health insurance, medical services and power.
We do this because of the attractiveness of returns in these focus sectors and the opportunities that can be created for the people of Africa. The size of the opportunities in Africa is big and that may be surprising to others, but not to us.
Sources of smiles about doing business in Africa
I am a big believer in Africa and Africans. I often look back in amazement when I think about the progress that has been made in recent years and the pace of that change.
The fact that I believe we are at a tipping point is a constant source of happiness as I look forward to what I expect will be a very exciting and rewarding future for the continent and its people.
