Privatisation in the power sector

Nigeria’s Power sector reform has proceeded as scheduled. In this publication we look at some of the milestones that have been crossed and explore the next steps in the sale of 17 Federal Government power assets.

With an installed generating capacity of about 7,500MW and operating capacity of circa 4,000MW, electric power is still a major hindrance in Nigeria’s objective to be regarded as one of the world’s top 20 economies by 2020.

The rule of thumb for an industrial nation is about 1MW for every thousand of population. This puts Nigeria’s energy needs in the 160,000MW range given its population of 160 million. The Federal Government has a target of 40,000MW by the year 2020.

The size of Nigeria’s power challenge led to the government’s release, in August 2010, of the “Roadmap to the Power Sector Reform”, a blueprint to conclude the privatisation of the power sector. Since the release of the Power Sector road map, the privatisation has gained momentum. The timelines set by the Bureau for Public Enterprise (BPE) have been met and significant milestones laid out in the roadmap achieved. Some of the achievement to date include: successful review and implementation of Nigeria’s Multi Year Tariff Order (MYTO II); additional 1000 MW of power generation by the National Integrated Power Project (NIPP) and succesful bidding for 5 generation companies (Gencos)and 10 distribution companies (Discos).