Biggest Nigeria Power Plant Owed $352 Million by Government

(Bloomberg) -- Nigeria’s Egbin power plant, the biggest in Africa’s most-populous nation, is owed 125 billion naira ($352 million) by the government and half of its output is wasted because of inadequate transmission infrastructure, its chief officer said.

Out of the roughly 1,300 megawatts currently generated by the facility’s six units, which is close to full capacity, some 700 megawatts are lost since the grid is overwhelmed, Egbin CEO Dallas Peavey Jr, said Wednesday in an interview at the plant in Lagos state.

Egbin is working with the Transmission Company of Nigeria to improve things, Peavey said. “We have major pieces of equipment that are almost impossible to find,” he said. “We are working with General Electric and other U.S. companies to help us provide those, perform the overhaul, help us do the transmission evacuation.”

Nigeria currently distributes an average of 4,500 megawatts of electricity, Peavey said. That’s an improvement from 1,000 megawatts in May 2016, when gas supply was disrupted, and from an average of 2,503 megawatts recorded in the second quarter of this year, according to the National Bureau of Statistics. But it is still far from the needs of Nigeria’s 180 million inhabitants who face daily blackouts. South Africa distributes about 34,000 megawatts during peak demand, for a population less than a third of Nigeria’s.

Government Debt

Egbin is facing financial difficulties, with the government owing it 125 billion naira, according to Peavey. “We need to be paid, that is a very big challenge,” he said.

Sahara Group Plc, the Nigerian energy company that owns Egbin, has invested $400 million in the plant since it took over in 2013, after a partial sale of state-power companies to private investors.

With such debt, banks are reluctant to give Egbin loan facilities. “But we will continue to work with the banks, the Central Bank of Nigeria and the federal government so that we close that gap and lower that risk,” Peavey said.

While Egbin is owed money, the amount given by Peavey was incorrect, Yesufu Alonge, head of power procurement at government-owned Nigerian Bulk Electricity Trading Plc said, declining to provide a figure. The delay was in part due to the fact that distribution companies owed the trading company payments, he said by phone.

Peavey said he believed transmission issues could be addressed “very soon” and he plans to add 1,500 megawatts of capacity to Egbin by 2020.

President Muhammadu Buhari, who has called Nigeria’s power situation a “national shame,” said in 2016 that the country was targeting an output of 10,000 megawatts of electricity by 2019. That’s a quarter of the capacity of South Africa, which has a third of the population of Nigeria.