Nigeria Power Reform Agenda: Keynote Address

1. PTFP http://www.nigeriapowerreform.org taskforce@nigeriapowerreform.org Keynote Address by: Engr. Beks Dagogo-Jack FNSE Chairman, Presidential Task Force on Power Member, Presidential Action Committee on Power Federal Republic of Nigeria Presented at: The 9th CII EXIM Bank Conclave on India – Africa Project Partnership, Taj Palace, New Delhi India. 17 - 19th March 2013

2. Outline • The Reform Agenda • Timeline & Introduction • Delivery of Reform Milestones. • Service Delivery. • Current and Prospective Opportunities (in the Nigerian Electricity Market) • Generation • Transmission • Off-Grid • Other • The Political Will • Reconstitution of PACP • Outstanding Milestones • Role of the PTFP Presidential Task Force on Power 2

3. The Reform Agenda: Timeline & Introduction • Before Power Sector Reform: • Vertically integrated government-owned monopoly entities in the power value chain . • Growing inefficiencies and leakages; annual capital drain from the federal budget • Uncoordinated investments in generation, transmission and distribution. • Huge widening gaps between demand & supply ; massive industry flight leading to worsening unemployment . • High suppressed demand throughout Nigeria Presidential Task Force on Power 3

4. The Reform Agenda: Timeline & Introduction • The Power Sector Reform has two broad missions : • Service Delivery : • Relying mostly on the completion of the new NIPP projects & the recovery of installed capacities in the up, mid and downstream , grow the availability , supply and reliability of electricity in Nigeria to an acceptable short term level during the divestment. • Reform: • Move the sector from the position of government ownership/management of the assets to a private-sector driven Nigerian Electricity Supply Industry in line with the EPSR Act 2005. . Presidential Task Force on Power 4

5. The Reform Agenda: Timeline & Introduction • Presidential Road Map on Power – a short history. • Pre – May 2010 • The Electric Power Sector Reform Act enacted ( EPSRA 2005 ). • NEPA unbundled into Successor companies with PHCN as the holding company • Nigerian Electricity Regulatory Commission NERC created . • A multi-billion dollar National Integrated Power Projects ( NIPP) started and later stalled • Reform stalls until President Goodluck Jonathan assumes office in May 2010. • Post – May 2010 • President Jonathan chooses Power as one of his cardinal programmes . • The stalled NIPP program resumes in earnest . • President Jonathan inaugurates the Presidential Task Force on Power & the PresidentialAction Committee on Power . • President Jonathan launches the Nigeria Power Sector Reform RoadMap in August 2010. Presidential Task Force on Power 5

6. The Reform Agenda: Delivery of Reform Milestones Presidential Task Force on Power 6

7. The Reform Agenda: Service Delivery Presidential Task Force on Power 7

8. General Electric • Facilitating and promoting private sector investment up to 10,000MW • Siemens AG • Facilitating and promoting private sector investment up to 10,000MW • Electrobras • Facilitating and promoting private sector investment up to 10,000MW • Daewoo • Facilitating the development, financing, procurement, manufacture, commissioning and operations of 10,000MW • EDF/ETDE • Promoting power sector investments by sponsoring feasibility studies for approved projects. • Multilateral G-to-G Agency Support • Promoting the development of small / medium hydro-power plants as embedded generation for rural communities Current & Prospective Opportunities: Generation Power projection is underpinned by several MoUs with the following organisations. Presidential Task Force on Power 8

9. Privatisation of NDPHC Power Plants • 10 medium-sized power generation plants under construction by government – rated to produce 4771 MW of power – to be privatised after completion of construction program. • 6 plants to be completed by 2013; remaining 4 by 2014 • Development of IPPs • 3 IPPS currently active in country – date pre-Reform • Project-finance IPP development pipeline now well in progress. • PPAs with government-backed electricity buyer • Securitisation with World Bank Partial Risk Guarantee program under development • Captive & Embedded Generation • Small IPPs dedicated to captive clients. Power plants sited at Free Trade Zones and various Industrial Zones/ Parks around the country. • “NERC Regulation on Embedded Generation 2012“ defines market rules for selling power to (soon-to-be-divested) Electricity Distribution Companies • “NERC Regulation for IEDN 2012” defines market rules for setting up an Independent Electricity Distribution Network Current & Prospective Opportunities: Generation Presidential Task Force on Power 9

10. Contractor-Financed Infrastructure • The transmission network will require significant investment to keep pace with the expected growth of the soon-to-be-privatised generation and distribution power sectors. For the next 5 years, approximately 1 to 1.5 Bn USD will be required per annum to turn the grid from the current weak radial system to the robust mesh network presented below. • Financing models being currently investigated include EPC contractor-financed infrastructure where investment will be paid back over a pre-determined period of time upon completion and handover of transmission asset to the government-owned Transmission Company of Nigeria (TCN). Framework to be established 2013-Q2 to allow for important network gap-closure projects to begin in 2014 for 2016 delivery Current & Prospective Opportunities: Transmission Presidential Task Force on Power 10

11. 2 2 2 2 2 3 4 2 2 2 2 2 2 Existing (2012) 330 kV Radial Grid TRANSMISSION LINE LEGEND 330KV LINES (EXISTING) – MULTIPLE CIRCUITS 330KV LINES (FGN) – MULTIPLE CIRCUITS 330KV LINES (NIPP) – MULTIPLE CIRCUITS 330KV LINES (PROPOSED PROJECT) – MULTIPLE CIRCUITS 330KV LINES - EXISTING 330KV LINES - FGN 330KV LINES - NIPP 330KV LINES - PROPOSED PROJECT 330 KV BULK SUPPLY POINT H HYDROELECTRIC POWER STATION THERMAL POWER STATIONS REPUBLIC OF CHAD Weak system with high risk of collapse Niamey NIGER SOKOTO Sokoto Katsina 132 kV YOBE Hadejia JIGAWA BORNO Birnin Kebbi Gusau MW transfer ability (Est. 5,630 MW) KATSINA Damaturu ZAMFARA Potiskum Kano Maiduguri KEBBI KANO REPUBLIC OF BENIN KADUNA Limited hydro generation BAUCHI Bauchi Northern Region Low Generation Poor Voltage Profile Kaduna SHIRORO Jos NIGER Gombe KAINJI ADAMAWA GOMBE ~60% totalload Minna KWARA JEBBA/GS Yola Abuja PLATEAU Jalingo JEBBA/TS ABUJA NIGERIA IIorin REPUBLIC OF CAMEROON OYO Lafia NASSARAWA TARABA Lokoja Osogbo ~50% total generation Makurdi Ado Ekiti Ibadan AJAOKUTA MAKURDI EKITI Bali Olorunsogo OSUN OGUN BENUE KOGI Abeokuta Mambila Akure Aliade ALAGBADO ONDO ENUGU TO SAKETE EGBIN P/ST. EDO EBONYI Enugu Ikeja Akwa Benin Asaba LAGOS ONITSHA Abakaliki AN AMBRA SAPELE P/ST. CROSS RIVER IMO Umuahia ABIA DELTA POWER ST. Owerri DELTA RIVERS Uyo Calabar Port Harcourt AKWA IBOM 11 BAYELSA ATLANTIC OCEAN AFAM POWER ST.

12. 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 2 2 2 2 2 2 2 2 4 2 2 2 4 2 2 2 2 2 2 2 2 2 2 2 2 2 4 2 3 4 2 MESH GRID STRUCTURE BY 2020 Niamey Improved northern voltage 132 kV YOBE Hadejia JIGAWA Gusau BORNO Birnin Kebbi KATSINA Damaturu Sokoto ZAMFARA Potiskum Kano Maiduguri KEBBI KANO REPUBLIC OF BENIN KADUNA BAUCHI Bauchi Kaduna SHIRORO Jos Many major loops improve reliability NIGER Gombe KAINJI ADAMAWA GOMBE Minna KWARA JEBBA/GS Yola Abuja PLATEAU Jalingo JEBBA/TS ABUJA NIGERIA IIorin REPUBLIC OF CAMEROON OYO Lafia NASSARAWA TARABA Lokoja Osogbo Makurdi Ado Ekiti Ibadan AJAOKUTA MAKURDI EKITI Bali OSUN Olorunsogo OGUN BENUE KOGI Abeokuta Mambila Akure Aliade TRANSMISSION LINE LEGEND ALAGBADO ONDO 330KV LINES (EXISTING) – MULTIPLE CIRCUITS ENUGU TO SAKETE EGBIN P/ST. EDO 330KV LINES (FGN) – MULTIPLE CIRCUITS EBONYI Enugu Ikeja Akwa Benin 330KV LINES (NIPP) – MULTIPLE CIRCUITS Asaba LAGOS ONITSHA Abakaliki 330KV LINES (PROPOSED PROJECT) – MULTIPLE CIRCUITS AN AMBRA SAPELE P/ST. CROSS RIVER 330KV LINES - EXISTING IMO Umuahia 330KV LINES - FGN ABIA DELTA POWER ST. 330KV LINES - NIPP Owerri 330KV LINES - PROPOSED PROJECT UNDER STUDY DELTA RIVERS Uyo 330KV LINES - PROPOSED PROJECT Calabar Port Harcourt BULK SUPPLY POINT 330 KV AKWA IBOM H BAYELSA HYDROELECTRIC POWER STATION MW capacity (Est. 28,000 MW) ATLANTIC OCEAN AFAM POWER ST. THERMAL POWER STATIONS 12

13. Background • Remote and off-grid projects are to be implemented in locations where it is technically and commercially unviable to implement grid extension projects • The Rural Electrification Agency (REA) was established in 2006, via EPSR Act-2005. Historically was involved in • In March 2012, in conjunction with MDGs a baseline data survey was commenced for the 774 Local Government Areas. The survey has concluded and collected information on: • Grid reach; Functionality of power supply; Status and quality of power supply; Energy payment • Off-Grid Generation • Pre-feasibility & feasibility studies for remote and off-grid locations. • Load profiles & forecasts for remote and off-grid locations. • Development of commercial framework for implementation of remote and off-grid power. • Funding and technical support for pilot project implementation. • Staff training. Current & Prospective Opportunities: Off-grid Presidential Task Force on Power 13

14. Training/ NAPTIN • The un-bundling of the Power Holding Company of Nigeria has aggregated all previous training services into a single body National Power Training Institute of Nigeria (NAPTIN). This body has a well-defined footprint of facilities across the country but no monopoly. Opportunities exist to • either partner with NAPTIN or • set up training facilities independently in anticipation of private-sector requirements • Technical Support Services/ EMS • Similarly affected in the unbundling were the common technical support services – such as meter testing and certification. These services have been brought together into a new company Electricity Management Services (EMS). Like NAPTIN there is the advantage of incumbency but no monopoly, providing opportunities to: • either partner with EMS, or • develop independent companies providing support services in a growing and competitive private-sector power market Current & Prospective Opportunities: Market Services Presidential Task Force on Power 14

15. Products and Services • PTFP is co-sponsoring 2013 NIGERIA POWER SECTOR INVESTOR SUMMIT: • “Connecting Investors to Emerging Opportunities in Nigeria's Privatised Power Sector” • Eko Hotel & Suites, Lagos, Nigeria, September 18 - 20, 2013“….a gathering of investors to explore potential commercial opportunities in Nigeria’s privatized power sector; discuss policies guiding the sector and discover government programmes that support private investment in the sector. It is anticipated that the soon-to-be concluded privatisation process will increase competition in the Power sector, which will make the eventual owners of the power companies to focus on their core businesses and outsource the non-core businesses.” • Technical Consultancy and Advisory • 11 Distribution Companies and 7 Generating Companies are being privatised. Requirements for specialist technical and engineering needs: • Technical studies: distribution network performance studies; • Software/MIS: Customer Relationship Management • Technical/ non-power training. Current & Prospective Opportunities: Market Services Presidential Task Force on Power 15

16. Presidential Task Force on Power (PTFP) Policy Consistency & Programme Control Federal Ministry of Power Hon. Minister of Power Presidential Action Committee on Power (PACP) Performance Management for Timely Delivery of Roadmap Targets ONE LEADERSHIP ONE SECTOR ONE MISSION Political Will & Mandate Chairman Mr. President Political Will: Reconstitution of PACP/PTFP Sep-2012 • Reform of the Sector in line with the provisions of the EPSR Act of 2005 Mandate • Monitor the performance of the MDAs charged with the day-to-day responsibility for ensuring that Service Delivery levels remain “steady and relatively predictable” and that there is a “noticeable increase” in the average number of hours of electricity supplied to consumers. “One Leadership, One Sector, One Mission” the imperatives of which are laid out below: Presidential Task Force on Power 16

17. Political Will: Outstanding Milestones Presidential Task Force on Power 17

18. Political Will: Role of PTFP By the end of 2013, the majority of components of the Power Sector Reform are expected to be completed. At which time, the PTFP’s job would be essentially completed: “Delivering The Reform”. At this point, The Nigerian Electricity Market will be a commercially-focused, contract-driven market led principally by private sector participants. The Government would have withdrawn from its traditional roles to focus on the critical roles of Policy and Regulation In this year, 2013, the work of the PTFP is as critical as ever as it is necessary that the infant market starts off in the right direction. The PTFP is currently conducting a review of the original RoadMap to assess what was achieved, to record what was learnt and to propose a path for the Power Sector into 2020 ensuring that what was started will be sustained. Presidential Task Force on Power 18

19. PTFP http://www.nigeriapowerreform.org taskforce@nigeriapowerreform.org Thank You 19