Commissioning Of The Afam Three Fast Power Project (ATFP) By Transcorp Power

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I bring you the warm felicitations of President Muhammadu Buhari who is the Special Guest of Honour and I am here today on his behalf.


It is my special pleasure to join you at this official commissioning of the AFAM three fast power project.  AFAM 3 fast power is an important part of the evolving story of Nigeria’s aspirations to bring electricity to millions in their homes and to the factories and businesses that provide their livelihoods. This is because it brings into very sharp relief, the importance of private capital in building up capacity along the power value chain.


A major weakness of our privatization process which started in 2005 (and since then) was and has been the inadequacy of investment and new cash injections. But the tide is turning with indigenous power entrepreneurs such as Transcorp Power, and Heirs Holdings making a significant investment such as this hundred per cent acquisition of the 966MW installed capacity Afam Power Plc and Afam Three Fast Power Limited (jointly referred to as “Afam GenCo”), at an acquisition cost of N105.3 billion.


Only yesterday, the National Council on Privatisation, NCP, formally delisted Transcorp Power PLC (formerly known as Ughelli Power PLC) from routine Monitoring & Evaluation by the Bureau of Public Enterprises, BPE indicating yet another successful power investment.


The last few days I must say belong to Transcorp Power because at the same meeting of the NCP, the council approved Transcorp Power consortium as the preferred bidder for the acquisition of the Abuja Disco.


The complete story is that in the past few years, we have seen more new money coming into the power value chain. These transactions include Quest PLC which became a core investor in Yola Disco in 2020 with a transaction worth N19billion.


Last month, NCP approved the 30-year concession on Zungeru Hydro Power Plant at $70million a year. And overall, the story of the Nigerian Electricity Supply Industry is also getting better.


I am happy to say that since 2020, the Nigerian Electricity Regulatory Commission, NERC, has executed all of its biannual review processes without fail. This is a major difference from the past. In 2019 subsidies reached a peak of N584 billion in an environment that was very burdensome on the Nigerian Government’s fiscal position.


The introduction of the Service Based Tariff, the Payment Discipline Initiative for the sector (through NERC and Central Bank of Nigeria, CBN) and the introduction of the National Mass Metering programme have led to a doubling of market collections in the Nigerian Electricity Supply Industry from N40billion per month in 2020 to a record of N80billion per month in the 1st quarter of 2023.


In 2021 and 2022, five underperforming Discos were brought into a restructuring program that has led to a N10billion per month reduction in shortfalls.  If this trajectory continues, the Nigerian Electricity Supply Industry will attain self-sufficiency by the end of 2023. In other words, it will be able to resource itself, and pay for itself.


The challenge before us now is for the industry to leverage the improved commercial environment that has been created to sustainably supply electricity and improve service to all citizens. Our administration has made significant strides in this direction.


The administration has created programmes for off-grid electrification and revamped the Rural Electrification Agency, such that it now has the first-rate capacity to provide renewable and off-grid electricity supply.


This administration has also completed and concessioned the Zungeru Hydroelectric power plant which will add another 700MW of renewable energy to our energy mix. We believe we are on track to electrify all Nigerians in the next decade as we look forward to the next administration scaling up already existing programmes.


Despite all these, we will not make progress if our industrial and urban power supply that is anchored on large-scale gas power plants such as Afam III Fast Power does not improve.


Despite having one of the largest gas reserves in the world, the gas supply and security for the power sector have remained inconsistent and are hampering reform efforts.


In 2022 a Gas Supply Stabilization Fund of N40billion was established by the Nigerian Electricity Regulatory Commission to provide advanced payment security to all gas suppliers in the electricity supply industry.


Consistently, the gas suppliers to the sector had claimed that payment certainty was the greatest challenge to supply. Unfortunately, payment security has not led to improved supply certainty. I encourage Gas Power Producers and Gas Suppliers to have a fundamental re-think about supply security and proffer ways to ensure our gas power supply base can improve and meet the gap and growing demands of the Nigerian Electricity Supply Industry. Some areas to further explore would be to depend on more Non-Associated Gas and specific gas fields to supply the power industry at more liberalized rates.


Also, more joint regulatory partnerships are needed between NERC and the Oil and Gas regulatory agencies over gas supply to the power sector. Particularly, every gas company supplying to the power sector should have a requirement to have some form of contractual obligation with penalties for non-performance. We should eliminate all “best endeavor” contracts for gas supply to the power sector.  I urge the Nigerian National Petroleum Corporation Limited to work constructively with the power companies in the area to improve the stability of supply from Okolomo Gas Plant and its associated fields so we can have a maximum output of the ~1.5GW of energy capacity in this Afam cluster.


Let me end with special commendations.


First, the Federal government for starting and completing this project.  I recall a number of years ago when General Electric spoke to us about the idea of bringing new state-of-the-art Aeroderivative Gas Power units to replace the scrapped Afam III Power Plant. To some, it seemed fanciful given the negative investment environment for power in the country. That commitment and partnership with General Electric has now resulted in an additional 240MW of capacity in this very important Afam Cluster, that houses our most important power assets in the country.


Then the Rivers State Government and the Afam Paramount Ruler and Communities adjoining Afam for working constructively with the Power Companies to ensure continued peace and security in the Afam Cluster, without which we wouldn’t be here today commissioning this project.


Also, General Electric for its continued investments and partnership in Nigeria to improve our electricity industry.


The Director General of BPE, Mr. Alex Okoh, the entire BPE team and the National Council on Privatization for another successfully completed transaction.


And of course, Mr. Tony Elumelu, serial power investor and the entire Transcorp team on yet another great power sector investment.


We have all that we require to create one of the best power markets in the world and I am confident that it will happen within our lifetimes.


Thank you and God bless Nigeria.