Daud Olatunji
State governors have urged the Federal Government to refund their full equity investments in the $10 billion National Integrated Power Projects (NIPP), managed by the Niger Delta Power Holding Company (NDPHC).
In addition to their equity investments, the governors, under the umbrella of the Nigeria Governors’ Forum (NGF), are also demanding an equitable rate of return on these investments.
The governors’ demands were articulated in a document titled “Development of the National Integrated Electricity Policy and Strategic Implementation Plan Policy Recommendations by State Governments,” submitted to the Federal Ministry of Power.
While the ministry confirmed receipt of the document, it did not comment on the specific demands.
“The investments by states in the NDPHC need to be clearly defined. States advocate for a refund by the Federal Government of the states’ full equity investments in the NIPPs plus an equitable rate of return on their investment,” the document stated.
It emphasized that this demand was made irrespective of the Federal Government’s plans to privatize or sell the NIPPs.
Background on NIPPs
Launched in 2004, the NIPPs aimed to address Nigeria’s chronic electricity shortages by constructing several gas-powered plants across the country.
These projects are jointly owned by federal, state, and local governments through the NDPHC, a company established to manage NIPP assets. Currently, there are 10 operational NIPP plants with plans for further expansion.
The NIPPs were initially envisioned with a $9 billion budget, but expenditures reportedly ballooned to around $10 billion.
The Socio-Economic Rights and Accountability Project (SERAP) highlighted that despite this hefty investment, tangible results in power generation were lacking.
SERAP reported that the Obasanjo administration spent $10 billion on the NIPPs, but without significant improvement in power generation, with unfunded commitments amounting to an additional $12 billion.
Recent Developments, Govs’ Concerns
PLATFORM TIMES gathered that the call for refunds comes in the wake of the Electricity Act 2023, which allows state governments to operate and regulate their own electricity markets independently of the Nigerian Electricity Regulatory Commission (NERC).
It was further gathered that this legislative change has empowered states to assert more control over their electricity investments and infrastructure.
The governors also raised issues regarding the valuation and management of assets from state-owned Rural Electrification Boards (REBs), which were not properly accounted for during the privatisation of power distribution companies (Discos).
They argue that existing edicts establishing state REBs did not transfer assets to the National Electric Power Authority (NEPA) or the Federal Government, hence these assets legally remain under state ownership.
Further, a 2018 NERC valuation indicated that states and the Federal Capital Territory hold greater equity than the Federal Government in the 40 percent government shareholding in successor Discos.
Despite this, states currently lack representation on the boards of these Discos.
The governors propose that states should have at least one representative on the boards to ensure better management and optimisation of their investments.
… Privatisation Efforts
The Federal Government has been moving towards privatising several NIPP plants to raise funds. In December 2022, it was agreed that five NIPP plants would be sold to support the 2023 budget. These plants include:
- Geregu II (434MW) in Kogi
- Omotosho II (451MW) in Ondo
- Olorunsogo II (750MW) in Ogun
- Odukpami (563MW) in Cross River
- Benin-Ihovbor (451MW) in Edo
The sale is expected to generate around $600 million, although there have been concerns about whether this amount would substantially impact the budget deficit.
PLATFORM TIMES reports that state governors continue to push for a comprehensive review and refund of their investments in the NIPPs, alongside equitable returns.
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