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The power of democracy

Interview - April 10, 2012
Mike Uzoigwe, CEO of Egbin Power Plant, speaks with Upper Reach about his hopes for how Nigeria’s new leadership and the privatization strategy can attract the necessary foreign investments to improve and stabilise the country’s energy supply

Please can you evaluate Nigeria’s political, economic and social progress over the past 10 to 15 years?

Nigeria has come a long way over the past 10 to 15 years. We would have been in a better situation economically and politically if not for the military regimes of the past. The military is for territorial and national defence, and they do not have much business in political leadership. If you check the records, you will find that for a considerable number of years the military had been in power. Over those years, they alone crafted economic and political policies. Because of the nature of how they came to power, there was never actually any stability because they were busy trying to consolidate themselves in power.

The current regime is a democratic leadership to which the ordinary man can contribute. If you look at the economic, political and social progress over the past 10 years, you will agree we are now moving forward. The economic and social problems of a nation are directly tied to politics. When there is bad government, then nothing works. Since the onset of this present regime, I think we have made a lot of progress in the country because of the political stability we have achieved.

The first elections after the military were not so good. Subsequently however, we are getting better – it is not just going to happen overnight. We are looking at our mistakes and making things better. There will be a time when all of this will go, and then there will be improved systems in Nigeria, and more good people will come into power and we will move forward.

Let’s jump to the power sector now. Please give me a general overview of the current challenges and on-going projects in the power sector in Nigeria.

Like I said, during the military regimes, no real plans were made – they just kept going. There were no serious economic or infrastructural plans. Over the years that the military was in power, we found that nothing was really completed. When I joined NEPA (then government-owned power outfit) in the early 1980s, I worked in different areas of the power sector. I worked in transmission, distribution and the planning department. We had all the plans on paper, but nothing was ever implemented during the military regime. We had a 10-year and 20-year plan, but none of the processes were implemented.

Not many new power stations or lines were built; therefore the goods simply became scarce and demand was ever on the increase. All equipment related to power became obsolete and undersized. There were many states not hooked up to the central grid. A lot of equipment dilapidated without replacement and that cycle continued for a very long time. If we spent 20 to 30 years degrading our system, I do not think it is going to take five years to get to where we should be. But once you find your way, you will get to where you are going. That is where we are now. We have the opportunity of a professional like the current Minister of Power. We have low power capacity with 150 million people over a landmass of about 1,000 sq km with about 3500 MW of power. There is no efficient way to successfully distribute this kind of capacity. People did not understand this problem. But now that the right people have been appointed, we have found our way and we are moving forward. Unfortunately, due to our uncoordinated past, a lot of things went wrong economically. Factories were shut down and people became frustrated because of low and unsteady power supply. We are however on a recovery journey now; we have to continue with the democratic system.

Please can you tell me about bid evaluation process for generation firms? How do you think this will affect power generation companies? Please can you also tell us about the multi-tariff?

The privatisation of the power industry was the handiwork of former President Obasanjo’s administration, which was good. But a lot of things were not foreseen, although they looked good on paper. We found that there were problems, and we took time to resolve those problems. The privatisation process was stopped at one point because it was not well understood.

That is why the process, which started in 2005, has not been completed. No single asset has been conclusively sold. There was also the fear of how new investors may manage the industry. We have seen other Government agencies that were privatised and things have not turned out well, but that happened when we did not have the type of governance we have now. The minister’s job is very hectic, because I am sure that every day he is retuning, refining and readjusting. That is going to make the privatisation process take a little bit more time. All the issues are however being addressed with the right approach.

I do not believe in putting solid timelines on some new things we do in this country, because we have not done things this way before. There is a need to get it right now once and for all. We have not done things well in the past, so we need to be careful in order to get it done okay.

For a long time we have wanted people to invest in our economy, and now we have worked out the proper unit cost for electricity so that they will be interested in investing. The tariff must be good; nobody will invest money here and then get pittance from present unit cost of electricity. Over the years, there were very few people who went to a bank, looked at the business profile of Nigeria and invested. But people are beginning to understand what the Nigerian business climate is like. We have to raise lots of funds to provide cushioning for people so that a new tariff regime could be viable. I am sure the tariff will be readjusted in a short while. This will encourage more investors from within and outside Nigeria. That needs to be done soonest in my opinion.
Those are some of the problems we have. A lot of investors around the world are looking for where they can do bankable business. Nigeria is a virgin economy and a lot of things could be done here. We are blessed with oil.

Do you think the goal of 40,000 MW of power in the country by 2020 is achievable, and what is needed in order to achieve this goal?

Sometimes I sit down and look at the Vision 2020-20 and I hope that those who created 2020-20 did their homework well. 2020-20 is nine years from now, but how long does it take to build a power plant? This one took five to six years. Do we have the will? Can we complete it? It is a good goal. It will happen, but only if we can maintain the type of people we have now controlling the sector. The privatisation process started in 2005, and it was not until last year that more positive steps were taken to implement what we originally set out to do. It is only now that the people in power have started narrowing down the things we need to do to ensure that we move forward. As soon as we get the entire infrastructure in place, this goal is possible.

There are people who have money abroad and in the country who are looking for investment and good businesses to finance. There is the World Bank and grants all over the place, and they are just looking for a market and a will. As long as we keep up this new pace, we will be able to achieve this objective. The reason why I am positive about it is because many things get better in cycles, and we are finding out new things every time. For example, the quality of our elections has kept improving.
When President Jonathan came to power, he insisted that the Professor would become Minister of Power. This is a guy who has an element of interest in power as a businessman, so he is involved in the sector. 40,000 MW is possible as long as we maintain the present trend. We need international support; we need political and economic support from abroad for stability. It is going to be good for everybody. The future is going to be bright in Nigeria no matter how bleak it looks now.

Egbin Power Plant is currently the largest electricity generating power plant in Nigeria, and the only power station in the country which is capable of generating at least 1,000 MW on the national grid. How challenging is that and what are the advantages and disadvantages of steam power plants compared to other types of power plants?

We had a good beginning. This plant was built for 1,320 MW. We started operations in 1987. Unlike other power stations in the past, people were employed with very low qualifications. People with higher qualifications did not want to work in the power sector because remuneration was poor. So seondary school graduates were employed to become operators and workers in the industry. But when we joined the industry in 1982, most of us had tertiary education in engineering, chemistry and other technical areas.  We loved the job and thought it was a challenge and so started learning how to operate the plant by ourselves, and we had enough knowledge to do so. We were able to really apply world-class techniques, unlike what used to happen before. We therefore came out better compared to most other plants around the country.

We ran the plant the best way we could but we were challenged by poor funding. We nearly sank mid-way, but started to do well when privatisation and unbundling process began. We made all the decisions that had to be made, and we reviewed everything. When autonomy was given to the unbundled companies, we had to make decisions about our plant and run it the way we wanted. Ever since then it has generally been better than the past.

I think we have done really well; this is one plant in the country which has such high percentage availability after 28 years in operation. Five of the six units we have are running at full capacity. We are generating about 900MW steadily and we are using this plant to control the grid system. There is so much fluctuation in power demand, and this plant automatically picks load when necessary. When people are not using too much energy, the plant will automatically go down also. If we put our full capacity on the national grid all the time, we will be generating 1,080 MW. On your question regarding steam/gas turbine, I think that for now gas turbines are the type that will meet our immediate requirement of quickly raising our installed and available capacity. Otherwise steam turbines or steam plants are preferable in our region. This is because of the prevalent higher ambient temperature and dusty conditions generally in Africa. Gas turbines run at higher speeds and their controls are generally more sophisticated. Steam turbines come more robust and are rated in the ranges of 200-400 MW/unit and more. The type of gas turbines we have here come in 30-50 and 100 MW units. From experience in this country steam turbines have done generally better. 

The federal government has made an important investment of around 2 billion Naira in power plants to deal with some problems you have been experiencing lately. Some experts say that thanks to your management skills the company was able to cut the cost of operations. Is this true?

Yes, the Federal Government is really serious about the power sector and power generation. The unbundling process of the PHCN has made it possible that discussions are made as fast as possible to address operational and/or repair issues in the power plant. In the past, all major contracts and approvals came from our Headquarters in Abuja. It was so difficult and time wasting to get things done. Recently however, we have been able to decide what to do in the best interest of our plant. That is why we were able to quickly carry out the repair works on ST 01, which I think you referred to. We are also in position to decide which part of the work we need to do ourselves and which part to contract out. We mostly try our best to carry out possible repair works using our own engineers and technicians. We do get foreign assistance when we need it, by so doing we expose our workers to getting necessary experience for other jobs they need to do.  We have carried out a few repairs in this way and have saved our company a lot of money.

Funding like you said is better now than it was before.  We will continue in this way until the industry is fully commercialized and other interested parties invest and provide all sorts of services that are yet required to effectively run a viable power industry in Nigeria.  Our present Government is serious about this now and everything is being done.

As one of the true leaders in Nigeria who wants to see this country grow in a good way, what are the goals and main objectives of this company for the years to come?

Our immediate goal is to fix one unit which is not available (Unit ST-06). If I get it fixed, we will be running at full capacity. There are other things which I have not done in the past, which I need to do in order to increase availability in the plant to about 90% at all times and keep it going. My target is that those who inherit this plant will be happy the way they will find it. We have the facilities to expand and the market is there. The whole of west of Africa lacks power, and we can export power to anywhere. We have the resources, the gas and the human capital. Expansion would be one of the easiest things that could happen in this case. This plant could be the base and the most critical power plant in this country. That is what we are planning to do.
As the power industry becomes privatised there will be need for more people to be trained in the business of power generation. Having worked for almost all my life here we have gathered lots of experience. We are planning to maximally transfer knowledge to younger people and train them to take over from us. There has been a gap in training in this area, this was because the whole thing was owned and run through Government Agencies. Best practice was not in focus, as people were never held responsible for their actions. Now that we are somewhat liberalized, ones actions come to roost. I want to leave this plant in the condition it was when we first started here many years ago. I want it to be a yardstick for measuring power station success in Nigeria. We will leave a shining example and good practice as our contribution to our National well-being. And lastly we want to run the plant as business people, we want to make profit and be able to favourably compete in the emerging market of the power industry. The good times will definitely come and overtake all the wrong things we have done in the past in the history of this country. Nigeria and the power sector will be great again. I want to be reckoned as one of those who contributed to our success when that time comes.

When our readers open up our report, what do they need to understand about Egbin Power Plant?

They need to understand that Egbin Power Plant has been run and operated well in the past given our lean resources. They need to know that there is room for more investment even in this plant and in the power sector generally in this country. We are now generating only about 4200 MW as the whole available power for a population of more than 150 million people. There is lots of room for additional power in the country. We have natural gas available in Nigeria, we need investment to harness the gas and use it for power generation. There is a lot of coal laying waste and needing investment to produce it for power generation. Everybody listens to the bad stories coming out from this country. Yes some of those are true, but tell me if New York is the safest city in the whole world. There are a lot of foreigners working in the Nigeria oil sector, they are smiling to the banks I am sure, they are still doing business in this country. Look at what has happened in the communication sector with GSM telephone. The power sector will tell the same success story in a short while. The sector is as green as can be and investors are invited to be part of that success in the future. We here at Egbin Power Plant are in good position to say this.