FG’s Proposed Sale of Five NIPPs

In a bid to improve power generation in the country, the Nigerian National Integrated Power Project (NIPP) was established in 2004. The programme was an intervention that aimed to improve government funding in the critically ailing electricity sector. However, 18 years past the project launch, there are contending conversations surrounding the Federal Government’s (FG’s) proposed sale of five NIPPs.

Insufficient electricity supply has always been an issue in Nigeria, inhibiting the development of the country’s industries and overall economic growth. In 2004, President Olusegun Obasanjo’s administration launched the NIPP to address the challenge of power generation specifically. The project’s objectives also included curtailing the immoderate gas flaring from oil exploration.

In order to achieve this, the Niger Delta Power Holding Company (NDPHC) was incorporated under the Companies and Allied Matters Act as a limited liability company to hold the NIPP assets. This limited liability company has three shareholders, the federal, state and local governments. Hence, through the NDPHC, the federal government holds 47 per cent, while the state and local governments own 53 per cent of the NIPPs.

To initiate the launch of the NIPP, the National Assembly, alongside the National Council of State (NCS), approved $2.5 billion in seed funding from the Excess Crude Oil Account (ECOA). As of 2022, the NIPP had gulped about $7.875 billion.

The original mandate of Phase 1 of the NIPP aimed for the power plants to collectively add 5,000MW to the country’s generation capacity. The plants were also to be privatised, with the profits reinvested into the NIPP Phase 2. The plants are namely:

The second phase of the NIPP, which commenced in 2020, sought to develop new solar and hydropower projects in parts of the country without oil, especially the North. So, if the privatisation of these plants helps raise funding to be reinjected into the sector, why is there so much kick against FG’s proposed sale of five NIPPs?

Through the Bureau of Public Enterprises (BPE), the federal government announced its decision to privatise five NIPP plants against the House of Representatives’ directive to halt the sale. The five power plants include Geregu, Omotosho, Olorunshogo, Calabar and Benin-Ihovbor. According to the BPE, the FG, which has previously shortlisted 16 companies at the Investor Pre-bid Conference, is assessing the pre-qualified bidders.

On Monday, electricity consumers also opposed the sale of the NIPP assets. Although the House of Representatives’ reason to pause the sale was the FG’s adamance in selling the plants without the consent of the state and local governments, the electricity consumers had other reasons.

The president of the Nigerian Consumer Protection Network (NCPN), Kunle Kola Olubiyo, stated that this was not the best time for the assets to be sold. The statement added that the considering the country’s current political clime, the funds could be diverted rather than reinvested.

The statement further read, “We are not saying that the plants would not be sold at the appropriate prices and time in the future but not now when Nigeria is seriously battling challenges of deliberate load rejection by the Distribution Companies (DisCos) and deliberate low energy dispatch by the Transmission Company of Nigeria (TCN). The House of Representatives should look into the challenges and help in the overall public interest to avert needless chaotic energy crises that may come with sales of the five NIPP/NDPHC power plants by BPE.”

Although valid, are these reasons objective enough to stop FG’s proposed sale of the five NIPPs?