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How Geregu Power became one of the best performing power plants in Nigeria – Akin Akinfemiwa

The CEO explained how they achieved this success in an exclusive interview with Nairametrics.

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The management of Geregu Power Plc earned a rare commendation from the lawmakers in the Senate, as the lawmakers lauded the efforts of the company for meeting the performance target set by the Bureau of Public Enterprise (BPE).

At the end of the just-concluded three-day investigative hearing on the power sector recovery plan, the lawmakers blamed the hiccups in the power sector to lack of coordination among players responsible for power administration in the country. But the committee submitted that only two of the six privatised GenCos- Geregu Power and Transcorp Power met the performance targets set by BPE.

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The Chairman of the committee, Gabriel Suswam, said: “We have listened to presentations from the government side and the operators and we have seen that there is no alignment anywhere and that is the problem. Once there is an alignment and proper coordination, there will be sanity and progress. Out of six GenCos privatised, only two of them are performing.”

The Director-General of Bureau of Public Enterprise (BPE), Alex Okoh, said, “Geregu Power met its minimum performance target set for it in 2013, while the other four GenCos did not meet their targets for various reasons. It achieved 435mw from its 414mw at handover.”

But what has been behind Geregu Power Plc’s success considering the numerous challenges in the sector?

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The company attributed its success to its long-term investment plan, reaffirmed belief in the overall objective of the power sector reform programme of the Federal Government.

In an exclusive interview with Nairametrics, the Chief Executive Officer, Geregu Power Plc, Akin Akinfemiwa, attributed the success of the company to a strong focus in certain areas.

Excerpts:

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How have you been able to achieve this success despite all the challenges in the power sector?

We appraised the investment as a long term play, reaffirmed our belief in the overall objective of the Power Sector Reform Programme of the Federal Government and we set out our plans accordingly. Our success is therefore
primarily hinged on a strong focus in the following areas:

1. Meeting and exceeding the goals of the privatization exercise to ensure that the private sector is seen to be capable in the operations of the power sector.

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2. Motivating our people to ensure that they deliver the afore-mentioned goals and objectives. Our main challenge here was changing the culture of the organisation and people from that of a public service institution to a private enterprise with a service-oriented culture.

3. Prudent management of resources with special emphasis on financial engineering to effectively manage the lingering liquidity squeeze in the sector.

4. Maintaining high levels of operational efficiency with investments in major overhauls and regularly scheduled maintenance programmes, as well as ensuring adequate technology transfer between our service providers and technical employees in the day-to-day management of the power plant.

6. Effective relationship management with all stakeholders along the power value chain.

7. Strong corporate governance practices to ensure transparency, accountability and to promote sound business ethics across the entire organisation. We have a firm conviction in the long-term viability of the power sector in Nigeria and our commitment is unwavering.

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Riding on this success, are there plans to expand the existing capacity of Geregu Power Plant?

As you may be aware, we inherited the power plant with an available capacity of 90MW in November 2013, even though the plant’s nameplate capacity was 414MW at the time. In furtherance of our goals and objectives at takeover, we invested the sum of 100 million dollars (USD) to carry out a major overhaul not only to ensure that the three turbines were operational at the nameplate capacity of 414MW but also to add an extra 21MW to bring the total nameplate and available capacity to 435MW. This achievement is one I consider to be a short-term strategy.

In the medium-term, we are in the final stages of completion of the front-end engineering design (FEED) aimed at converting the existing simple cycle infrastructure to a combined cycle plant by installing a steam turbine with a capacity of 300MW to take the current configuration to 735MW. Our medium-term strategy is also focused on expansion through the acquisition of existing power plants in other locations in Nigeria. We are also watching key developments in renewable energy and have the establishment of solar and wind power in our purview, as a company focused on providing sustainable energy to Nigerians.

The world bank just approved a $750m financing capacity for the power sector. How does this help Geregu in achieving its medium to long term goals of 2 above and exceeding privatization goals?

This is a very welcome development and it is very encouraging to see that the Power Sector Recovery Plan (PSRP) is being taken seriously as the World Bank had set conditions for the Federal Government to achieve before approving this initial amount. For Geregu Power Plc, the World Bank financing will eliminate or reduce the liquidity crisis in the sector, which means that all GENCOS including Geregu will get paid in full for power dispatched to the grid and this will give us access to more funding for our expansion plans.

Furthermore, when the entire sum is fully approved, a portion of it will be channelled to the expansion of the national grid to reduce the incidences of stranded power. The funds will also be used in reducing electricity distribution losses. The World Bank financing is without a doubt, a significant step in creating a self-sustainable power sector devoid of the Government’s payment interventions. This will ultimately translate to sustainable power for Nigerians in the near future and foster the much-needed investor confidence in the sector.


Last year the Chairman of Geregu Power Plans, Billionaire investor and businessman, Femi Otedola, revealed plans to shift focus to power generation with a planned investment of up to $1 billion into Geregu Power Plc. The purchase of Geregu was done in 2013 during the power sector privatization, under Amperion Power Distribution Company Limited which is a subsidiary of Forte Oil Plc. After the acquisition, $94 million was initially invested in the power plant. In 2018, another $350 million was pumped into the plant. Otedola said the acquisition/investment is demonstrative of his commitment to the Federal Government’s power sector recovery plan.

The company reportedly generates annual revenue of $41 million.

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Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Energy

NNPC quells fears over leaking Lagos pipeline

The Corporation says it was on the last stage of completing repairs which includes hydro testing.

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NNPC, Domestic Crude Allocation, Why NNPC’s Duke Oil is quitting London operations for Dubai , NNPC divests stake in four oil wells to NPDC , How NNPC discovered oil, gas deposits in the North , Nigeria to leverage on condensate refineries to be petrol net exporter, How NNPC saved $3 billion from arbitration , NNPC, IPPG donate medical supplies to South West state governments, NNPC discloses bases for employment and managerial progression in the oil firm, NNPC diversifies into housing, power; plans to beat crude production cost to $10 per barrel

The Nigerian National Petroleum Corporation (NNPC) urged Nigerians to ignore reports of a possible fire outbreak from a vandalized pipeline at Aboru Canal in Alimosho Local Government Area of Lagos state. 

“There is no such hazard as the line in question has since been shut down for repairs and presently contains only water,” NNPC said. 

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READ ALSO: Abule-Ado explosion: Lagos State Government presents cheques to survivors

NNPC said that the Atlas Cove-Mosimi stretch of the system 2B pipeline was shut down on June 25, 2020, to enable the comprehensive maintenance of some segment of the pipeline. 

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READ MORE: NNPC states why it failed to fix refineries, to build 200,000 capacity refinery

The Corporation says it was on the last stage of completing repairs which includes hydro testing (a process of pumping water through the entire pipeline to leak detection and for integrity tests). 

Revealing that they stopped pumping water 9:27 am Thursday morning to enable necessary repairs after patrol team made a report about leakage at a point in the Aboru Canal. 

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NNPC urges residents of the community to remain calm “as there is no possibility of a fire erupting from the leakage point”. 

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Energy

Nigerian LNG to increase exports, returns profits despite weak gas prices 

The gas firm has been able to sell the excess supply at a discount in the spot market. 

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Nigeria will most likely increase the export of its Liquefied Natural Gas (LNG) in August and September to the global market if the demand of the commodity goes up despite the crash in prices which is near record lows. 

However, in the meantime, the government-owned Nigeria Liquefied Natural Gas (NLNG) company has concluded plans to maintain its current supply level to the global market. This is contrary to what some other exporters like the United States and Australia seem to be doing following low prices. 

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According to a report from Bloomberg, Nigeria exported over 1.8 million tons in the month of June, which is more than last year’s monthly average of 1.7 million tons. 

Some of the country’s buyers have effected clauses in their long-term which allows them to take fewer shipments than was originally agreed. The gas firm has been able to sell the excess supply at a discount in the spot market. Over 50% of Nigeria’s exports in May were sold in Asia as against the about 30% that was sold last year. 

Natural gas exports have slowed in June as the coronavirus pandemic has negatively affected global demand. Most of the multibillion-dollar projects in natural gas export terminals have been either halted or delayed as a result of the disruptions by the pandemic. 

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The damage to the gas trade goes well beyond the Middle East as it is affecting similar businesses in Australia, which is reputed to be the world’s largest exporter of LNG and the United States. With the global exports down by 6.3% from the previous year, only a few exporting countries like Qatar and Algeria, have been able to increase output. 

The positive for Nigeria is that the production cost at its LNG facility in Bonny island is so low that it can still turn a profit despite the weak spot prices. The facility has been about the lowest costs when compared to similar projects around the world. 

Nairametrics had reported that the NLNG just signed the engineering, procurement and construction contract for its train 7 project, which is a major gas expansion plan. The project is expected to boost the country’s LNG output by more than 30%. 

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The NLNG is a consortium between the Nigerian National Petroleum Corporation (NNPC), Royal Dutch Shell, Total and Eni. The project is coming at a difficult time when LNG prices in Asia and gas prices in Europe have hit a record low due to the coronavirus pandemic which has weakened demand.   

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Energy

Update: FG increases fuel price to N143.80 per litre

This was disclosed by Petroleum Products Pricing Regulatory Agency (PPPRA) in a circular.

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The Federal Government has announced an increase in the new pump price of Premium Motor Spirit, otherwise known as Petrol, to N143.80 per litre.

According to a monitored report, this was disclosed by Executive Secretary of Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Saidu, in a circular dated Wednesday, July 1, 2020, to oil marketers,

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The statement from the circular says, ‘’After a review of the prevailing market fundamentals in the month of June and considering marketers’ realistic operating costs, as much as practicable, we wish to advise a new PMS pump price band of N140.80-N143.80 per litre for the month of July 2020.’’

‘’All marketers are advised to operate within the indicative prices by the PPPRA.’’

READ ALSO: Nigerian Treasury Bills plunge to 3.39% per annum

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He also pointed out that the ex-depot for collection include the statutory charges of bridging fund, maritime transport average, National Transport Allowance and administrative charges.

The federal government had a few months ago announced its plans to stop the subsidy payment regime as they said that the downstream sector of the oil industry will be fully deregulated. The government said that the prices of all petroleum products which includes fuel would be fully determined by market forces, following the removal of the existing cap on fuel prices.

READ ALSO: Subsidy economics

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PPPRA had stated that it arrived at the new price regime after taking into consideration the operating costs of the oil marketers.

It can be recalled that at the beginning of the month of June, there was a minor adjustment of fuel price as it was fixed at N121.50 per litre from N123.50 per litre in May. The new price in July represents an over N20 per litre increase when compared to the price last month.

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