Sahara Group: Transform Nigeria’s power sector, build a thriving business environment

By Temitayo Lawal

Posted on Thursday, 19 May 2022 14:51, updated on Thursday, 26 May 2022 11:04
Electric wires are pictured in Ojuelegba district in Nigeria's commercial capital Lagos
Electric wires are pictured in Ojuelegba district in Nigeria's commercial capital Lagos, Nigeria June 18, 2018. REUTERS/Akintunde Akinleye

Nigeria’s infrastructure company (Infra-Co), which is expected to grow to N15trn ($37bn) in assets and capital in the next few years, will go a long way in helping to raise capital from private investors and transforming the power sector, says Kola Adesina, group managing director at Sahara Power Group, an energy and infrastructure company.

“With the understanding that the funds will be made available and injected into infrastructure projects in the country at favourable rates and tenure, Sahara Power will seek to take advantage of arrangements of this nature that will support long term investments and help in the development of infrastructure project[s] in the power sector,” he says.

In February 2021, the federal government launched – with an initial seed of N1trn ($2.4bn) from the Central Bank of Nigeria, the Nigerian Sovereign Investment Authority (NSIA) and the Africa Finance Corporation – an infrastructure company to fund critical capital projects, especially road, rail and power, in the country.

Sahara Power understands the importance of investments in alternative or renewable energy sources.

The aim of the company is to help close the burgeoning infrastructure gap. Nigeria needs to spend $100bn annually for the next 30 years ($3trn in total) to effectively close the gap.

Private sector involvement in the fund will “bring a major advantage as a greater level of efficiency and cost effectiveness both in the execution and management of the infrastructure is expected”, says Adesina.

Adesina also says that the group is also interested in investing beyond traditional infrastructure projects. “Sahara Power understands the importance of investments in alternative or renewable energy sources.

“As such, Sahara has invested in renewable energy initiatives and a number of pilot projects that will be announced in due course.”

Held back

Despite being the largest country in Africa in terms of GDP, Nigeria continues to be held back from building a thriving business environment due to its ailing power sector.

A report by Nigeria’s statistics office on the power sector revealed that generators provided 48.6% of electricity in Nigeria in 2021, the national grid provided 51.2% while off-grid renewables share was only 0.1%.

The report added that petrol-powered generators accounted for 22.6% of the generator-enabled power supply. The share of supply from diesel-powered generators was 16.6%. The contribution of this to air and noise pollution across the country cannot be overemphasised.

Despite the shortfall, Sahara remains dedicated to supporting the country’s electrification goals, says Adesina, and will help the country address the current shortfall of over 21,000MW of operational generating capacity, the exclusion of over 100 million Nigerians from the electricity grid and support clean energy projects.

In April 2019, Sahara Group partnered with the UNDP to provide access to clean and sustainable energy in Africa, beginning with Côte d’Ivoire, Ghana, and Nigeria. The group in October 2021 also pledged to invest over $1bn in Africa to enhance access to Liquefied Petroleum Gas (LPG).

“Over the past seven years, Sahara has significantly invested capital towards six power generating plants with combined capacity of approximately 1600MW owned and operated in various locations around the country,” says Adesina.

The group has a “strategic development plan,” he says, which will see the company continue to invest in the country’s power generation infrastructure to cover at least 5000MW of the country’s power shortfalls by 2023. They also have a distribution capacity target to supply power to 2.5 million homes – around 25 million people.

Largest power plant

Nigeria’s single largest power generation plant, Egbin Power Plant, in Lagos State, which has a capacity of 1320MW, is owned and operated by the group. It is one of the largest thermal power plants in Sub-Saharan Africa, which contributes over 16% of the total electricity generated to the Nigerian national grid.

Since acquisition of this asset, the largest privately-operated Electricity Distribution company in Nigeria, Sahara has deployed over $100m in CAPEX for further development.

Others include First Independent Power Limited (FIPL) 402MW, Afam 180MW, Eleme 75MW, Omoku 150MW and Trans Amadi 136MW, all located within Rivers State in southern Nigeria.

In 2013, Sahara invested in the ownership of Ikeja Electric making Sahara responsible for 20% of Nigeria’s power distribution.

According to Adesina, the total energy received by Ikeja Electric has increased from 3839.7 GWh to 4548 Gwh – an 18.5% improvement – since 2013, driven by the adoption of an Advanced Metering System and the deployment of smart metres across the Ikeja Electric network.

“Since acquisition of this asset, the largest privately-operated Electricity Distribution company in Nigeria, Sahara has deployed over $100m in CAPEX for further development,” he says.

With the injection of funds, the Group has realised a substantial improvement in operation capacity since it acquired the power plants in 2013. For instance:

  • An approximate 250% capacity increase in the Egbin Power Plant from 500 MW to 1320 MW since acquisition.
  • A ten-fold capacity increase in FIPL: from 43 MW to 429 MW since takeover through continuous refurbishment.
  • Commenced the first phase of the development of the 75MW facility in the Eleme plant, 25MW has since been achieved.

According to the National Bureau of Statistics, Nigeria is home to over 200 million people with a 70-million-strong labour force. The National Population Commission, the government agency in charge of census, projects that the country’s population will reach 262 million by 2030.

Indeed, as Nigeria’s population – and the associated increase in energy demand – continues to grow, the country must scale up its power generation capacity.

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