- The managing director of Welbeck Electricity Distribution Limited has said that the high cost of gas is a significant factor affecting the IPP sector.
- He praised the federal government’s electricity generation, transmission and distribution movement to the concurrent list.
Afolabi Aiyela, the managing director of Welbeck Electricity Distribution Limited, an independent power producer, has relayed that the significant factor affecting the IPP sector is the high cost of gas because gas is priced in dollars. He said that when the naira moves against the dollar, gas prices increase, affecting the industry; he advocated for gas to be valued in the naira.
He stated that the IPPs pay more for gas than the GenCos, asking for a lower gas price to propel investment, and Nigerians will have more access to power.
He said this during a recent interview on Arise TV while praising the federal government’s electricity generation, transmission, and distribution movement to the concurrent list.
Aiyela noted that this has enabled some states to develop their state electricity goals, including Imo state, which has passed an electricity law that allows the state electricity board to generate, transmit, and distribute electricity.
This has created the needed interest from independent power producers to set up state power. He stated that Lagos State is the largest electricity consumer due to the many industries. He noted that the Lagos State Assembly must accelerate its effort to set up a state electricity board.
The Welbeck director stated that independent power producers generate electricity and sell it to end users independent of the grid through gas. He noted that the IPP has not tapped into solar because the high capital cost of one megawatt of power generation is three times higher with solar than gas turbines and generators.
Furthermore, he revealed that there are some incentives that IPP companies need to reduce costs. These include carbon credit offered by the United Nations, which encourages countries to reduce emissions, noting that one of his company’s projects, in partnership with MTN, is signed up to access carbon credit. He asked other IPPs to explore these incentives.
He noted that most IPP customers, aside from telecom, are industrialised factory SMEs and producers who employ Nigerians. He called on state laws to address these issues and set up enforcement units to prosecute offenders for cost-reflective tariffs, theft, and illegal connections.
Aiyela stated, “Nigeria spent twenty trillion naira to generate electricity, and only one trillion went to the grid, meaning Nigeria is spending nineteen trillion naira to generate electricity. Lagos generates sixteen thousand megawatts of electricity, of which one thousand comes from the grid, four times the national average. This means that Nigeria is spending a lot of money generating electricity; if part of the money is put back into the grid and investment, Nigerians will pay less for electricity even with tariffs increase.”