Federal Republic of Nigeria

INVESTMENT OPPORTUNITIES IN THE NIGERIAN POWER SECTOR

Federal Ministry of Power

Outline
Nigeria on the World Stage/Background Nigeria Before the Power Sector Reform The Reform Power Growth plan Policy guidelines Renewable Energy Resources Infrastructure Expansion & Investment Opportunities Conclusion

Nigeria on the World Stage

Population is the seventh largest in the World, ~160 million people and still growing at over 6% per annum. By United Nations statistics, Nigerias population will reach nearly 230 million within the next 20 years. The largest of any country in Africa (accounts for nearly half the total population of West Africa and more than 15% of the total population of the entire African Continent). More than 40% of Nigerias population is less than 20 years old, functional literacy level is placed at between 30% - 40% over the population and well over 65% on the (18 45 years) population segment. Indicating strong, sufficient & modern labour market. Nigeria represents over 65% of the effective West Africa market and remains the most competitive destination for the establishment of medium and large manufacturing industries.

Nigeria Background Information

Area: Population: Rural population: GDP GDP growth GNI per capita 923,770 sq. km 162,470,000 (2011) 52% US$235bn (2011) Ave 7% last 3 yrs US$2,300 approx.

Nigeria Background Information

Total Energy Consumption Total Electricity Production Energy consumption per capita Electricity Consumption Access to Electricity Access to Electricity rural Installed Generation Capacity Peak Generation to date 1,259 TWhr per annum 19.78TWhr per annum 8.1 MWhr per head 18.05 TWhr 51% 10% 10,000MW by December 2013 4,500MW

Introduction
Fortunately, Nigeria already has important building blocks to develop a strong, successful power sector
Natural resources

We have a very broad range and quantity of fuels available for power generation (gas, hydro, coal, wind, solar, etc..) We have a strong base of youth (More than 60% of population are below the age of 30) and reputed technical universities (e.g., FUT. Owerri, FUT, Minna, FUT Akure, FUT Yola, Yabatech, RSUST etc. ) We have a strong and well structured roadmap for performance and growth in the power sector. President Goodluck Jonathan has continued to demonstrate clear and strong political-will and direction.

Local talent

Power Roadmap

Power generation installed capacity

Nigerias standing among peers
kW / thousand inhabitants

To achieve Brazil GDP per

530

capita level by 2030 (i.e., $10,000), we will need 135GW1 of capacity to supply a projected 230m Nigerians. capacity increase from today based on projections for Dec 2013

This is a 15 times
270 190 120 40
Nigeria Indonesia India Morocco South Africa Brazil

145

It also means we need to

build power plants at 7 GW/year for the next 18 years. Only two countries China and US have done this in the past

1 Capacity estimate based on consumption per capita average of Brazil and South Africa and with capacity utilization of 70%

West Africa Power Pool (WAPP)

Nigeria is a member of the Executive Board of WAPP & currently serves as Chairman Nigeria has a Power Sale obligation of 150 MW with a request for an upward review to 200MW in the short term for CEB (Transmission Company of Benin & Togo) Gas supply obligations through the West Africa Gas Pipeline currently supports power production in Ghana with plans to cover other West & Northern African Countries
Energy Exchanges Per Country (GWh)
200,000 0 -23,815 -200,000 -400,000 -600,000 -800,000 -45,304 61,234 107,917 169,610 44,956

-798,281
Benin/Togo

Burkina Faso

Cote D Ivoire

Ghana

Mali

Nigeria

Senegal

Source: www.ecowapp.org

Introduction
Structure Key Characteristics Results

Government owned monopoly with the Federal Ministry of Power at the Apex of a vertically integrated monopoly (NEPA later PHCN)

Internalized inefficiencies and leakages ; Annual capital drain from the federal budget. Uncoordinated investments in generation, transmission & distribution. Poor projects delivery.

Huge widening gaps between demand & supply ; massive industry flight leading to worsening unemployment. High suppressed demand throughout Nigeria. Large number of manufacturing & industrial operations grounded or relocated to neighboring African Countries. Painful loss of economic dominance in the west coast.

Nigeria Power Sector Appropriation Funding History

Funding To The Nigerian Power Industry
500 400 300 200 100 0

19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04

19 74

Investment ('US$millions)

Nigeria before Power Sector Reform

3.9%
Nigerias GDP is around 7% p.a.. With adequate electricity our GDP will be above 10% p.a.

Nigeria Power Reform

The Power Sector Reform has two broad missions : Service Delivery : Relying mostly on the completion of the new NIPP projects & the recovery of installed capacities in the up, mid and downstream , grow the availability, supply and reliability of electricity in Nigeria to an acceptable short term level during the divestment period. Reform: Move the sector from the position of government ownership/management of the assets to a private-sector driven Nigerian Electricity Supply Industry in line with the EPSR Act 2005.

Nigeria Power Reform

Presidential Roadmap on Power A short history of the journey
1) Pre - May 2010

The Electric Power Sector Reform Act enacted ( EPSRA 2005 ). NEPA unbundled into Successor companies with PHCN as the holding company Nigerian Electricity Regulatory Commission NERC created & later suspended A multi-billion dollar National Integrated Power Projects ( NIPP) started and later stalled Reform stalls until President Goodluck Jonathan assumes office in May 2010. President Jonathan chooses Power as one of his cardinal programmes . The stalled NIPP program resumes in earnest . President Jonathan inaugurates the Presidential Task Force on Power & the Presidential Action Committee on Power . President Jonathan launches the Nigeria Power Sector Reform Road map in August 2010. NERC Board reconstituted

2) Post - May 2010

The Reform Strategy: Changes in Ownership and Control

Current Configuration
Gas Production Ownership Operational Control Mixed Largely Private Gas Transmission FGN FGN Power Production Largely FGN Largely FGN Power Transmission FGN FGN Power Distribution FGN FGN

Required Configuration
Gas Production Ownership Operational Control Mixed Largely Private Gas Transmission Mixed Largely Private Power Production Largely Private Fully Private Power Transmission FGN Fully Private Power Distribution Fully Private Fully Private

Long Term Goals

(2015 and beyond)

The Nigerian power market to have reached stability for willing-buyer, willing-seller mode To ensure that all aspects and stakeholders of the NESI are working together to deliver quality, reliable and efficient electricity to consumers at reasonable prices

Power Growth Plan

We need to continue increasing our available capacity
Projected available capacity in Nigeria 2012-2016
GW GW 20.3

Preferred Vision 20-2020 Target of 40GW 4%

10%
14.4 12.3 9.2 6.0

6%

4.0

5.1

80%
Thermal Coal Hydro Renewables

2010

2011 2012

2013

2014

2015

2016

Power Growth Plan

The aspiration of 40 GW by 2020 will move Nigeria to a much more stable socio-economic position

Nigeria power consumption1 KWh/Capita (2012-2020)

Other emerging markets consumption KWh/Capita2 4.523

Nigeria in 2020
948

2.206 1.159
596 147

153

447

711

2012

2014

2016

2018

2020

Kenya

India

Brazil

1 Assumes 2.6% population growth per annum; 80% load factor on plants; approx 4.3 GW of new capacity per annum to achieve 40 GW by 2020 2 As of 2009 SOURCE: NERC; McKinsey analysis

South Africa
15

The Reform Enablers

The Power sector in Nigeria has already achieved many successes
Pre-2010: Getting policies in place

2005: Approval of the Electric Power Sector Reform Act and establishment of NERC. NEPA transformed into PHCN marking the start of the unbundling journey. Also marked the start of the NIPP

2010 2012: Moving from policies to action

August 2010: Roadmap for Power Sector Reform officially launched by Mr. President 2011: Solid progress implementing power sector reform, e.g., NERC effectively re-established Bulk trader, NELMCO, NAPTIN established and operationalized Privatization process at handover stage Management Contractor for TCN operationalized. PHCN Wind Down in process World Bank PRG support for PPAs. Signed MOU for equity investment in power generation projects with General Electric, Siemens, Daewoo, Eletrobras etc. Cost reflective tariffs under MYTO II Feed-in tariff for renewables

Existing Power Stations Connected to Grid

NIGERIA
Installed Capacity (MW) 760 540 600 304 1320 720 900 726 450 120 650 304 414 294 190

Kainji 760MW

Shiroro 600MW

Kainji Jebba Shiroro Olorunsogo Egbin

Jebba 540MW Egbin 1,320MW Omotosho 304MW Geregu 414MW

Okpai 450MW AES 294MW

lorunsogo 304MW Sapele 720MW Delta 900MW

Sapele - FGN Delta Afam I-V Afam VI (Shell) Okpai Omoku Omotosho Geregu AES Ibom Power Ibom 190MW

Omoku 120MW

Afam VI 650MW

Afam I-V 726MW

17

Nigeria. Transmission Grid

Map 4: Existing NEPA Transmission Line System
SOKOTO
Sokoto Katsina

NIGER
JIGAWA
Hadejia

REPUBLIC OF CHAD
YOBE BORNO
Damaturu

Birnin Kebbi

Gusau

ZAMFARA KEBBI

KATSINA
Kano

KANO

Maiduguri

REPUBLIC OF BENIN
KAINJI

KADUNA
Kaduna

BAUCHI
Bauchi Jos

NIGER
Minna

SHIRORO 2 Circuits

2 Circuits

GOMBE

Gombe

ADAMAWA

KWARA

JEBBA/GS

Abuja

Yola

OYO

IIorin

JEBBA/TS 3 Circuits

ABUJA NASSARAWA
Lokoja Makurdi
AJAOKUTA

PLATEAU
Lafia

Jalingo

TARABA

Osogbo Ibadan Ado Ekiti

REPUBLIC OF CAMEROON

OGUN
Abeokuta ALAGBADO Ikeja

OSUN
EGBIN P/ST.

EKITI
Akure

MAKURDI

KOGI ENUGU
Akwa Enugu EBONYI Abakaliki Umuahia

BENUE

NIGERIA
TRANSMISSION LINE LEGEND
132 KV LINES - EXISTING 132KV LINES - AWARDED 132KV LINES - APPROVED 132KV LINES - UNDER CONSTRUCTION 330KV LINES - EXISTING 330KV LINES - AWARDED 330KV LINES - APPROVED 330KV LINES - UNDER CONSTRUCTION
132KV 330KV

ONDO
Benin City 2 Circuits 2 Circuits SAPELE P/ST. DELTA POWER ST. Asaba

EDO

LAGOS

AN AMBRA IMO
Owerri

ONITSHA

ABIA
Uyo

CROSS RIVER

DELTA

BAYELSA RIVERS POWER ST. Notes: 1. Multi-circuits are not indicated for the 132KV system.
Report Maps 7-24-00

2 Circuits Port Harcourt

BULK SUPPLY - EXISTING BULK SUPPLY - UNDER CONSTRUCTION BULK SUPPLY - APPROVED / AWARDED HYDROELECTRIC POWER SUPPLY THERMAL POWER STATIONS

AFAM

AKWA Calabar IBOM

ATLANTIC OCEAN

Policy Initiatives for Promoting Renewables

RE STRATEGY DOCUMENT IRENA

REA ESTABLISHMENT BIOFUEL POLICY RENEWABLE MASTER PLAN EPSR ACT NATIONAL ENERGY POLICY

2003

2004

2005

2006

2007

2008

2009

2010

2013

Renewable Energy
Policy Guidelines
RE policy sets out Federal Governments vision, policies and objectives Policy Guidelines drawn primarily drawn the Constitution, NEPP, EPSR, RE Master Plan and REA Policy Document Vision of Nigeria is to move gradually from a fossil economy by increasing the share of renewables in energy mix Development of renewables shall be on equitable and sustainable basis Energy transition to less carbon intensive economy powered by natural gas and RE Development of domestic Ethanol and Biofuel policy under the purview of the NNPC

Policy Initiatives - Renewables

The National Electric Power Policy (NEPP) 2001 has set a target of 10% renewable energy mix for all new connection by 2020 The Ministry of Power has recently developed a draft Renewable Energy Policy that will drive the development of Renewable Energy resources in the country The Nigerian Electricity Regulatory Commission (NERC) has published Feed-InTariffs for most renewable energy in June 2012 (www.nercng.org) providing investors cost recovery and guaranteed return on investment Federal Govt. has established the Nigeria Bulk Electricity Trading Co. Ltd as a credible and creditworthy offtaker of power including renewables. The off-taker is supported by World Bank Partial Risk Guarantee The Rural Electrification Agency (REA) has established Rural Electrification Fund (REF) to focus on promotion renewable in rural areas NERC has also developed regulation to promote and guide embedded power generation including embedded renewable power generation within existing distribution networks

Energy Resources
Resource Large hydropower Small hydropower Solar Sun shine Wind Biomass animal waste Resource Crude oil Natural gas Coal and lignite
Source: SERC - UDUS

Potential
11,500MW 734MW 3.5 7.0 kW/m/day 4 8 hrs/day 2 6 m/s @ 10m height 61 mill tons per year

Potential
36.2 billion barrels 187 trillion scf 2.7 billion tons

Nigeria Solar Radiation

Nigeria Potential Hydropower Sites

Nigeria Onshore Wind Map

Average wind speed: 2 - 6.5 m/sec measured at 10m Offshore resource mapping in progress

Renewable Energy - Targets

Renewable energy - targets
18% of electricity from renewable by 2025 20% of electricity from renewable by 2030 100MW of small hydropower by 2015 and 760MW by 2025 300MW of Solar PV by 2015 and 4000MW by 2025 40MW of Wind Power by 2020 30MW of biomass fired capacity by 2020

Infrastructure Expansion & Investment Opportunities

Current Assets
Legacy Assets (installed) Thermals 5.6GW Hydro 1.3GW Wind (pilot) 10MW

On-going projects
Mambilla Hydro 3.1GW Zungeru Hydro 0.7GW S&MH (pilot)

New Initiatives
Sale of NIPP (4775MW) New IPPs in planning stage 2.6GW Coal/Renewables MOUs 30GW (GE, Siemens, Daewoo etc) Rural Electrification
SPDC/CNL 100mmscfd SPDC SS 180mmscfd CNL Okan 300mmscfd Bosi/Erha 300mmscfd

Generation

Fuel to power

Gas to Power average daily consumption of 650mmscfd

ELPS-C Pipeline SPDC(NPDC) 50mmscfd Oben Gas plant 30mmscfd OB3 Pipeline 120km (48) Grid Expansion Projects 10.4GWE by Q4 2013

Transmission

Grid Stability Projects Grid Capability 4.3GWE

SuperGrid ( Conceptual) 40GW by 2020

Support Services

Provision of specialized training for electricity industry technicians and managers. Assembly Plants for intermediary power equipment & accessories including meters Consultancies in Regulatory & Consumer education initiatives Provision of Power Sector specific equipment testing, calibration & logistics services Energy Efficiency Initiatives & products .
27

Infrastructure Expansion & Investment Opportunities

The 2015- 17 power projection is underpinned by several MOUs with the following organizations
General Electric Siemens AG Eletrobras Daewoo E&C EDF/ETDE US Exim

Facilitating and promoting private sector investment up to

10,000MW. 10,000MW. 10,000MW.

Facilitating and promoting private sector investment up to Facilitating and promoting private sector investment up to Facilitating the development, financing, procurement, Promoting power sector investments by sponsoring
feasibility studies for approved projects. manufacture, commissioning and operations of 10,000MW

$1.5Billion credit facility dedicated to exports of Machinery,

Equipment & Engineering Services to develop Power Projects and support growth if the Power Sector Promoting the development of small / medium hydro-power plants as embedded generation for rural communities

Multi-Lateral G- to-G Agency Support

Each of these MOUs present opportunities for new ventures by serious Nigerian-led power development consortiums. The MOUs are designed to make significant equity contribution in kind or cash, as well as provide credibility for IPPs seeking international financing.

Key Agencies in the Nigerian Power Sector

Federal Ministry of Power Policy formulation and consistency (www.power.gov.ng) Nigeria Electricity Regulatory Commission Issuance of licenses & Regulation (www.nerc.org) Nigeria Bulk Electricity Trading Company Plc Power Purchase Agreements (www.nbet.com.ng) Bureau of Public Enterprise responsibility of Privatization of Federal Government Assets. (www.bpeng.org) Gas Aggregation Company of Nigeria Allocation of gas for domestic use (http://gacnnigeria.com) Transmission Company of Nigeria Management of the National Grid (www.tcnng.org) Nigeria Gas Company Gas Infrastructure and Transportation (www.ngc-nnpcgroup.com) Rural Electrification Agency Remote & Off grid projects

Why Invest in the Nigerian Power Sector?

Capitalize on growth opportunities in the Nigerian electricity market where demand far outstrips current supply and the potential for strong economic growth is high. Establish a strong presence in West Africa, using Nigeria as a platform for acquiring further assets in the region. Benefit from a Multi Year Tariff Order (MYTO), designed to be a cost-reflective tariff that accounts for the operating cost and capital recovery, incentivizing efficient operations, based on best new entrant capabilities and technology. MYTO brings certainty to the Tariffs.

Conclusion
The Power Sector Reform has recorded major achievements and milestones due to the unflinching support of President Goodluck E. Jonathan. The milestones achieved so far are beginning to impact on service delivery and market structure. Nigeria is poised to meet its demands and contribute more to the West Africa power pool. Huge investment opportunities exist in the Nigeria Electricity Supply Industry. Local and international investors are encourage to take advantage of the ongoing power sector reform. The Federal Government will continue to ensure a conducive environment and level playing field for all investors.

Thank You
www.power.gov.ng

 Large Hydro Power Development 3,050MW Mambilla Hydro Power Plant Project 360MW Gurara II Hydro Power Plant Project Potential Sites Medium Size 38MW Dadinkowa Hydro Power Plant Project 40MW Itisi Hydro power Plant Project

Investment Opportunities Hydro Power

Small & Medium Hydro Power Projects - Nationwide

DAM STATE CAPACITY (MW) ESTIMATED COST 7,500,000.00 11,000,000.00 4,275,000.00 33,500,000.00 44,562,500.00 8,125,000.00 1,287,500.00 4,900,000.00 1,531,250.00 91,250,000.00 207,930,750.00

Oyan Ikere Gorge Bakolori Challawa Tiga Kampe Owena Doma Zobe Jibia TOTAL

Ogun Oyo Zamfara Kano Kano Kogi Ondo Nasarawa Katsina Katsina

10 6 3 7.5 10 3 0.45 1 0.30 4 83.25

(usS)

Investment Opportunities NIPP

Niger Delta Power Holding Company (NDPHC) is planning to divest its holdings in the generation assets in the National Integrated Power Projects (NIPP). 39 Gas Turbine Generators in 10 Plants with a total capacity of 4,775MW located in: o Calabar (5) 561MW, o Egbema (3) 338MW o Ihovbor (4) 451MW o Gbarain (2) 225MW o Sapele (4) 451MW o Omoku (2) 225MW o Alaoji (6) 961MW o Oloronsogo (6) 676MW o Omotosho (4) 451MW o Geregu (3) 434MW o Total equivalent cost in excess of USD3.8 billion
34

Investment Opportunities
Transmission

Our Transmission network needs an injection of about $5b within the next 5 years Plan for a 765KV Super Grid Funding options include: International Development Banks Multilateral Funding Sources Public Private Partnership. Local Capital Market
Remote, Off-Grid and Renewable Energy

Pre-feasibility & Feasibility Studies for Remote and off-grid locations. Load profiles & forecasts for Remote and off-grid locations. Development of commercial framework for implementation of remote and offgrid power. Funding and Technical support for pilot project implementation. Staff training.

Investment Opportunities - Renewables

Power generation using renewable sources of energy Solar, Wind, Biomass and Small Hydropower) Manufacture of solar panels and small hydropower equipment Capacity building in the field of renewable energy technologies Supply of renewable energy equipment and accessories EPC contracting in renewable energy projects 10MW Wind Farm ready for commissioning and concessioning Over 300 small and medium Hydropower projects were identified, while feasibility studies has been carried out on 12 of the dams awaiting interested investors to takeover and develop the hydropower potentials

Contact Information for Investment in Nigeria

One Stop Investment Center Nigerian Investment Promotion Commission Plot 1181 Aguiyi Ironsi Street, Maitama District, P.M.B 381 Garki, Abuja, Nigeria. Tel #: 092904882 or 092904706. Email: [email protected] OR [email protected] Corporate Affairs Commission (CAC) Plot 420, Tigris Crescent, Off Aguiyi Ironsi Street, Maitama, Abuja, Nigeria http://www.cac.gov.ng

Contact Information for Federal Ministry of Power

Amb. (Dr.) Godknows Igali The Permanent Secretary 4th Floor, Phase II, Federal Secretariat Complex, Shehu Shagari Way, Abuja Roland Ekechi Director, Investment Sector & Development 5th Floor, Phase II, Federal Secretariat Complex, Shehu Shagari Way, Abuja Olajuwon Olaleye SA to the Honourable Minister of Power on Investment, Finance and Donor Relations 5th Floor, Phase II, Federal Secretariat Complex, Shehu Shagari Way, Abuja Ms. Olufunto Boroffice TA to the Honourable Minister of Power Investment, Finance and Donor Relations 5th Floor, Phase II, Federal Secretariat Complex, Shehu Shagari Way, Abuja

Thank You
www.power.gov.ng