Egbin Power Plc, operator of Nigeria’s largest electricity generation plant, plans to upgrade the aging facility and seek more gas to boost output, Chief Executive Officer Mike Uzoigwe said.

“Our plan this year is to overhaul and upgrade all the units into a modern facility,” Uzoigwe said in a phone interview Monday from Lagos, the commercial capital. “It costs about 6 billion naira ($30 million) to overhaul one unit,” or $180 million for all six parts of the plant built about 30 years ago. One unit has been upgraded while the others will be done so that there will be limited downtime, Uzoigwe said.

Korea Electric Power Corp., or Kepco, owns 30 percent of Kepco Energy Resources Nigeria Ltd., which in 2013 completed buying 70 percent of the equity capital in Egbin from the country for about $407 million, Kepco said. This was part of a plan to dismantle the government’s power monopoly to bring in investment needed to expand electricity supply in the continent’s biggest economy, where demand is more than triple current output of about 3,000 megawatts, according to the Power Ministry.

While Egbin, a gas-fired plant, has installed capacity of 1,320 megawatts, it currently produces 41 percent of that because of gas shortages, Uzoigwe said.

“Gas is not available for us to take advantage to run full capacity,” Uzoigwe said. “If you give me enough gas to generate 1,000 megawatts, by tomorrow this plant will be spinning 1,000 megawatts.”

Gas Shortages

While Nigeria was the world’s fourth-biggest exporter of liquefied natural gas in 2012, it’s struggling to meet local demand for the fuel used by plants that generate at least 70 percent of the country’s electricity needs. The nation that holds Africa’s largest gas reserves of more than 180 trillion cubic feet is expanding pipeline networks so that they service power plants and industries and not just export terminals.

Rising incidents of sabotage to gas links is hampering supply. The Trans-Forcados pipeline, which supplies natural gas to power plants, has been attacked four times since January, Ohi Alegbe, an Abuja-based spokesman of the Nigerian National Petroleum Corp., said by phone Wednesday.

“The sabotage is awful,” he said. “The sad thing about it is that, unlike oil, you can’t do anything with gas once you bust the pipes, gas goes into the air.”

Electricity Market

Persistent gas shortages stalled the start of a transitional electricity market, set for March 2014, that would enable power trading between producers such as Egbin and distribution companies. The Nigerian Bulk Electricity Trading Plc, which acts as a clearing house for power generators and distributors, will guarantee all purchases for a five- to 10-year trial period.

While the government in September provided a 213 billion-naira bailout to prop up struggling power companies, low revenue collection from distributors mean they are unable to pay generators for electricity, Uzoigwe said.

“A lack of bankability in the industry is what is hampering our progress,” he said. “If people pay up their energy bills then the distribution companies will have money to pay us.”

Source: Bloomberg