Business in Ghana

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Untangling Nigeria’s Power Lines

Posted by Business in Ghana on April 25, 2014

Africa’s Top Economy Produces Half the Electricity of North Dakota—for 249 Times More People


LAGOS, Nigeria—The quest to turn the lights back on in Nigeria is pitting some of the country’s richest men against rusted power lines, pilfered electricity and grenade-lobbing saboteurs.

Nigeria’s government built only 12 power plants since independence from the U.K. in 1960—all of them now in disrepair. Meanwhile, its population tripled to 174 million. The result: Nigeria produces less than half as much electricity as North Dakota for 249 times more people. Blackouts strike 320 days a year, according to the World Bank.

Now, Africa’s top economy has asked its wealthiest businessmen to get the plants humming again. Last November, the Nigerian government auctioned off six power plants, including a 50-year-old tumbledown facility located near swampland.

That plant now belongs to Tony Elumelu, a Nigerian mogul whose company made its name running a local Hilton resort. In the months to come, the hotelier hopes to jolt the power plant back to life, pushing out a surge of electricity into this country where big city offices charge their laptops with car batteries and the poor eat by candlelight.

“Things will change,” said Mr. Elumelu, the chairman of investment firm Heirs Holdings, last October, days before the government handed him the keys to the power plant. “You will see what power will do.”

Nigeria isn’t Africa’s only nation handing rundown infrastructure to local multimillionaires. African governments from Ivory Coast to Ethiopia are selling off assets, ranging from ports to railways and refineries. Nigeria’s power selloff, though, represents the biggest test of that drive.

The Nigerian government hopes the fresh capital and new equipment, such as turbines, will help it generate 25,000 megawatts by 2020—10 times what the country currently produces.

It’s an ambitious target. Even 25,000 megawatts wouldn’t be enough to keep the lights on all day, according to companies and analysts. Nigeria, they say, needs as much as 170,000 megawatts to generate 24-hour electricity for its 174 million people—a population projected by the United Nations to grow another 100 million in the next 15 years.

And there are some snags. Half of Nigeria’s electricity is stolen or lost on quarter-century-old power lines. Companies have taken on the job of installing electric meters and bringing bills to the hundreds of thousands of Nigerian households that run wires to nearby electrical poles, without paying.

Plus, Nigeria will need to lay fresh pipelines to tap its gas reserves—the world’s eighth largest—to fuel those turbines. One problem: Saboteurs lurking in the swamps keep throwing grenades under what few gas pipelines exist in an attempt to extort protection money from Nigeria’s government.

None of this has deterred Nigeria’s new power barons.

Mr. Elumelu paid $300 million for his 60% stake in his power plant. He has some experience: To keep the lights on at his 10-floor Hilton, he runs a massive generator on the premises, churning four megawatts—more than the country of Guinea-Bissau produced, until recently.

The thinking is simple, he said: Thanks to all-day outages, Nigerians consume scant electricity—less than Puerto Rico. Once electricity flows into their homes, though, tens of millions of people will rush to buy refrigerators, air conditioners, electric kettles, he added—all pulling power from his turbines.

Still, it’s a big job.

When Mr. Elumelu’s staff first walked into the plant last November—they weren’t given access until it was purchased—they discovered technicians weren’t wearing safety goggles or even shoes. Some crawled into the innards of deadly gas turbines wearing flip flops.

Those workers had also lost track of turbine parts, rendering the massive machines unusable. All told, the station produces just 160 megawatts—half the wattage the company assumed when it bought the place.

“Maybe some of us didn’t know it would be that bad,” said Adeoye Fadeyibi, the chief executive officer of Transcorp Ughelli Power Ltd., the Heirs Holdings unit that runs the plant.

By year-end, Mr. Fadeyibi hopes to get his workers trained and the turbines spinning. Then he’ll install new turbines, revving up to 3,000 megawatts by 2016.

He is in talks with both U.S.-based General Electric Co. GE -0.60% and Germany’s Siemens AG SIE.XE +0.48% , he said, as the company mulls which turbine maker to order from. Low interest loans from the Export-Import Bank of the U.S. tilt the balance toward GE, he said.

Over the next five years, as the plants sold by the government install new turbines, GE says it expects to bring in $1 billion in revenue from Nigeria.

Rival Siemens forecasts adding nearly 5,000 megawatts by 2020.

“Everybody’s jumping in,” said Michael Lakota, CEO of Siemens Limited Nigeria.

Meanwhile, Mr. Elumelu said he has to convince Nigeria’s government to sell or refurbish the creaky electrical towers, drooping high voltage lines, and fire-prone substations responsible for carrying the current toward big cities.

If he and others get it right, economists expect Nigeria’s factories to produce through the night and, in time, compete globally. Airlines will be able to land after sunset. Schoolchildren will do their homework after dark.

“One way or another,” said Transcorp’s Mr. Fadeyibi, “it’s going to happen.”

Write to Drew Hinshaw at

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