With Nigeria’s power sector plagued by several issues, key of which is the inability to supply its citizens enough electricity, the country has announced its intention to increase power supply to neighbouring countries.
Despite owing Nigeria billions of Naira, the Federal Government appears keen on supplying the Republic of Benin more power.
A second transmission line from Ikeja to Sakete in the Republic of Benin is being constructed and will be ready by 2021. Funding for the project has been provided by the New Partnership for African Development (NEPAD) and the African Development Bank (ADB).
Nigeria supplies power to the Republics of Benin, Togo and Niger as part of a bilateral agreement. Niger and the Republic of Benin, have so far made a part payment of $152 million of the total amount owed. Despite the payment, the two countries still have an outstanding balance of $92 million.
The country may have undertaken the agreement as the three companies surrounds her borders. The Republics of Benin and Togo are supplied 200 MW, while Niger Republic gets 100 Mw. The power supplied is however a small fraction compared to the over 2000 MW the country generates and is unable to transmit due to limits in transmission capacity. The FG recently got a $1.55 billion loan from a consortium of development banks to expand her transmission capacity.
The companies these countries are indebted to, will in turn owe the firms that provide them gas. This could lead to them running at a loss. Due to the bilateral agreement, they may be hesitant to apply legal means. Power sector operators owe billions of Naira across the value chain, and to banks that provided funds for their acquisition from the Federal Government. This has led to some critics calling for a reversal of the privatization programme.
While it has announced an increased in power generation to about 7,000MW in the last months, Permanent Secretary in charge of power at the Ministry of Power, Works and Housing Louis Edozien blames the distribution companies for their inability to distribute more as they could only distribute about 4600.