Power & Infrastructure
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20 20 KEY DEVELOPMENTS IN 19 20 NIGERIAN POWER & WRAP- UP O U T L O O K INFRASTRUCTURE A PUBLICATION OF THE POWER & INFRASTRUCTURE PRACTICE OF OLANIWUN AJAYI LP TABLE OF CONTENTS 08 O V E R V I E W 24 P O W E R LEGAL & REGULATORY DEVELOPMENTS . Consultation Paper on the Development of a Regulatory Framework for Electricity Distribution Franchising in Nigeria . Regulation of Local Content in the Nigerian Power Sector Receives Boost . The MYTO Minor Review Order 2019 – the Awaited Relief or a Nostrum? . Regulatory Watch MARKET DEVELOPMENTS . Deal Highlights . Gas Supply . Generation . Spotlight Feature Piece: On-Grid Power Generation (Interview of Mr. Oti Ikomi, CEO of Proton Energy Limited) . Transmission . Distribution . Financing, Investment & Market Development Initiatives TABLE OF CONTENTS 90 INFRASTRUCTURE LEGAL & MARKET DEVELOPMENTS • Road & Rail • Spotlight Feature Piece: Project 4MB (Interview of Mr. Ope George, DG of the Lagos State PPP Office) • Air & Sea Ports • Telecoms • Insight Article: August 2019 Minor Review Order & License Cancellation Notice 118 PROJECTS IN THE P I P E L I N E 122 CLOUDY CRYSTAL BALL GLOSSARY 4 4MB Lagos State 4th Mainland Bridge CPGNL C ummins Power Generation Nigeria Limited AEDC A buja Electricity Distribution Company Plc CRCC C hina Railway Construction Corporation A gence Française de Development or French AFD DFBOT Design, Finance, Build, O perate and Transfer Development Agency Af DB A fric an Development Bank DFI Development Financial Institution Af IF European Union’s African Investment Facility DisCo Electricity Distribution Company licensed by NERC AMR A utomated Meter Reading ECA Export Credit Agency ANED A ssociation of Nigerian Electricity Distributors ECOWAS Economic Community of West African States APGC A ssociation of Power Generation Companies EEC Enyimba Economic City ATC&C A ggregate Technical Commercial & Collections EIA Environmental Impact Assessment BPE Bureau of P ublic Enterprise EKEDC Eko Distribution Company Limited CAPEX C apital Expenditure EMS Electricity Management System CBEA C ros s-Boundary Energy Access EPC Engineering, Procurement, Construction CBN C entral Bank of Nigeria EPSRA Electric Power Sector Reform Act, 2005 C hinese Civil Engineering Construction Company CCECC ESIA Environmental and Social Impact Assessment Nigeria Ltd CDB C hina Development Bank ETR Extra- ordinary tariff review United Kingdom government’s foreign investment CDC Group EU European Union arm CHEC C hina Harbour Engineering Company FAAN Federal Airport Authority of Nigeria GLOSSARY 5 FCT Federal Capital Territory Inf raCo Infrastructure Company FEC N igeria’s Federal Executive Council IPP Independent Power Project FEED Front - End Engineering and Design ISO Independent System O peration FGN The Federal Government of Nigeria JHCF James Hope College Foundation FID Final Investment Decision JICA Japan International Co-operation Agency FIDC First Investment Development Company kV Kilo-volt FIRS Federal Inland Revenue Services kW Kilo-watt FOREX Foreign Exchange LASG Lagos State Government GE General Electric Company LC Letter of Credit GenCo E lec tricity Generation Company licensed by NE RC LFZ Lekki Free Zone GoTG Government of the Republic of Gambia LPLTZ Lekki Port LFTZ E nterprise Limited GW Giga-watt MAP Meter Assets Provider HSC Nigerian Electricity Health & Safety Code MD Managing Director ICRC Infrastructure Concession Regulatory Commission MDAs M inistries, Departments and Agencies of the FGN IE Ikeja Electric Plc MO Market Operator IEDN Independent Electricity Distribution Networks MoU Memorandum of Understanding INEC Independent National Electoral Commission MRO Minor Review Order GLOSSARY 6 MRT Minimum Remittance Threshold NICL N E RC’s Notice of Intention to Cancel Licences MVA Mega Volt Amp NIPOST Nigerian Postal Service MW M ega-watts NIPP National Integrated Power Project MYTO Multi-Year Tariff O rder, 2015 NLNG Nigeria LNG Limited NASS N igeria’s N ational A ssembly NNPC Nigerian National Petroleum Corporation NBET Nigerian Bulk Electricity Trading Plc NPA Nigerian Ports Authority NCC Nigerian Communications Commission NSG Nasarawa State Government NSIA NCCF Nigerian Content Consultative Forum Nigerian Sovereign Investment Authority NEMSF Nigerian Electricity Market Stabilisation Facility O&M O peration and Maintenance NEMSF Nigeria Electricity Market Stabilization Facility ONHYM Morocco National Office for Hydrocarbons & Mines NEP National Electrification Project OPEX O perating Expenditure NEP Nigerian Electrification Roadmap PA P erformance Agreement NERC Nigerian Electricity Regulatory Commission PAF P ayment Assurance Facility NESI Nigerian Electricity Supply Industry PAIF P ower and Airline Intervention Fund NESIS Nigerian Electricity Supply and Installation Standards PDP P eoples Democratic Party NGN N aira PEPCA P rivatisation & Commercialisation Act NICAPACO Nigerian Carton and Packaging Manufacturing Company Limited PHCN P ower Holding Company of Nigeria GLOSSARY 7 PHEDC P ort Harcourt Electricity Distribution Company SCADA Supervisory Control and Data Administration C omprising Saipem of Italy, Chiyoda of Japan, and Daewoo of South PIPP P IPP LVI DisCo Limited SCD Consorium Korea PIU P rojec t I mplementation Unit SO System Operator PPA P ower Purchase Agreement TBEA Tebian Electric Apparatus PPP P ublic Private Partnership TCN Transmission Company of Nigeria PSRP P ower Sector Recovery Plan TEM T rans itional Stage Electricity M arket Q1 First Q uarter of the year TIT Technical Team TREDIC Star Q2 Second Q uarter of the year Nigerian Canadian firm Core Q3 T hird Q uarter of the year TREP First Q uarter of the year Q4 Fourth Q uarter of the year TSP Transmission Service Provider REA Rural Electrification Agency UK United Kingdom Rf P Request for Proposal US United States of America Rf Q Request for Q ualification USAID United States Aid ROW Right of way USTDA United States Trade and Development Agency RP Global P rivately owned Spanish IPP developer and investor WB World Bank 8 OVERVIEW F O R E W O R D The year 2019 began on a note of cautious optimism, with to settle in - with the passage of the 2019 budget in May industry players looking to see what impact the general and the announcement of ministerial appointments in July. elections would have on the Nigerian economy as a whole From there on out, the year was marked by a number of and the infrastructure sector in particular. In the power major market developments in the infrastructure space, sector, stakeholders were concerned about a potential with some of the more consequential of these taking place reversal of the NESI privatisation process, which the in the power sector. President Buhari administration had reportedly considered in the preceding year and has continued to contemplate. For The FGN continued to demonstrate a keenness to leverage non-power infrastructure, there was no telling whe ther a private sector funding and capacity in the development of “…a number of change in administration would mark the end of the road for public utilities. This was evinced by, among others, a major market projects commenced or continued under President Buhari’s proposed PPP collaboration between the Nigerian and developments first term, or whether a second term by President Buhari German governments, in relation to the contemplated in the would hasten or decelerate the pace of such projects. The upgrade of NESI’s systems by Siemens, as well as the FGN infrastructure suspense was heightened by INEC’s delayed administration continuing to make significant progress with the proposed space, with of the elections, which eventually held between the third acquisition of the Afam power generation assets by the some of the week in February and the first week in March. Transcorp group. Other notable strides in 2019 include the th more landmark 4 Mainland Bridge Project, spearheaded by the As predicted, even after the general elections, which saw no Lagos State Government, the operationalization of the consequential sea changes, deal traffic in the NESI and the infrastructure Lagos-Abeokuta railway line and the proposed development of these taking spaces remained slow for most of 2019, and there were no of ultra-modern healthcare centers by the Kano State place in the regulatory developments of note up until the end of the Government. power sector…” second quarter of 2019, when the new administration began 9 OVERVIEW F O R E W O R D On a less positive note, due to a mix of reasons, the of international players such as Konexa, and which is projects previously earmarked by the FGN for priority expected to revitalize the distribution sub-sector and have treatment under the auspices of the Presidential positive ripple effects on the value chain. The long-awaited Infrastructure Development Fund – including the 3000MW minor review of MYTO 2015 was also a major market Mambila hydro power project, the Lagos-Ibadan expressway shaker; which sector participants and the public are still project, the 2nd Niger Bridge, and the Abuja-Kano Road – adjusting to. again made little progress in 2019, despite keen attention from infrastructure players and stakeholders within the Thus, notwithstanding its slow start, the year 2019 (and broader polity. That said, the tides appear to have changed indeed, the first few weeks of 2020) was full of interesting for these projects, among other key infrastructure projects activity, which will set the tone for 2020 and beyond. Whilst “…a number of in different sectors in the country, with the recent