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FG to grant incentives to embedded power operators

By BusinessNews Staff on May 18, 2015

The Federal Government favours granting incentives to the operators of embedded power generation in the country, in order to encourage further investment in the sector.

The incentives would come in the form of tax holidays and cost reflective tariff, with a committment to remove encumbraces in the system.

Chinedu Nebo, minister of Power disclosed this on the sideline of the official commissioning of the Niger Delta Power Holding NDPHC/NIPP 330/132/33kv Oke Aro Transmission Substation in Lagos on Thursday.

The idea of embedded power has become more pronounced because it is much easier and proficient to do several 20 megawatts power stations than one 200 megawatts unit which would take between three and five years to build, Nebo added.

An added advantage is that the smaller units can be deployed within a year he further said.

He observed that embedded generation is the fastest way to bring electricity to Nigerians, adding that there is a policy which gives that direction for the scheme, and that what government is working on, is to provide incentives to investors because it is easier and more proficient to build small generating powers plants than big ones.

Embedded power generation is a situation where a generator is directly connected to the distribution network. It is also a useful means of dedicating power to state and local government, eligible customers and others.

The parties involved would have to agree on a tariff to be paid, as distinct from the official electricity tariff.

It would provide reliable supply of energy, critical for viable industrial activity. It would also minimise line losses and voltage sag, as closeness to load results in more efficient power transmission.

Other qualities of embedded generation include substitute for main supply, source of power in areas without grid supply, and backup standby generation which ensures regular supply and provision of ancillary services such as voltage or frequency control.

According to the minister, embedded generation is the key, and the commission has been directed by government to do all that is necessary to make the scheme work.

Commenting on the importance of the commissioned transmission substation, Nebo said: “ The problem we always have is because we lack transmission infrastructure, there is so much congestion in the Lagos line”.

He said it was necessary to expand capacity and create redundancy, so that current and voltage coming to Lagos would always be stable and reliable.

“This gives relief to Ikeja West substation and makes it easier for very good quality power to get around to consumers”, he said.

Vice President, Namadi Sambo who also is the chairman, board of directors of the Niger Delta Power Holding Company, said he was impressed by the gigantic power transmission infrastructure, Oke-Aro 330/132/33kV which also has a distribution leg for the benefit of the two states.

Sambo further said : “Here in Oke- Aro today, we are witnessing another great feat of this administration in power infrastructure capacity expansion to boost economic and industrial development of the country.

In Lagos, the two distribution companies.i.e Ikeja Electricity Distribution Company and Eko Electricity Distribution Company both accounted for over 40% of all power consumption in Nigeria. ”

This according to him is understandable from the fact that Lagos, which used to be our political capital before the advent of Abuja, is still Nigeria’s commercial and industrial capital hub with a large concentration of industries located in the state and the adjoining Ogun state.

“Prior to the advent of Oke Aro substation, there were only 3nos 330/132/33kV substations in Lagos. One of these three,is Ikeja West 330/132/33kV Substation which was the major marshalling point for all power plant that flows its generation into Lagos, this development which had thrown the state into a state of great congestion with limited space for safe expansion of capacity for increased flows into Lagos and environs. All the 330kV power lines from the Benin and Oshogbo 330kV hubs of the national grid – which were also serving as evacuation lines for NIPP new power plants at Omotosho as well as Olorunsogo, terminated there. Even 330kV evacuation lines for older major power plants such as Egbin in Lagos also terminated at Ikeja West”

[Business Day]

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