State Governors Demand Refund of $10bn Investments in National Integrated Power Projects
In a recent move, state governors have called for the refund of their full equity investments in the $10 billion National Integrated Power Projects (NIPPs), managed by the Niger Delta Power Holding Company (NDPHC). This demand was made under the auspices of the Nigeria Governors’ Forum (NGF), who also seek an equitable rate of return on their investments in these power plants.
The governors detailed their requests in a document titled, “Development of the National Integrated Electricity Policy and Strategic Implementation Plan Policy Recommendations by State Governments,” which was submitted to the Federal Ministry of Power. While the ministry confirmed receipt of the document, it has yet to comment on the demands.
“The investments by states in the NDPHC need to be clearly defined. States advocate for a refund by the Federal Government of the states’ full equity investments in the NIPPs plus an equitable rate of return on their investment. The refund of states’ investments in the NIPPs is without prejudice to the ability of the Federal Government to privatize or sell the NIPPs,” the governors stated.
The NIPPs were launched in 2004 to enhance Nigeria’s electricity generation capacity through the construction of several gas-powered plants. The projects are owned by the federal, state, and local governments through the NDPHC. Currently, there are 10 operational NIPP plants across Nigeria, with discussions underway about privatizing some of these assets.
State governments, empowered by the Electricity Act 2023 to operate and regulate their own electricity markets, argue that their investments in the NIPPs should be reimbursed if the Federal Government is to take over these assets completely.
Dr. Sam Amadi, former Chairman of the Nigerian Electricity Regulatory Commission (NERC), commented on the situation, highlighting that the NIPPs are still owned by the three tiers of government. He suggested that the states’ demand for a refund would be justified if the Federal Government had unilaterally taken over the assets. “Ownership can be managed beyond jurisdictions, which means that states can create power plants and still be owners of the NIPPs,” he said.
The governors also pointed out that there had been no valuation of state assets in the successor power distribution companies (Discos) prior to their privatization. They emphasized the need for a comprehensive assessment of states’ investments in the Discos’ assets, asserting that states should have representation on the Discos’ boards to optimize their equity investments.
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In January, it was reported that the Federal Government, through the Bureau of Public Enterprises (BPE), was proceeding with the sale of five NIPP plants valued at approximately $1.15 billion, despite concerns that the true value of these assets should be higher. The sale includes the Geregu II, Omotosho II, Olorunshogo II, Odukpami, and Benin-Ihovbor power plants.
The ongoing debate over the management and ownership of the NIPPs underscores the complexities of Nigeria’s power sector reforms. As states continue to push for a fair return on their investments, the Federal Government’s response will be crucial in determining the future of these vital assets.
