Managing Director and Chief Executive
Officer, Egbin Power Plc, Mr. Dallas Peavey
The Managing Director and Chief Executive
Officer, Egbin Power Plc, Mr. Dallas Peavey,
Jr., in this interview with ‘FEMI ASU , says
the nation may be enveloped in darkness in
the coming weeks due to a myriad of
challenges in the power sector
What do you think about the Nigerian
power sector almost three years after it
was privatised?
I think at this point, we have gone through
so many stages. I think the issue here is
liquidity. So many of the owners came and
they were thinking that they were going to
be reaping some sort of returns after the
first three years. In reality, nobody realised
that they would go through three years and
lose money. Our parent company owns
Egbin as well as Ikeja Electric. Having said
that, we cover a lot of the areas in Nigeria
out of our own pocket. We, as a private
company, don’t expect to do that.
I think the government is coming up with a
plan and working with us to ensure that we
get paid and continue to generate power,
and go from the current generation of less
than 4,000 megawatts to 10,000 MW in the
next five years. At least, that is what we
are hoping to achieve. We have got a long
way to go, but I think we can get there.
Aside from the liquidity challenge, what
other issues are hampering the growth of
the sector?
Fuel supply is also an issue. The second is
transmission; the system is older than
Egbin, which is 37 years old. The
transmission system is older than that, and
they have not done anything towards the
revitalisation of the system. They are trying
to push almost 5,000MW to the system and
it is not capable of taking that. We have to
work with the Transmission Company of
Nigeria and the government, because it is
still owned by the government, to work
through those issues.
How is the current economic recession in
the country affecting your operations?
We have not laid off anybody and we
haven’t cut back on salaries. We haven’t
cut back on the mainstay of our workforce
simply because we are hoping that we can
rectify the gas issues. We hope that the
liquidity issues will be resolved with the
government so that we can get back to
generating 1,320MW, because Nigeria needs
power.
Transmission is often regarded as the
weakest link in the power value chain, do
you think the government should give it
out on concession basis, or totally
privatise it?
I can only give my opinion, and I think
typically the transmission system is weak
and probably could have been privatised
earlier simply because that is the weakest
link and it takes the most investment. I
think that Manitoba Hydro is gone away;
now, the TCN is back in the hands of the
government. I think the government needs
to take a look at how they are going to
fund the projects that are necessary to
strengthen the transmission network; even
when we generate our capacity of
1,320MW, we are not sure the system can
take that. And we are looking at doubling
the capacity of the plant in the next three
years. How are they going to take that?
The government has to take a hard look at
that.
Over the past three years, we have seen
capacity upgrade at Egbin, with the plant
now having available capacity of
1,320MW; what plans do you have going
forward?
We are going to continue to work to ensure
that we maintain the 1,320MW, and we just
completed the environmental impact
assessment for our phase two so that we
can double the capacity of Egbin. Our plan
is to have up to 3,000MW capacity in the
next three years.
Do you have any plans to diversify your
sources of fuel for the plant?
We already are doing that. We are looking
at using Low Pour Fuel Oil. We are looking
at using liquefied natural gas. We are
looking at several options so that we are
not depending upon the Nigerian Gas
Company, because of the constant attacks
on the pipelines. Nigeria needs power, even
if we have full capacity, the nation needs
over 10,000MW today. So, what we need to
do is to continue to work with our owners
and partners so that we can get fuel, and
then work with the TCN so that they can
take the power and get it to the nation.
Right now, we have got almost 820MW
stranded capacity that the nation needs.
Normal generation in Egbin is about
1,320MW. Currently, we are doing about
425MW, only 30 per cent of what we should
be generating simply because of gas. The
other side that we are having an issue with
is that the TCN cannot take the full amount
of power that we can generate. Right now,
the biggest issue is gas, and we don’t know
what the future is going to bring to us in
terms of gas supply.
On top of that, we are owed over N86bn by
the Federal Government; we have been
producing but we haven’t been paid for
almost six months. The last amount of
money that we got was about 16 per cent
of the total bill for the power that we
generated for the month.
What are the implications if the debt is not
settled as soon as possible?
We can’t continue to operate simply
because we don’t have the money to pay
for materials. We don’t have the money to
pay for repairs and we can’t continue to
pay our employers simply because we are
owed so much money. We have gone out to
banks and different financial entities to
borrow the money to continue to do
maintenance. You know for banks, the limit
is only so much and we have reached that
limit.
How has the exchange rate crisis affected
your operations?
When we bought the plant three years ago,
the exchange rate was N156 to the dollar.
Today, the bank rate is N310 to the dollar,
double of what it was then. This plant was
built 37 years ago by the Japanese. And to
do replacement and repairs, the foreign
exchange rate is double. So, where are you
going to find that? We are being paid in
naira, but almost everything that we pay for
is in dollars. So, the exchange rate is
significantly impacting our ability to
continue to operate as well and we are
looking to the government to assist us on
that, to come up with the solution for us to
do that. Also, the scarcity of the dollar to
be able to buy these spare parts and
continue to do maintenance is impacting us
tremendously.
But we, as a private company, have
continued to dig deep into our pocket, go to
our sister and parent companies to borrow
money that the banks can’t loan us to
continue to operate. But even so, if we
don’t get paid and if we don’t get gas, we
can’t continue to generate.
In terms of building power plants, we have
not seen a lot in the sector in the past few
years, why is this so?
It is a challenge because it requires huge
investment. You have to have the capital to
come in and build the power plant. A power
plant like Egbin will cost you $600 to $700
per megawatt to build and install. Where
are you going to find that much money, you
are talking about $1.7bn to build the plant?
That is a lot of investment. When you are
not getting paid and you are owed N86bn,
it is hard to attract investors in that kind of
marketplace.
The Central Bank of Nigeria recently gave
out intervention funds to power firms, what
has become of that?
They didn’t give it to us; what they paid to
some of the generation companies was
what they owed them. It wasn’t
guarantees; it wasn’t financing; it wasn’t
loans. It was simply the obligations that
they owed us; but then, we haven’t got any
money. We are still waiting for it.
What do you intend to achieve with the
Egbin plant in the next five years?
If we can continue to progress and move
forward, by addressing the fuel supply,
transmission and the liquidity issues, again
we are looking at generating up to
3,000MW in the next three years from this
plant alone. Right now, we currently provide
35 per cent of the power in Nigeria. That is
a big step. Nigeria needs it and all we do
here is to generate power.
Managing Director and Chief Executive
Officer, Egbin Power Plc, Mr. Dallas Peavey
The Managing Director and Chief Executive
Officer, Egbin Power Plc, Mr. Dallas Peavey,
Jr., in this interview with ‘FEMI ASU , says
the nation may be enveloped in darkness in
the coming weeks due to a myriad of
challenges in the power sector
What do you think about the Nigerian
power sector almost three years after it
was privatised?
I think at this point, we have gone through
so many stages. I think the issue here is
liquidity. So many of the owners came and
they were thinking that they were going to
be reaping some sort of returns after the
first three years. In reality, nobody realised
that they would go through three years and
lose money. Our parent company owns
Egbin as well as Ikeja Electric. Having said
that, we cover a lot of the areas in Nigeria
out of our own pocket. We, as a private
company, don’t expect to do that.
I think the government is coming up with a
plan and working with us to ensure that we
get paid and continue to generate power,
and go from the current generation of less
than 4,000 megawatts to 10,000 MW in the
next five years. At least, that is what we
are hoping to achieve. We have got a long
way to go, but I think we can get there.
Aside from the liquidity challenge, what
other issues are hampering the growth of
the sector?
Fuel supply is also an issue. The second is
transmission; the system is older than
Egbin, which is 37 years old. The
transmission system is older than that, and
they have not done anything towards the
revitalisation of the system. They are trying
to push almost 5,000MW to the system and
it is not capable of taking that. We have to
work with the Transmission Company of
Nigeria and the government, because it is
still owned by the government, to work
through those issues.
How is the current economic recession in
the country affecting your operations?
We have not laid off anybody and we
haven’t cut back on salaries. We haven’t
cut back on the mainstay of our workforce
simply because we are hoping that we can
rectify the gas issues. We hope that the
liquidity issues will be resolved with the
government so that we can get back to
generating 1,320MW, because Nigeria needs
power.
Transmission is often regarded as the
weakest link in the power value chain, do
you think the government should give it
out on concession basis, or totally
privatise it?
I can only give my opinion, and I think
typically the transmission system is weak
and probably could have been privatised
earlier simply because that is the weakest
link and it takes the most investment. I
think that Manitoba Hydro is gone away;
now, the TCN is back in the hands of the
government. I think the government needs
to take a look at how they are going to
fund the projects that are necessary to
strengthen the transmission network; even
when we generate our capacity of
1,320MW, we are not sure the system can
take that. And we are looking at doubling
the capacity of the plant in the next three
years. How are they going to take that?
The government has to take a hard look at
that.
Over the past three years, we have seen
capacity upgrade at Egbin, with the plant
now having available capacity of
1,320MW; what plans do you have going
forward?
We are going to continue to work to ensure
that we maintain the 1,320MW, and we just
completed the environmental impact
assessment for our phase two so that we
can double the capacity of Egbin. Our plan
is to have up to 3,000MW capacity in the
next three years.
Do you have any plans to diversify your
sources of fuel for the plant?
We already are doing that. We are looking
at using Low Pour Fuel Oil. We are looking
at using liquefied natural gas. We are
looking at several options so that we are
not depending upon the Nigerian Gas
Company, because of the constant attacks
on the pipelines. Nigeria needs power, even
if we have full capacity, the nation needs
over 10,000MW today. So, what we need to
do is to continue to work with our owners
and partners so that we can get fuel, and
then work with the TCN so that they can
take the power and get it to the nation.
Right now, we have got almost 820MW
stranded capacity that the nation needs.
Normal generation in Egbin is about
1,320MW. Currently, we are doing about
425MW, only 30 per cent of what we should
be generating simply because of gas. The
other side that we are having an issue with
is that the TCN cannot take the full amount
of power that we can generate. Right now,
the biggest issue is gas, and we don’t know
what the future is going to bring to us in
terms of gas supply.
On top of that, we are owed over N86bn by
the Federal Government; we have been
producing but we haven’t been paid for
almost six months. The last amount of
money that we got was about 16 per cent
of the total bill for the power that we
generated for the month.
What are the implications if the debt is not
settled as soon as possible?
We can’t continue to operate simply
because we don’t have the money to pay
for materials. We don’t have the money to
pay for repairs and we can’t continue to
pay our employers simply because we are
owed so much money. We have gone out to
banks and different financial entities to
borrow the money to continue to do
maintenance. You know for banks, the limit
is only so much and we have reached that
limit.
How has the exchange rate crisis affected
your operations?
When we bought the plant three years ago,
the exchange rate was N156 to the dollar.
Today, the bank rate is N310 to the dollar,
double of what it was then. This plant was
built 37 years ago by the Japanese. And to
do replacement and repairs, the foreign
exchange rate is double. So, where are you
going to find that? We are being paid in
naira, but almost everything that we pay for
is in dollars. So, the exchange rate is
significantly impacting our ability to
continue to operate as well and we are
looking to the government to assist us on
that, to come up with the solution for us to
do that. Also, the scarcity of the dollar to
be able to buy these spare parts and
continue to do maintenance is impacting us
tremendously.
But we, as a private company, have
continued to dig deep into our pocket, go to
our sister and parent companies to borrow
money that the banks can’t loan us to
continue to operate. But even so, if we
don’t get paid and if we don’t get gas, we
can’t continue to generate.
In terms of building power plants, we have
not seen a lot in the sector in the past few
years, why is this so?
It is a challenge because it requires huge
investment. You have to have the capital to
come in and build the power plant. A power
plant like Egbin will cost you $600 to $700
per megawatt to build and install. Where
are you going to find that much money, you
are talking about $1.7bn to build the plant?
That is a lot of investment. When you are
not getting paid and you are owed N86bn,
it is hard to attract investors in that kind of
marketplace.
The Central Bank of Nigeria recently gave
out intervention funds to power firms, what
has become of that?
They didn’t give it to us; what they paid to
some of the generation companies was
what they owed them. It wasn’t
guarantees; it wasn’t financing; it wasn’t
loans. It was simply the obligations that
they owed us; but then, we haven’t got any
money. We are still waiting for it.
What do you intend to achieve with the
Egbin plant in the next five years?
If we can continue to progress and move
forward, by addressing the fuel supply,
transmission and the liquidity issues, again
we are looking at generating up to
3,000MW in the next three years from this
plant alone. Right now, we currently provide
35 per cent of the power in Nigeria. That is
a big step. Nigeria needs it and all we do
here is to generate power.
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