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Nigeria targets 1,268MW from new power plants

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Eight brown and green field hydropower projects built through public-private partnerships are expected to yield 1,268 megawatts of electricity, according to the Nigerian government.

It was learned that the Federal Executive Council had authorised the concession of one of the power projects, while three other power projects had already been awarded to concessionaires.

According to a February 2024 document that our correspondent was able to receive from the Federal Ministry of Water Resources and Sanitation in Abuja on Friday, three of the hydroelectric projects had already been finished, while the remaining five were in varying states of completion.

Prof. Joseph Utsev, Minister of Water Resources and Sanitation, delivered the document to the National Council on Water Resources and Sanitation during its thirty-first regular meeting.

With a population of more than 200 million, the nation has struggled with inadequate power generation and supply, with energy companies producing and distributing between 3,000MW and 4,000MW.

With a combined production of 1,338 megawatts, the Kainji and Jebba hydroelectric dams, operated by Mainstream Energy, provide approximately 33% of Nigeria’s current electricity generation of 4,000 megawatts.

The government has been investing in hydropower plants, which are powered by water turbines instead of gas, to help alleviate the situation. Since January of this year, the appalling state of the electricity supply has gotten worse as gas suppliers to gas-fired thermal power plants have stopped supplying the product to the plants because of the $1.3 billion in debt that the electricity producing facilities owe.

In a recent ministry presentation, the minister of water resources said that significant advancements in brown and green field hydropower production through public-private partnerships had been made.

“We have conclusively concessioned some projects while still developing others through various PPP models itemised as follows: concession of the 40MW Dadinkowa Hydropower Project in Gombe State. We have attained financial closure, and the plant is operational, thereby, stabilising the transmission voltage of the North-East of Nigeria.

“Concession of the 30MW Gurara Hydropower Plant in Kaduna State up to financial closure and the plant, which is under rehabilitation, will commence commercial operation in the third quarter of the year 2024.

“Concession of the 40MW Kashimbila Hydropower Plant in Taraba State. The Federal Executive Council approval has been secured, the concession agreement executed and the commencement fee paid by the concessionaire to the special concession account as approved by the Federal Ministry of Finance Budget and National Planning,” Utsev said.

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Ethiopia might devalue currency to secure IMF loan

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Ethiopia may need to decide on a big currency devaluation soon to get a rescue loan from the International Monetary Fund (IMF).

In December, East Africa’s most populous country went bankrupt, making it the third African country in as many years to not pay its debts. The country already had high inflation.

Ethiopia hasn’t gotten any money from the IMF since 2020, and its last loan deal with the fund fell through in 2021. In late 2022, the federal government and a rebellious regional authority made a deal to end a cold war that had been going on for two years.

Although the IMF has not said that currency reform is necessary for its backing, it however maintained that progress was made during its most recent visit. However, the Fund usually favours flexible, market-determined exchange rates. Ethiopia has requested $3.5 billion of support from the IMF, sources told Reuters last year.

The birr currently trades at between 117 and 120 per dollar on the black market, which is more than double the official rate of about 56.7. This is because there is a constant lack of foreign cash and the exchange rate is tightly controlled.

“It seems that the Ethiopian authorities have found accepting the demands of the IMF hard,” said Abdulmenan Mohammed, an Ethiopian economic analyst based in Britain.

“The Ethiopian authorities are worried about the devaluation of the birr, (which) would have serious negative economic repercussions, including soaring inflation… and surging foreign currency denominated debts in terms of birr.”

Early in 2021, Ethiopia asked the G20’s Common Framework to restructure its debt. This was set up in response to the COVID-19 pandemic to include new creditor countries like China and India. Other African countries like Tunisia and Zambia also suffered a similar fate with their foreign debt at the time.

As of the end of March, Ethiopia’s foreign debt totals $28.2 billion. According to Boston University’s Chinese Loans to Africa Database, the country’s biggest bilateral creditor, China, agreed to stop collecting its debts in August 2023. From 2006 to 2022, China promised to give the country $14 billion.

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Nigerian govt to save N1.5tn from removal of electricity subsidy

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The Nigerian government says a recent increase in the price of electricity for Band A customers to N1.5tn means it could save more this year.

The government also said that about 2.5 million meters would be installed this year to close the metering gap across the country and make sure that people pay the right amount for electricity.

The Federal Ministry of Power, in a document made public by Bolaji Tunji, who is the media assistant to the power minister, on Wednesday evening said that the recent tariff change would save the country N1.5tn.

It said, “FG (Federal Government) to save N1.5tn with tariff adjustment. FG still subsidising Bands below A. Pricing change will help improve liquidity to the NESI (Nigeria Electricity Supply Industry).

“Discos (power distribution companies) will be sanctioned for supplying less than 20 hours to Band A consumers.”

Electrical consumers in the Band A group, which makes up about 15% of the country’s 12.82 million power users, no longer get any subsidies on their bills. Those affected would now pay N225 per kilowatt-hour, which is about 240% more than the old rate of N68/kWh.

In reaction, manufacturers and organized labour spoke out against the tariff increase that about 1.9 million consumers will have to pay. The increase was passed and announced by the Federal Government on April 3, 2024.

For the past few months, the terrible state of the electricity supply has gotten even worse because gas producers to gas-fired thermal power plants have stopped sending gas to those plants because they owe $1.3 billion in debt.

Meanwhile, the argument around subsidies of essential products and services in Africa remains active with some analysts positing that the earning power and GDP of most countries in the continent puncture the likely gains of a no-subsidy regime, given the lack of economic means by a large percentage of the public.

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