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ENRON-AES Lagos Power Project Takes Off  (Posted 24th Jul, 2001) Tell your friends about this page! Email it to them.

July 9, in Lagos an exhibition of contemporary Nigerian art was staged to mark the take off of the controversial Enron power project. The project actually started generating its first electricity of 60 megawatts by the third week of June more than a year-and-a-half after the "emergency" power barges of the American company first arrived Nigeria in December 1999. In the event, for eleven months the power barges had been marooned on the waters of the Lagos lagoon. A victim of political brinkmanship between the various interested Nigerian Governments and the politicians that run them.

On one side is the Bola Tinubu administration in Lagos state, Enron´s major backer and client while on the other side is the federal government of President Olusegun Obasanjo, who belongs to rival Peoples Democratic Party, PDP.

The Enron project had been primarily aimed at breaking the monopoly of the inept federal government-owned National Electric Power Authority, NEPA. Initial disagreement between Enron and NEPA centred on the pricing of the power to be generated by the American Company. Enron's initial quote of N8.50 per kilowatt/hour was considered too high by NEPA, although the national power utility itself generates at over N10 per unit but sells at a little over N4.00per unit with government supposedly subsiding the difference. For reasons of expediency Enron has had to depend on NEPA to reach its final consumer. Reason NEPA owns all the existing transmission network. 

Since Enron had to rely on its supposed competitor to reach the final consumer of its generated power in Lagos the stage was set for some intrigues. Quite naturally NEPA did not take kindly to an upstart trying to challenge its monopoly position on its own home turf. More so, the Obasanjo administration and political strategists of the PDP were also concerned that the success of Enron in Lagos would build valuable political capital for the rival Alliance for Democracy, AD-run government of the state.

Thus the stage was set for another round of political filibustering and horse-trading before eventually the Obasanjo administration gave the go-ahead for NEPA-Enron co-operation. The Tinubu administration, on its part, had to bend over backwards to save the project by agreeing to shoulder the difference between the Enron price of N8.50 and the NEPA offer price of N3.80 per k/h. The cost subsidy would cost the state government N120 million per month or N1.44 billion per annum. However to further reduce cost, Enron resorted to use natural gas rather than diesel as initially planned. The power barges had to be retrofitted to utilise gas, which is cheaper by at least 40 per cent.

Nonetheless while the stand-off lasted, another significant development took place. Ownership of the project changed hands. Enron sold the project to another American Company, AES. Enron obviously, known world wide for its successes in handing such power projects in numerous developing countries round the world including the political manoeuvrings that go with them, simply could not endure the Nigeria stand- off any longer. In the deal concluded last December Enron sold its 95 percent interest for AES for $200 million, according to AES plant and business manager in Lagos, Norman Bell.

Inspite of the sale, the power project continued to be known to the public as the Enron project. AES had however retained Enron as the technical contractor to complete the project. Early this year installation of the power barges started apace at the NEPA facility at Egbin about 100 kilometers north of Lagos. Three times thereafter the project missed planned take off dates, the first being the end of March. Dennis Skipper Enron general manager attributed the disappointment in May to the delay occasioned by the turnaround maintenance of the gas facilities of the Nigerian Gas Company, NGC from where Enron was to get its gas supply.

Now with the successful test-run of the power facility, Bell says AES now wants to be known as the actual owners of the project and not Enron. According to him, AES intends to increase capacity to 270 megawatts by this December. Two 30-mw plants are expected to be operational this month bringing capacity to 120mw. The second phase of the project is planned to have a capacity of 548mw but that is still a bit far into the future. What seems paramount now is getting the power being generated presently to alleviate the burden of blackout-weary Lagosians.

Editor's Note: The ENRON-AES Power Project  started generating 270 Megawatts from  week beginning 25-11-01.

Editor's Note:  is now know as Power Holding Company of Nigeria, PHCN, from 2005


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