Trial and Tenacity: After a 10-Year Slack, Bart Nnaji’s Electricity Project Gets a New Spark

After a decade-long stagnation forced upon it by bureaucratic and political intrigues in the privatization of the Nigerian power sector, former minister, Bart Nnaji’s electricity development company, Geometric Power, is on the rebound. Nnaji told Awka Times that his firm is set to launch operations to transform power supply in its Aba (Abia State) franchise area, and hopes from there to explore opportunities elsewhere in Nigeria. He also said he is putting his gubernatorial aspiration aside for now to focus on his power sector project.

By Chudi Okoye

It happened again on Wednesday, July 20th. Nigeria suffered once more a precipitate power outage following yet another collapse of the country’s cranky electricity grid. It was the sixth system failure this year alone, and about the 140th since the Nigerian government began to implement the privatization of the power sector a decade ago. Nigerian homes, offices and businesses pay a hefty ₦876.6 billion a year in electricity bills, with the tariff seemingly hiked every six months or so, but it feels as if they are paying for recurrent darkness. The economic costs of the constant brownouts and blackouts are almost incalculable.

Nigeria lags behind all the countries in its population cohort in terms of electricity production. It produces just 5% Brazil’s output, 11% of Indonesia’s, and 21% of Pakistan’s. It’s not just these countries. Nigeria also plays second fiddle to some African countries. It produces only 12% of South Africa’s electricity output; 15% of Egypt’s; and 37% of Algeria’s. In a 2020 ranking of countries in terms of electricity production, the ‘giant of Africa’ came in 70th, far below South Africa (21st), Egypt (23rd) and Algeria (41st).

Nigeria’s challenges with power generation are all the more astonishing considering the provenance. The country got its first power generating plant installed – in the city of Lagos – more than a century ago, in 1896. The first electric utility company, known as the Nigerian Electricity Supply Company, was established in 1929. Yet, in many parts of Nigeria electricity, or a stable supply of it, remains little more than a dream.

Foray into Disarray
Nigeria’s epileptic power supply persists not for want of a reform agenda. There have been many efforts to reform the sector, many initiatives to fix the country’s notorious power supply problem. But many well-meaning protagonists involved in the process have come unstuck. One such player is Prof Bart Nnaji, the Enugu-born, world-acclaimed engineer, inventor and innovator who marked his birthday recently – he turned 66 on July 13, 2022 – and is staging a comeback in the Nigerian power sector, after nearly a decade in limbo.

Bart Nnaji has been hoping to help revamp the Nigerian power sector for the better part of two decades. He’s done so in various capacities. In 2000, along with joint venture partner Renatech International and US technical partner Cummins Power Generation, Nnaji’s company Geometric Power built and managed a 15-megawatt emergency power station in Abuja. The plant came on stream on November 7, 2001 and supplied power to the State House, the Abuja Central Business District and the headquarters of the Nigerian National Petroleum Corporation (NNPC), among other places, for 30 months without interruption. It was quite impressive.

Nnaji once served as president of the Independent Power Producers Association of Nigeria (IPPAN). He also served as Chairman Presidential Task Force on Power (June 2010 – July 2011), doubling as Special Adviser to the President on Power.

Fresh from his presidential adviser stint, Nnaji was picked as Minister for Power in President Goodluck Jonathan’s administration (from July 2011 to Aug. 2012), having had an earlier stint as Science and Technology minister (Aug. to Nov. 1993). Nnaji had picked up the power portfolio with zest and an ambitious plan for a transformation of the Nigerian electricity sector. However, the usual Nigerian syndrome – bureaucratic and political intrigue – hampered his efforts. In fact things got so touchy at one point that the urbane and self-effacing minister chose to resign his position, walking away from the privatization program he had been leading.

When Prof Nnaji resigned, there had been speculation in the media about ‘conflict of interest’ concerns since a firm in which Nnaji had a stake was bidding for some power companies that the government was selling off at the time. However, his stake in the company had not been unknown to the authorities, and it was widely reported in the media. More likely the issue arose because Nnaji had upset powerful interests with the privatization program and they decided to stop him.

Prof Nnaji told Awka Times that he had been concerned that the privatization program had occasioned the parceling off of national assets to private interests who did not have the requisite technical or financial capability to operate the newly privatized companies. He left, he says, because he “wasn’t going to be part of that.” A spokesman for Prof Nnaji added that the former minister had been the “lone voice in the wilderness protesting against the manner [in which] national assets were [being cornered] in the name of privatization,” and that he had upset some vested interests by speaking out. These interests, as reported in the media, included former heads of state and powerful businessmen, and reached into the presidency, precisely to the office of the then vice-president.

When Nnaji resigned his ministerial appointment in August 2012, the London Economist wrote a rueful article titled “A bright spark is extinguished”. The magazine said the ex-minister had been at “[war] with the vice-president, Namadi Sambo, who owns companies with interests in the public power sector,” and noted that this “may have hastened his departure.” The Economist’s headline was a clever construction; it was a double entendre which spoke to Nnaji’s nudged exit as well as the precarious prospects for President Jonathan’s “vaunted” power sector reform which the magazine argued was “flagging”.

The chaos that persists in the Nigerian power sector today, a decade after Nnaji’s exit, probably justifies the Economist’s dismal prognostication. Even though there has been some improvement, power supply remains spasmodic. There is still uneven supply across the country, with disproportionate provision in state capitals and industrial centres compared to rural areas, and more in the South than in the North. There remains also the problem of stranded assets and under-utilized capacity, with wide gaps between power generation, transmission and distribution. Ten years on, the privatization of the power sector in Nigeria has not delivered the expected dividends.

Privatization of Chaos
The privatization program had been long on the cards following a process earlier initiated by the Obasanjo administration which culminated in the Electric Power Sector Reform Act of 2005. The reform became necessary after decades of extreme underperformance by the government’s power parastatal, National Electric Power Authority (NEPA, which Nigerians gave the humorous backronym: “Never Expect Power Always”). There was still no improvement even after NEPA was converted into a public limited company known as NEPA Plc (which Nigerians then dubbed: “No Electrical Power at All; Please Light Candle”).

The 2005 Act transformed NEPA into the Power Holding Company of Nigeria (PHCN), and set up a goal of unbundling the entire electricity value chain. It split the system into discrete spheres of electricity generation, transmission, bulk trading, distribution and regulation, to be operated by separate successor entities. This resulted in the creation of six generation companies (GenCos), 11 distribution companies (DisCos), and a national power transmission company. The intent was to see a gradual withdrawal of the government from the power sector in order to improve service delivery and ensure a wider and more stable supply of electricity across the country. The privatization of PHCN’s successor companies was undertaken over the period 2012 to 2013.

The privatization process remains incomplete, however. The power sector retains a wild and complex mix of government, quasi-public and private sector ownership. Transmission and bulk trading remain wholly under federal government ownership. Two of the GenCos are still owned by government but have been under concession to private operators. The other GenCos are privately owned, though they retain pockets of federal and sub-national government ownership as well. Even in the DisCos which supply electricity to homes, businesses and industries, the government still retains about 40% to 49% equity.

After a decade of partial privatization, the record of performance is not the least bit impressive. The unbundling of the transitional PHCN (which the ever-inventive Nigerians had christened “Please Hold a Candle Now”) was not without hitches. Its partially privatized successors have had mixed results. Whereas the privatized and concessioned power generating plants do not seem to be faring too badly, those under joint private and public ownership are struggling. There’s reporting that they are incurring heavy losses.

Another weak link in the value chain is at the level of the distribution companies, the DisCos. Several of them are not commercially viable, laden with debt arising from unpaid bills by end-users – one estimate indicated a loss of about ₦258 billion in just 11 months of unpaid bills in 2021, the bulk the bills owed by government agencies, departments and ministries. The government continues to pour money into these entities through loans which are unrecoverable and subsidy regimes riddled with inefficiency and corruption.

The weakest link in the electricity supply chain in Nigeria is the government-owned transmission grid, located in Osogbo, Osun State and managed by the Transmission Company of Nigeria (TCN). It is old, clunky, ill-maintained and grossly inadequate to met today’s challenges. No wonder it fails so frequently. Awka Times gathered that whilst on his ministerial post Bart Nnaji had been working on developing a super grid of 765kV which would have been a vast improvement on the current 132kV and 330kV lines which are prone to disturbances and outages.

Prof Nnaji believes the continuing crisis in the power supply sector owes at least in part to the stalled progress towards sector reform, especially the manner in which the privatization of PHCN’s successor companies was carried out. It might all have turned out differently had not the former power minister been forced to exit so abruptly.

Exit and “Witch-hunt”
Although Bart Nnaji had chosen to leave his ministerial post without any fuss, it did not prevent the authorities from subjecting him to the usual Nigerian “witch-hunt,” according to a source close to the ex-minister. As though his quiet departure were not enough, the authorities turned on companies in which the ex-minister was thought to have an interest. In one poignant case, the government announced a unilateral termination of a $23.7-million management contract which TCN had signed with a Canadian electricity corporation, Manitoba Hydro International (MHI), mistakenly believing that Nnaji had a stake in the firm. Manitoba Hydro is a provincial Crown Corporation owned since 1961 by the Province of Manitoba in Canada. It appears this was not known to government bureaucrats and politicians in Nigeria. Nnaji would be informed later, Awka Times learned, that the government had sent an emissary to Canada to investigate the ownership of MHI. There have been reports of issues with the technical competence of the Canadian corporation as well as its financial health. However, according to Nnaji’s spokesman, the presumption against the ex-minister as to ownership showed “the extent the government went to deal with Bart.” Eventually, the Nigerian government reversed its cancellation of the MHI contract, but this came after international condemnation of the action.

The authorities also targeted the private enterprise in which Nnaji actually had an interest, Geometric Power Limited, which he had founded in 2000 as Nigeria’s first independent power transmission company.

In April 2005 the old NEPA had reached a lease agreement with Aba Power Ltd (APL), a subsidiary of Prof Nnaji’s Geometric Power, giving the latter an exclusive license to operate the Aba ring-fenced area in Abia State.

The decision to build the Aba power project was rather fortuitous. The seed had been planted in 2004 when Dr. Ngozi Okonjo-Iweala, then Nigeria’s Finance Minister (and current Director General of the World Trade Organization), was touring the bustling but electricity-challenged Ariara Market in Aba with World Bank president, James Wolfensohn. Okonjo-Iweala and her guest appealed to Nnaji to consider building a power generation plant to service the iconic market.

Nnaji welcomed the suggestion, and initiated a process that culminated in the 2005 agreement with NEPA. However in 2013, as the power sector privatization program got underway, the Bureau of Public Enterprises (BPE), under the direction of vice-president Sambo – and in violation of privatization guidelines as the media reported at the time – unilaterally granted an electricity distribution license to the Enugu Electricity Distribution Company (EEDC) in which businessman Emeka Offor’s company, Interstate Electric, had acquired a 60% equity. The license covered all the five South-eastern states, thus overlapping the exclusive Aba ring-fenced area which the government had already granted to APL. The government thus created a conflict between the two licenses.

The conflict was a major blow to Geometric Power. Nnaji’s spokesman told Awka Times that the company had invested “millions of dollars” in the Aba ring-fenced area hoping to turn it into a model franchise with a consistent supply of electricity. Despite repeated reminders sent to the government to honor the existing GP/APL license, and even with a supporting court order, the Jonathan administration would not budge. It fell to the Buhari administration finally to resolve the issue. Following a long process of enquiry, Geometric Power finally regained control of the Aba ring-fenced area in February this year.

Commenting on the resolution, Nnaji said that “the [Jonathan] government sold what was rightfully ours to the people who acquired EEDC. So, they simply bundled Aba as part of EEDC. It was done knowingly. That is why we went to court, and we’re grateful this administration resolved the issues,” he said.

At an event scheduled for the hand-over to Geometric, BPE’s director general, Alex Okoh, said he was pleased that the “right thing was done”, and specifically praised Prof Nnaji’s tenacity: “I am pleased to announce that we are handing over this asset to a tenacious, very, very tenacious investor who has made a firm commitment to transform the Aba Ring Fence area into a model electric supply franchise, providing quality, stable and appropriately priced electricity to consumers, thereby unlocking the significant economic benefits of this commercial and industrial hub of the regional and national economy.”

Reset and Recovery
Prof Nnaji says his company has incurred huge costs to get back on track. According to him, Geometric had to pay Interstate Electric and EEDC about $26 million to recover the Aba assets, a 120% premium on the $11.8 million originally paid for the assets. Geometric drew down on a $50m facility from the African Export-Import Bank (Afreximbank) to make the payment.

Geometric’s new operation, which Awka Times learned is currently running at a cost of $600 million, is scheduled to be commissioned later this year. The company says its goal is to provide steady, quality and affordable power to Aba City as well as nine of the 17 local government areas in Abia State.

The Aba Power project is now at about 95% completion, according to Nnaji. The company says it has also refurbished, upgraded and modernized three old power substations inherited from the PHCN. Work has been completed on about 150-kilometre overhead power lines installed by ABB Powerlines, while rehabilitation work is being completed on four brand new power substations. In addition, Oilserv Ltd, an indigenous petroleum pipeline building firm, has completed a 27-kilometre natural gas pipeline from the Shell flow-station at Owaza in Ukwa West Local Government Area of Abia State to Osisioma Industrial Estate, where Geometric Power is located. Finally, three thermal turbines built by General Electric which Geometric had sent to the United States for maintenance, are back and have been reinstalled. Afreximbank had insisted on a re-certification of the turbines which had been lying fallow for long. Nnaji told Awka Times that it cost the company $8 million to complete the turbine re-certification.

Everything seems nearly set for the commissioning of Prof Nnaji’s Geometric Power project in Aba later this year.

Politics Can Wait
A resurgent Geometric is returning to its founding dream of becoming a major player in the transformation of the Nigerian power sector. For Prof Bart Nnaji, this is an all-consuming passion, a far stronger pull apparently than the tug of politics.

Earlier this year, it was reported that a group known as the New Enugu Coalition for Good Governance had secured an expression of interest form for Nnaji urging him to run for governorship in Enugu State, on the platform of the Peoples Democratic Party (PDP). Another group, the Association of Enugu State Young Professionals, also urging the former minister to run, has argued that the emergence of Nnaji in Enugu alongside Governor Chukwuma Soludo in Anambra State would catalyze the South East zone, turning it into one of the fastest growing economies in the world, as it had been in the First Republic.

It is uncertain however if Prof Nnaji will run in 2023. The ex-minister told Awka Times that he is putting any political quest aside for now to concentrate on realizing his dream for Geometric Power. “I believe my contribution to Nigeria is to build an effective and efficient power sector in the country,” he declared. Nnaji said he hopes to operate the Aba franchise as a model and eventually to target other opportunities in the South East and South South, and probably beyond. Nnaji also hopes that the Nigerian power sector will be further privatized, and that current license holders across the value chain will be willing to dilute their holdings in order to attract investment and expertise, particularly from global sources, that will drive operational efficiencies.

Asked to comment on the 2023 presidential field in terms of prospects for the power sector, Prof Nnaji told Awka Times that he was sure that Peter Obi of the Labor Party would do everything he can to strengthen the private sector and also to attract international investors. He also believes that PDP flag-bearer Atiku Abubakar might strengthen the private sector. He said however that he wasn’t too sure what Bola Tinubu of the All Progressives Congress might do.

After a decade of trial and tenacity, Prof Bart Nnaji’s Geometric Power is back on track and has a new spark. If the company delivers, its Aba franchise could yet become a model for the rest of Nigeria. Perhaps like the Sun itself, a template for stable electric light can yet rise from the East.