Presented at: The 9 th CII EXIM Bank Conclave on India – Africa Project Partnership, Taj Palace, New Delhi India. Keynote Address by: Engr. Beks Dagogo-Jack FNSE Chairman, Presidential Task Force on Power Member, Presidential Action Committee on Power Federal Republic of Nigeria th March 2013 PTFP

Outline  The Reform Agenda  Timeline & Introduction  Delivery of Reform Milestones.  Service Delivery.  Current and Prospective Opportunities (in the Nigerian Electricity Market)  Generation  Transmission  Off-Grid  Other  The Political Will  Reconstitution of PACP  Outstanding Milestones  Role of the PTFP Presidential Task Force on Power2

The Reform Agenda: Timeline & Introduction Before Power Sector Reform:  Vertically integrated government-owned monopoly entities in the power value chain.  Growing inefficiencies and leakages; annual capital drain from the federal budget  Uncoordinated investments in generation, transmission and distribution.  Huge widening gaps between demand & supply ; massive industry flight leading to worsening unemployment.  High suppressed demand throughout Nigeria Presidential Task Force on Power3

The Reform Agenda: Timeline & Introduction The Power Sector Reform has two broad missions : Service Delivery : Relying mostly on the completion of the new NIPP projects & the recovery of installed capacities in the up, mid and downstream, grow the availability, supply and reliability of electricity in Nigeria to an acceptable short term level during the divestment. Reform: Move the sector from the position of government ownership/management of the assets to a private-sector driven Nigerian Electricity Supply Industry in line with the EPSR Act Presidential Task Force on Power4

The Reform Agenda: Timeline & Introduction Presidential Task Force on Power5 Presidential Road Map on Power – a short history. Pre – May 2010  The Electric Power Sector Reform Act enacted ( EPSRA 2005 ).  NEPA unbundled into Successor companies with PHCN as the holding company  Nigerian Electricity Regulatory Commission NERC created.  A multi-billion dollar National Integrated Power Projects ( NIPP) started and later stalled  Reform stalls until President Goodluck Jonathan assumes office in May Post – May 2010  President Jonathan chooses Power as one of his cardinal programmes.  The stalled NIPP program resumes in earnest.  President Jonathan inaugurates the Presidential Task Force on Power & the Presidential Action Committee on Power.  President Jonathan launches the Nigeria Power Sector Reform RoadMap in August 2010.

The Reform Agenda: Delivery of Reform Milestones Presidential Task Force on Power6 Milestones from RoadMap 2010Achievement 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % þ Establishment of cost-reflective tariff GGGGGGGGGG þ Establishment/ operationalising the Nigerian Bulk Trader GGGGGGGGGG þ Provision of FGN Credit Enhancement to the Bulk Trader GGGGGGGG þ Operationalizing the NELMCO GGGGGGGGGG þ Reconstitution of NERC to strengthen regulatory regime GGGGGGGGGG þ Substantial increase in quantum of power delivered AAAAAAAAA þ Ensure that power supply is steady and predictable GGGGGGGG þ Double the Aug-10 power supply by Dec-13 AAAAAAA þ Engage Management Contractor for the TCN GGGGGGGGGG þ Execute privatisation of generation and distribution assets GGGGGGGGGG þ Resolve labour issues associated with divesture AAAAAAAA þ Implement a framework to guarantee increased gas supply GGGGGGGG þ Implement the Emergency Gas Plan (short term) GGGGGGG þ Develop and launch National Gas Master-plan AAA þ Develop implementation framework for strategic energy mix R RSignificant issues. AMinor issues GNegligible issues

The Reform Agenda: Service Delivery Presidential Task Force on Power7

Current & Prospective Opportunities: Generation Presidential Task Force on Power8 Power projection is underpinned by several MoUs with the following organisations. General Electric Facilitating and promoting private sector investment up to 10,000MW Siemens AG Facilitating and promoting private sector investment up to 10,000MW Electrobras Facilitating and promoting private sector investment up to 10,000MW Daewoo Facilitating the development, financing, procurement, manufacture, commissioning and operations of 10,000MW EDF/ETDE Promoting power sector investments by sponsoring feasibility studies for approved projects. Multilateral G-to-G Agency Support Promoting the development of small / medium hydro- power plants as embedded generation for rural communities

Current & Prospective Opportunities: Generation Presidential Task Force on Power9 Privatisation of NDPHC Power Plants 10 medium-sized power generation plants under construction by government – rated to produce 4771 MW of power – to be privatised after completion of construction program. 6 plants to be completed by 2013; remaining 4 by 2014 Development of IPPs 3 IPPS currently active in country – date pre-Reform Project-finance IPP development pipeline now well in progress. PPAs with government-backed electricity buyer Securitisation with World Bank Partial Risk Guarantee program under development Captive & Embedded Generation Small IPPs dedicated to captive clients. Power plants sited at Free Trade Zones and various Industrial Zones/ Parks around the country. “NERC Regulation on Embedded Generation 2012“ defines market rules for selling power to (soon-to-be- divested) Electricity Distribution Companies “NERC Regulation for IEDN 2012” defines market rules for setting up an Independent Electricity Distribution Network

Current & Prospective Opportunities: Transmission Presidential Task Force on Power10 Contractor-Financed Infrastructure The transmission network will require significant investment to keep pace with the expected growth of the soon-to-be-privatised generation and distribution power sectors. For the next 5 years, approximately 1 to 1.5 Bn USD will be required per annum to turn the grid from the current weak radial system to the robust mesh network presented below. Financing models being currently investigated include EPC contractor-financed infrastructure where investment will be paid back over a pre- determined period of time upon completion and handover of transmission asset to the government- owned Transmission Company of Nigeria (TCN). Framework to be established 2013-Q2 to allow for important network gap-closure projects to begin in 2014 for 2016 delivery

TO SAKETE ONITSHA KAINJI JEBBA/GS JEBBA/TS SHIRORO Ikeja Akure Uyo Birnin Kebbi Minna Kaduna Abuja Jos Bauchi Gombe Damaturu Maiduguri Kano IIorin Ado Ekiti Enugu Akwa Ibadan Sokoto Gusau Katsina Hadejia Jalingo Yola Abakaliki Calabar JIGAWA KANO KATSINA SOKOTO ZAMFARA KEBBI KWARA KADUNA NIGER NASSARAWA TARABA YOBE PLATEAU EBONYI CROSS RIVER OSUN BAYELSA EDO DELTA ONDO OYO IMO ADAMAWA BORNO GOMBE BAUCHI EKITI LAGOS ATLANTIC OCEAN NIGER REPUBLIC OF BENIN REPUBLIC OF CAMEROON REPUBLIC OF CHAD SAPELE P/ST. DELTA POWER ST. OGUN Osogbo NIGERIA Potiskum Niamey 132 kV Mambila Bali AFAM POWER ST. Asaba Benin EGBIN P/ST. Lokoja ABUJA AJAOKUTA Lafia Makurdi MAKURDI BENUE KOGI ENUGU Aliade ABIA AKWA IBOM Owerri AN AMBRA Port Harcourt RIVERS Umuahia TRANSMISSION LINE LEGEND BULK SUPPLY POINT HYDROELECTRIC POWER STATION THERMAL POWER STATIONS 330 KV H 330KV LINES (EXISTING) – MULTIPLE CIRCUITS 330KV LINES - EXISTING KV LINES (FGN) – MULTIPLE CIRCUITS 330KV LINES (PROPOSED PROJECT) – MULTIPLE CIRCUITS 330KV LINES (NIPP) – MULTIPLE CIRCUITS 330KV LINES - FGN 330KV LINES - NIPP 330KV LINES - PROPOSED PROJECT 2 ALAGBADO Abeokuta Olorunso go Existing (2012) 330 kV Radial Grid 11 Weak system with high risk of collapse ~60% total load ~50% total generation Northern Region Low Generation Poor Voltage Profile MW transfer ability (Est. 5,630 MW) Limited hydro generation

TO SAKETE ONITSHA KAINJI JEBBA/GS JEBBA/TS SHIRORO Ikeja Akure Uyo Birnin Kebbi Minna Kaduna Abuja Jos Bauchi Gombe Damaturu Maiduguri Kano IIorin Ado Ekiti Enugu Akwa Ibadan Gusau Hadejia Jalingo Yola Abakaliki Calabar JIGAWA KANO KATSINA ZAMFARA KEBBI KWARA KADUNA NIGER NASSARAWA TARABA YOBE PLATEAU EBONYI CROSS RIVER OSUN BAYELSA EDO DELTA ONDO OYO IMO ADAMAWA BORNO GOMBE BAUCHI EKITI LAGOS ATLANTIC OCEAN REPUBLIC OF BENIN REPUBLIC OF CAMEROON SAPELE P/ST. DELTA POWER ST. OGUN Osogbo NIGERIA Potiskum Niamey 132 kV Mambila Bali AFAM POWER ST. Asaba Benin EGBIN P/ST. Lokoja ABUJA AJAOKUTA Lafia Makurdi MAKURDI BENUE KOGI ENUGU Aliade ABIA AKWA IBOM Owerri AN AMBRA Port Harcourt RIVERS Umuahia ALAGBADO Abeokuta 2 Olorunsogo TRANSMISSION LINE LEGEND BULK SUPPLY POINT HYDROELECTRIC POWER STATION THERMAL POWER STATIONS 330 KV H 330KV LINES (EXISTING) – MULTIPLE CIRCUITS 330KV LINES - EXISTING KV LINES (FGN) – MULTIPLE CIRCUITS 330KV LINES (PROPOSED PROJECT) – MULTIPLE CIRCUITS 330KV LINES (NIPP) – MULTIPLE CIRCUITS 330KV LINES - FGN 330KV LINES - NIPP 330KV LINES - PROPOSED PROJECT 2 12 MESH GRID STRUCTURE BY 2020 Improved northern voltage Many major loops improve reliability MW capacity (Est. 28,000 MW) Sokoto 330KV LINES - PROPOSED PROJECT UNDER STUDY 4 4

Current & Prospective Opportunities: Off-grid Presidential Task Force on Power13 Background Remote and off-grid projects are to be implemented in locations where it is technically and commercially unviable to implement grid extension projects The Rural Electrification Agency (REA) was established in 2006, via EPSR Act Historically was involved in In March 2012, in conjunction with MDGs a baseline data survey was commenced for the 774 Local Government Areas. The survey has concluded and collected information on: Grid reach; Functionality of power supply; Status and quality of power supply; Energy payment Off-Grid Generation Pre-feasibility & feasibility studies for remote and off- grid locations. Load profiles & forecasts for remote and off-grid locations. Development of commercial framework for implementation of remote and off-grid power. Funding and technical support for pilot project implementation. Staff training.

Current & Prospective Opportunities: Market Services Presidential Task Force on Power14 Training/ NAPTIN The un-bundling of the Power Holding Company of Nigeria has aggregated all previous training services into a single body National Power Training Institute of Nigeria (NAPTIN). This body has a well-defined footprint of facilities across the country but no monopoly. Opportunities exist to either partner with NAPTIN or set up training facilities independently in anticipation of private-sector requirements Technical Support Services/ EMS Similarly affected in the unbundling were the common technical support services – such as meter testing and certification. These services have been brought together into a new company Electricity Management Services (EMS). Like NAPTIN there is the advantage of incumbency but no monopoly, providing opportunities to: either partner with EMS, or develop independent companies providing support services in a growing and competitive private-sector power market

Current & Prospective Opportunities: Market Services Presidential Task Force on Power15 Products and Services PTFP is co-sponsoring 2013 NIGERIA POWER SECTOR INVESTOR SUMMIT: “Connecting Investors to Emerging Opportunities in Nigeria's Privatised Power Sector” Eko Hotel & Suites, Lagos, Nigeria, September , 2013 “….a gathering of investors to explore potential commercial opportunities in Nigeria’s privatized power sector; discuss policies guiding the sector and discover government programmes that support private investment in the sector. It is anticipated that the soon-to-be concluded privatisation process will increase competition in the Power sector, which will make the eventual owners of the power companies to focus on their core businesses and outsource the non-core businesses.” Technical Consultancy and Advisory 11 Distribution Companies and 7 Generating Companies are being privatised. Requirements for specialist technical and engineering needs: Technical studies: distribution network performance studies; Software/MIS: Customer Relationship Management Technical/ non-power training.

Political Will: Reconstitution of PACP/PTFP Sep-2012 Presidential Task Force on Power16 “One Leadership, One Sector, One Mission” the imperatives of which are laid out below: ONE LEADERSHIP ONE SECTOR Policy Consistency & Programme Control Federal Ministry of Power Hon. Minister of Power Political Will & Mandate Presidential Action Committee on Power (PACP) Mr. President ONE MISSION Performance Management for Timely Delivery of Roadmap Targets Presidential Task Force on Power (PTFP) Chairman Mandate  Reform of the Sector in line with the provisions of the EPSR Act of 2005  Monitor the performance of the MDAs charged with the day-to-day responsibility for ensuring that Service Delivery levels remain “steady and relatively predictable” and that there is a “noticeable increase” in the average number of hours of electricity supplied to consumers.

Political Will: Outstanding Milestones Presidential Task Force on Power17 Current Status of Outstanding Reform Milestones as at Sep 2012 Achievement Divestment of Successor Companies 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % þ Conclude on Preferred Bidders GGGGGGGGGG þ Sign Share-Sale Agreements GGGGGGGGGG þ Conclude Negotiations with Preferred Bidders AAAAAAAA þ Payment of 25% Share Purchase Price GG þ Conclude on Labour issues associated with Divestment AAAAAAAAA þ Receive full 100% Payment & Handover Conditions Precedent to Transition Electricity Market 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % þ Sign Industry Agreements - GSAs, GTAs, PPAs, Vesting Contracts GGGGGGGGGG þ System Operations: Systems and Processes implemented GGGGGGG þ Ring-fence System Operations and Market Operations G þ Adequate (Grid) Metering GGGGGGGG þ Testing and Implementation of Settlement System GGGGGGGGG þ Update of Grid Code and Market Rules A RSignificant issues. AMinor issues GNo issues

Political Will: Role of PTFP Presidential Task Force on Power18 By the end of 2013, the majority of components of the Power Sector Reform are expected to be completed. At which time, the PTFP’s job would be essentially completed: “Delivering The Reform”. At this point, The Nigerian Electricity Market will be a commercially-focused, contract- driven market led principally by private sector participants. The Government would have withdrawn from its traditional roles to focus on the critical roles of Policy and Regulation In this year, 2013, the work of the PTFP is as critical as ever as it is necessary that the infant market starts off in the right direction. The PTFP is currently conducting a review of the original RoadMap to assess what was achieved, to record what was learnt and to propose a path for the Power Sector into 2020 ensuring that what was started will be sustained.

Thank You 19 PTFP