Fact CheckEconomyHeadlineHomepage

Fact-checking Adeleke’s claim he provides 15% of Nigeria’s electricity

Getting your Trinity Audio player ready...

Claim: Adedeji Adeleke claims that he provides 15% of Nigeria’s electricity.

Fact-checking Adeleke’s claim he provides 15% of Nigeria's electricity

Full Text

One of Nigeria’s major challenges is constant power failure. Concerns over the country’s electricity problems heightened recently when the national grid collapsed three times in a week. Many Nigerians took to social media to express their displeasure over the development.

The country’s epileptic electricity supply comes despite prior announcements by Nigeria’s Minister of Power, Adebayo Adelabu, that the Federal Government was targeting the generation of 6,000 megawatts of power by the end of 2024.

Amid ongoing conversations around electricity in Nigeria, a video surfaced online showing Adedeji Adeleke, the billionaire father of popular music star David Adeleke (Davido), claiming he provides 15% of Nigeria’s electricity. 

Mr Adeleke also noted that he is about to expand his $2 billion investment in the power sector by building a 1,250-megawatt power plant called the Ajebandele power plant.

Once completed, the Ajebandele power plant will be the largest in the country. He also mentioned challenges faced by government officials during the construction of the power plant, which, according to him, contributed to the delays in its completion.

Shortly after his video went viral, many Nigerians praised the billionaire and expressed hope that further privatisation of the energy sector would lead to much-needed reforms.

However, Mr Adeleke’s claim that he provides 15% of Nigeria’s electricity has remained a subject of intense debate. Due to the topicality of the matter, DUBAWA decided to fact-check it. 

Verification 

Mr Adeleke is the group chairman and founder of Pacific Holdings Limited. The company operates two major power plants in Nigeria — the Olorunsogo and Omotosho I power companies located in Ogun and Ondo states, respectively. 

In November 2013, the Federal government privatised 11 electricity distribution companies (DISCOs) and six generating companies (GENCOs) but retained full ownership of the Transmission Company of Nigeria (TCN). 

This was done in a bid to improve efficiency and the overall electricity supply. Some of the GENCOs include Transcorp Power Limited, Shiroro Hydroelectric Power Station, Sapele Power Plc, Ughelli Power Plc, Geregu Power Plc, and Kainji Hydroelectric Power Station.

In 2014, the Bureau of Public Enterprises (BPE) announced that it had formally handed over Olorunsogo Power Plc to SEPCO-Pacific Partners, led by Mr Adeleke. According to reports, the power plant has a capacity of 335 MW and was constructed between 2002 and 2007 at a cost of $167 million.

This followed the acquisition of the Omotosho Power Plant earlier in 2013, which was sold to the China National Machinery and Equipment Import and Export Corporation (CMEC), with Adeleke serving as acting chairman at the time. Both power plants, now under Pacific Holdings Limited, have an installed capacity of 335 MW each.

In its 2023 annual report, the Nigerian Electricity Regulatory Commission (NERC) highlighted 31 licensed grid-connected power plants. This includes eight privatised plants, 11 independent power producers (IPPs), eight National Integrated Power Projects (NIPPs), and four concessions.

The following factors were used to gauge the operational performance of the electricity supply industry: Available generation, plant availability factor, total generation, generation load factor, and generation mix. In 2023, the average available generation capacity of the 27 grid-connected plants was 4,544.31 MW, rising to 28 plants in the Q2 2024 report.

Meanwhile, in terms of plant availability factor, the Olorunsogo and Omotosho plants operated under Pacific Holdings did not perform relatively well, with only 31% and 38% availability factors, respectively. 

Fact-checking Adeleke’s claim he provides 15% of Nigeria's electricity
Table depicting installed capacity and average available capacity for power plants in 2023. Source: NERC

Plant availability, as explained by the document, is the ratio of the plant’s maximum rated output declared by the operator (available capacity) relative to the maximum rated output specified by the manufacturer (installed capacity). 

For instance, the installed capacity for the Omotosho plant, as declared in the 2023 annual report, was 304 MW, but it had an average available capacity of only 117.95, while Olorunsogo trailed behind with an available capacity of just 95.18 despite an installed capacity of over 300MW.

During the period under review, the average availability factor for all grid-connected plants was just 35.90%, while about 64% of the NESI installed capacity was unavailable.

However, the report explained that the available capacity of a plant may change from time to time due to several factors, including the atmospheric conditions at the plant, the mechanical availability of the plant (planned and unplanned outages) and feedstock availability, among others. 

Regarding performance, the average share of generation output for the time under review showed that the Egbin power plant had the highest with 14.09%, followed by Kainji with 9%. Azura IPP, Delta GS, and Jebba power plants contributed about 8% each, while Olorunsogo and Omotosho power plants operated by Pacific Holdings contributed 2.27% and 2.74% respectively. Cumulatively, the generation output of both Olorunsogo and Omotosho does not amount to 15% on average, as Mr Adeleke claimed.  

Fact-checking Adeleke’s claim he provides 15% of Nigeria's electricity

For the first and second quarter of 2024, the Olorunsogo plant, with an installed capacity of 335 MV, had an average available capacity of 79.91 (Q1) and 79.53 (Q2) respectively while Omotosho plant had 84.59 (Q1) and 75.97 (Q2), both below 30% plant availability factor. 

As explained by NERC, “the plant availability factor (PAF) is a critical parameter for evaluating the overall health of the upstream segment of the NESI.”

The document, however, noted that both the Olorunsogo and Omotosho power plants are among the seven plants with very high load factors in Q1 and Q2. 

The load factor is simply a measure of how well a power plant’s available capacity is utilised in relation to the average electricity generated over a certain time to achieve the maximum possible generation. 

Nevertheless, subsequent reports on the NERC X’s handle have shown a consistent increase in the contribution of the Omotosho and Olorunsogo power plants. 

For instance, in August 2024, the average available capacity for Omotosho and Olorunsogo power plants increased to 120 MW and 134 MW, respectively, with an installed capacity of 335 MW each. 

However, Egbin ST, Delta GS, Kainji, Zungeru, Afam VI, Odukpani, Shiroro, Jebba, Okpai, and Azura IPP remained the largest energy producers for the period.

Fact-checking Adeleke’s claim he provides 15% of Nigeria's electricity
Operational performance of power plants in August 2024. Source: NERC.

Based on the information available on the Omotosho and Olorunsogo power plants, Mr Adeleke’s claim cannot be said to be true. 

Note that in 2022, the Bureau of Public Enterprise announced that 16 firms were bidding to privatise five National Integrated Power Projects (NIPPs) in the country. 

These include the 434 megawatts Geregu II gas-fired plant in Kogi, the 451MW Omotosho II plant in Ondo, and the 750MW Olorunsogo II plant in Ogun State; the 563MW Odukpami power plant in Calabar, Cross River State, and the 451MW Benin-Ihovbor plant in Edo State.

Information from the BPE showed that Pacific Energy Limited was one of the bidders. 

While the power minister had said the federal government concluded the sale of the power plants, details as to which companies finally secured the deals have not been made public.

Speaking on the development, Dayo Kunle, an energy financial expert, explained factors to consider before determining what Adeleke’s power plants contribute to Nigeria’s electricity sector.

He told DUBAWA that evaluating the performance of thermal power plants depends on several factors, including the type and quality of the turbine. The energy financial expert noted that the technical status of turbines, whether they operate on an open or combined cycle, is crucial.

According to him, another major factor is the quality of natural gas supplied to the turbines. Mr Kunle said poor gas quality hinders performance, which is a common issue in Nigeria, where many thermal power plants fail to operate at optimal levels due to subpar gas. 

He also said the volume of gas is important, adding that if the turbine receives less gas than required, it cannot run efficiently, leading to underutilisation and impacting both the turbine’s performance and lifespan.

Regarding Adeleke’s claim that he generates 15 per cent of Nigeria’s electricity needs, Mr Kunle noted that the billionaire businessman did not clearly differentiate between the installed capacity and available capacity of his power plants.

He added: “Adeleke’s claim is not about whether he’s saying the truth or not. It will depend on how many turbines he has. How many turbines does the Olorunsogo Phase 1 have? Who were the manufacturers of those turbines, and if he has enough volume of gas and qualitative gas, maybe he’s bringing out more than 50% of installed capacity. Same with Omotosho in Ondo. That may be what he added to arrive at his conclusion. 

“Another thing about Nigeria is that there is capacity and output. If a power plant is 375 MW, if the agreement with the government is that I’ll charge that 375 MW whether it produces or not, that’s a capacity charge, while output charge means if it is only 100MW that comes out per day, that’s what you’ll pay me.”

The energy financial expert, however, explained that Azura altered the investment banking framework with its power purchase agreement in 2015. Mr Kunle said under the agreement, the federal government provided a guarantee for capacity charges, meaning that even if Azura generates only 100MW out of its over 400 MW capacity, payment is still made for the full 400MW. He added this guarantee was based on capacity, not the actual power produced.

“Maybe Adeleke is talking about capacity. Probably, that’s what he added up to make his ratio. What is the actual amount they claim from the Nigerian Bulk Electricity Trading (NBET)? Is he claiming capacity templates or what they produce? They should tell us what type of agreement they have. We know Azura has an agreement guaranteed by FG and World Bank to collect capacity charges,” he concluded.

Conclusion 

Available data indicates that Adeleke has significantly contributed to Nigeria’s electricity sector. However, the claim that he provides 15% of the electricity consumed by Nigerians is inaccurate.

Show More

Related Articles

Leave a Reply

Back to top button
Translate »