The Niger Delta Power Holding Company is set to unlock its long-idle power plants by selling electricity directly to eligible customers at cost-reflective tariffs, opening a new channel for its underutilised capacity, DARE OLAWIN reports
With over 2,000 megawatts of stranded power, the Niger Delta Power Holding Company is making efforts to end its years of dormancy by engaging in direct sales of power to bulk electricity users. The Managing Director/Chief Executive Officer of NDPHC, Jennifer Adighije, sees this as the only channel out of the company’s liquidity crisis and other challenges.
For years, Nigerians remained in darkness in many parts of the country as the power plants under the supervision of the Niger Delta Power Holding Company of Nigeria struggled to generate 1,000 megawatts of electricity despite having an installed capacity of over 4,000 MW.
Various reports by the Nigerian Electricity Regulatory Commission showed over the years that the Ihovbor 2 power plant solely operated at 97 per cent of its capacity, generating 449 MW of its 461 MW capacity. It was observed that other power plants operated far below 50 per cent of their installed capacity, leaving Nigerians in the dark. It was gathered from various NERC reports that the power plants had remained underutilised even as the government struggled to ramp up power generation.
For instance, the 500 MW Alaoji 1 power plant did not generate a single watt for many months. Similarly, the Olorunsogo 2 power plant had an installed capacity of 750 MW, but it produced far below expectation. For several months, the Sapele 1 power plant generated about 23 MW out of its 720 MW capacity. The Sapele 2 power plant generated 105 MW, which is 21 per cent of its 500 MW capacity. Also, Omotosho 2 was able to add a paltry 21 MW to the national grid despite having a 500 MW capacity. Ihovbor 1 is another power plant with 500 MW, but it generated 17 per cent of its capacity.
Speaking on the matter recently, the media aide to the Minister of Power, Bolaji Tunji, told our correspondent that different factors were responsible for the problems facing the NDPHC, adding that the company could generate more power, but there was a lack of commercial value to do so. According to Tunji, consumers were not paying for electricity consumed, the Federal Government was not paying subsidies, and the distribution companies were not taking additional power.
“NDPHC can generate more than 1,000 MW. They have an additional capacity of over 800 MW. The reason they cannot generate more is the lack of commercial value in generating additional power. The energy that is currently being generated is not being paid for by consumers, and the government is also not providing the required subsidy payments. The distribution companies are also not willing to take on additional energy, as they do not have a cost-reflective tariff outside of Band A,” he said.
Tunji stressed that every additional KW is a loss when they supply non-Band A customers.
“Until we resolve to have a good commercial tariff downstream, it will be difficult to generate more energy than our current level,” he said.
Tackling liquidity challenges
When she assumed office a year ago, Adighije said she was confronted with the liquidity challenges and devised ways of tackling them.
“When we came, we encountered an acute liquidity crisis, primarily caused by the overwhelming debt owed by key market players and some of our cross-border customers. When I took over, the company was burdened with substantial unpaid invoices, resulting in severe cash flow limitations that threatened our capacity to sustain operations. In addition to the debt burden, there were longstanding operational inefficiencies, dormant generation assets, and weakened stakeholder confidence in NDPHC’s capacity, credibility, and industry relevance. To address these challenges, we took a multi-pronged approach. On the commercial side, we began the process of restructuring our power sales strategy, moving toward bilateral contracts with eligible customers,” she said.
Adighije explained that the power firm under her watch has initiated conversations around embedded and bilateral power solutions to ensure that where evacuation through the national grid is constrained, it can explore alternatives to serve its eligible customers directly. According to her, it is unsustainable to rely solely on the centralised electricity market, which she said continues to be plagued by chronic revenue shortfalls, market defaults, sector-wide uncertainties and persistent liquidity crises.
To reverse that trend, she said her team has initiated a gradual but deliberate shift towards bilateral power sales as a more commercially viable pathway. She noted that large and creditworthy customers are being identified as eligible customers, though the power purchase agreement requires the nod of the regulator.
“Over the past year, we have made meaningful progress in identifying and engaging large, creditworthy electricity consumers who qualify as eligible customers under the NERC framework. We are working to establish bilateral agreements that allow NDPHC to sell power directly to these customers at cost-reflective tariffs. This approach is aimed at enhancing our revenue base, improving liquidity, and insulating the company from the inefficiencies of the centralised market. We have prioritised bilateral power sales as a strategic alternative, targeting creditworthy eligible customers who can pay cost-reflective tariffs directly to us,” she said.
The managing director’s efforts appear to be yielding the desired results with the response from the Manufacturers Association of Nigeria in Kano. However, it was observed that the Discos were not pleased that customers would now dump them to transact business directly with NDPHC. But experts said this is the only way through which the power firm would end its liquidity challenge and get enough resources to revive its dormant assets.
In Kano, members of the Manufacturers Association of Nigeria in the state indicated their readiness to bypass the utility companies for direct power supply from NDPHC, saying this would address the severe power challenges crippling local manufacturing activities in the state. The delegation, led by the Managing Director of Dala Foods, Kano, Ali Madugu, requested direct power purchase from the power company. Madugu appealed to the NDPHC managing director to extend the company’s Eligible Customer Programme to MAN members in Kano “to address the severe power challenges crippling local manufacturing activities in the state.”
But the plan by Kano manufacturers to buy electricity directly from NDPHC generated discord between them and the Kano Electricity Distribution Plc, which expressed disappointment over what it called the “consistent antagonism from the Manufacturers Association of Nigeria, Kano Branch, despite sustained efforts to provide them with a stable power supply and exclusive discounts to the tune of N3bn over the past 12 months.”
Recently, the company stated that it plans to free and commercialise approximately 200 MW of its 2,000 MW stranded electricity by the end of 2025. The company said it signed new power purchase agreements with eligible off-takers and traders amid low power off-take by the distribution companies.
Adighije stated that the agreements, currently awaiting regulatory approval, are part of a broader strategy to unlock stranded capacity, improve liquidity, and ensure the commercial sustainability of the government-owned generation company. The NDPHC boss had, in May, bemoaned what she called the “abysmally low uptake of electricity“ from the electricity market by the electricity distribution companies, saying this significantly weighed down the company’s operations.
Adighije said, “Now that we’re also improving our mechanical availability, we can significantly improve on the commercialisation of our stranded electricity. The Electricity Act has also empowered us to go into successful bilaterals with bankable customers, off-takers, and traders, and I can tell you that we have already signed some PPAs with some traders and some off-takers, which are before the regulator for approval. I’m sure you know that for us to activate those transactions, we will need the regulator’s approval. The process is already ongoing. So, before the end of the year, we should be able to commercialise about 200 MW of our stranded electricity. This is awaiting the approval of the Nigerian Electricity Regulatory Commission as we speak.”
Challenge with NBET
As part of the liquidity challenge, the company said in May that the Nigeria Bulk Electricity Trading Plc and other bilateral entities owed it close to N600bn, thereby hindering the company’s operations. It was stated that the company had made several attempts to enter into a power purchase agreement with the Nigerian Bulk Electricity Trading, which would have improved NDPHC’s merit order in the dispatch priority schedule, but to no avail. This has reportedly impacted the company very negatively financially and further exacerbated the stranded capacity of the company.
“Currently, NDPHC is placed in the least priority bucket for dispatch in spite of its available daily dispatch capacity of about 2,000 MW. By no small measure, NDPHC owns the largest fleet of generating turbine units in the sector; conversely, much of that capacity remains stranded due to these impediments that constrain the company from generating optimally,” the company noted.
625 MW added to the grid
In the past year, the new NDPHC management disclosed that it had worked assiduously to resuscitate five turbine units across the Calabar, Omotosho, Sapele, and Ihovbor power plants that were erstwhile offline. The plants, she said, now contribute an additional 625 megawatts to the national grid.
The MD explained that when she came into office, she undertook a comprehensive audit and technical assessment of NDPHC’s generation assets and discovered that several of the power plants were either in bad shape or grossly underused. The reasons, she said, ranged from poor operations and maintenance practices, procurement delays, and persistent gas supply issues to transmission constraints that were left unaddressed for too long.
“Notably, prior to August 2024, power plants such as Ihovbor, Alaoji, and Omotosho NIPP were recording plant availability factors below five per cent. This was a significant waste of national resources and missed opportunities in improving power supply and revenue generation. In response, we initiated a strategic intervention targeting recovery of idle turbine units. This included engaging the original equipment manufacturers and parts suppliers and building an in-house response team in partnership with service providers to provide a quick response to facilitate recovery and avert downtime while also harnessing commercial relationships with gas suppliers to secure a stable gas supply to the power plants. The result is that we have successfully recovered five generating turbine units across the fleet, restoring 625 megawatts to active contribution to the national grid.
“This has contributed to an increase in the available megawatts for national consumption and improved asset utilisation. Alaoji Power Plant, which had hitherto remained dormant for an extended period, is now set to come on stream in a matter of weeks. NDPHC has been able to contribute an additional 625 MW to the national grid. This incremental capacity comes largely from Calabar, Omotosho, and Sapele with 125 MW each, while Ihovbor added 250 MW,” she said.
The NDPHC boss added that the firm had successfully tackled key constraints, most notably gas supply and evacuation limitations, by collaborating strategically to ease the bottlenecks.
As a result, thousands of households have directly benefited from various distribution electrification projects executed by NDPHC, including grid extensions, substations, feeders, spans of lines and standalone solar home systems.
Looking forward, Adighije re-echoed the importance of commercial sustainability, ensuring the financial viability of NDPHC. She promised, “In the coming year, we will intensify our commercial drive by aggressively pursuing bilateral power sales to eligible customers. Project completion, asset optimisation, and renewable energy are also key. Our focus remains firmly on completing critical NIPP generation and transmission projects, notably the Egbema plant and the full integration of the Alaoji plant, while simultaneously driving the technical and commercial optimisation of our existing assets.”
In conclusion, NDPHC’s move into direct power sales marks a turning point in its long struggle with dormant assets and stranded capacity. By reviving idle plants, securing bilateral agreements, and targeting creditworthy customers, the firm is edging closer to financial stability and greater relevance in Nigeria’s power sector. Still, its progress will depend on regulatory approval, tariff reforms, and its ability to navigate opposition from distribution companies, factors that will ultimately determine whether the company can sustain this momentum. To ensure lasting impact, NDPHC should prioritise asset optimisation by reviving more dormant plants and securing a steady gas supply, while also expanding partnerships with manufacturers and industrial clusters to guarantee reliable off-takers. NERC needs to fast-track approvals for bilateral agreements and review tariff structures to make them more cost-reflective. At the same time, NBET must clear outstanding debts to ease the firm’s liquidity strain. Together, these steps will strengthen NDPHC’s commercial sustainability and enhance its role in stabilising Nigeria’s power sector.
