Golden Penny Applies for Off-Grid Generation Licence to Build 57.2 MW Power Plant

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Ameenah Hassan

Golden Penny Power, a subsidiary of Golden Penny Foods, has applied to the Nigerian Electricity Regulatory Commission (NERC) to operate a 57.2 mega watts power plant at Wharf Road Apapa. The application has been made under Section 70 (c) of Nigeria’s Electric Power Sector Reform Act.

Golden Penny Power on Thursday 21 November 2024 published a notice informing the public of its application for an off-grid generation license in accordance with the provisions of NERC Application for Licenses Regulations 2010 and the Nigerian Electricity Regulatory Commission (Business Rules of the Commission) Regulations 2006. These provisions allow “persons” who may object to granting the licenses to Golden Penny Power to write and inform NERC of the reasons for the objection within 21 days.

NERC Had Approved Six Golden Penny Off Grid Gas Plants 100 MW in August 2024

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In August, 2024, the Nigerian Electricity Regulatory Commission had announced that it granted licenses to Golden Penny Power Limited to build six off-grid gas plants in Lagos, Oyo, Ogun, and Cross River states with a total capacity is 100MW. Licenses for off-grid electric power generations are issues to companies wishing to build electricity generation plants for their own use.

In 2023, President Tinubu signed the 2023 Electricity Act, replacing the 2005 Electricity and Power Sector Reform Act. The new law aims to increase electric power generation and supply in Nigeria by easing regulatory requirements for Nigeria’s 36 states and private firms to generate electricity. Since the last quarter of 2023, NERC has issued 15 off-grid power generation licenses.

Recipients of off-grid licenses include Daybreak Power Solutions, TIS Renewable Energy Limited, Auro Nigeria Private Limited, Watts Exchange Limited, Centum Dopemu Energy Services Ltd and DMD Electric Limited Lagos State.

The 2023 Electricity Act also allows states to grant licenses to generate and distribute electricity within their borders. Ekiti State in the Southwest of Nigeria in early November, 2024 issues licenses to 9 power generation and distribution companies to operate within the state. The state aims that the 9 firms will boost electricity supply within the state by 130 MW.

Can the 2023 Electricity Act and Proliferation of Off-Grid Generation Make a Difference?

Nigeria, with a population of approximately 230 million, has a grid power capacity of just 4,059 MW, a stark contrast to Texas, which serves a population of around 30 million with a grid capacity exceeding 80,000 MW—nearly 20 times that of Nigeria. Due to poor policy, underinvestment and deficient maintenance, Nigeria’s grid power capacity often collapses to below 2,500 MW.

Changes in regulations governing the Nigeria Electricity Supply Industry that allow companies like Golden Penny Power Limited and power firms to operate and distribute off-grid electricity within specified areas and Nigeria’s 36 states to license firms to build and operate mini-grids could help boost investment and power supply in Nigeria.

The regulatory changes will allow experimentation and “regulatory learning”. While it is true, as industry sources have argued, that states will struggle to attract the experts with the knowledge required to regulate electricity markets, some states that get it right will build models that work that other states and even NERC can emulate.

The politicisation of tariffs i.e. government leaning on NERC to keep costs to consumer lower than the cost of generating and distributing power has been the biggest disincentive to investment. States that stimulate investment with market-determined prices will test the extent to which the market i.e. consumers can support cost-reflective tariffs.

Larger and more efficient grids could develop. Manufacturers like Golden Penny are the biggest consumers of electricity and the consumers most able to pay for it in a market where “commercial loses” i.e. illegal connection or electricity theft is rife. Off-grid generation plants and mini-grids are less cost-efficient and their proliferation makes investment in power distribution companies less profitable. The experimentation with electricity markets regulation at the state level could see a combination of private firms who are now generating power for their own use selling more of the power into the state-wide grid and less number of firms relying on the state grid rather than build or expand their own power plants as pricing, investment and supply align and become more efficient. Nigeria’s contiguous and more prosperous states, e.g. Ogun and Lagos, could also harmonise regulation to attract investment and integrate their grids.

Over time, these developments could shift Nigeria’s power sector towards more efficient, market-driven solutions, reducing reliance on a failing national grid. Progress would however happen, not by Nigeria’s 36 states investing in power plants as commentators have often called for, but by smarter regulation that attracts investment and create incentives for as many consumers as possible to pay for grid electricity.

Ameenah Hassan

Ameenah Hassan is a content writer with experience in public relations. She has contributed to Arbiterz since 2021, writing research-based news and features on business. She is currently pursuing a degree in Mass Communication at the University of Lagos.