West Africa Rising: Why Indian firms are bidding to buy up Nigeria's decrepit electrical grid(Read article summary)
More than 200 companies – including India's Tata Group, New Jersey's Honeywell Energy, and Nigerian conglomerate Dangote Group – have signed up to own a rusty piece of Nigeria's grid.
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Nearly 1,000 bids have been placed by companies – some large, some small – looking to buy up one of the wonders of the modern world: Nigeria's electric grid.
A Gordian knot of high-voltage transition lines strung up half a century ago, the Power Holding Company of Nigeria is set to be untangled into 18 smaller for-profit-electric utilities. The newly reelected government hopes a bouquet of regional, for-profit power companies can keep the lights on longer than the few flickering hours a day Nigerians currently relish.
The grid being auctioned off is so decrepit its appraisal might as well take place on Antique Roadshow.
And yet, in a gesture of good faith in the African giant's future, more than 200 companies have signed up – including India's Tata Group, New Jersey's Honeywell Energy, and Nigerian conglomerate Dangote Group – each one on the short list to own a rusty piece of Nigeria's grid.
Indian firms make moves
In an earlier year, that list might have been dominated by Chinese state-run firms. And yet, conspicuously, the list is dominated by another Asian power – India – whose colonial history and power problems of its own may portend a rising role in Africa.
For those companies, Nigeria's energy grid could prove to be either the most lucrative or lunatic purchase since the state of Alaska.
And for Nigerians?
At stake: economic growth of 25 percent?
The country's economy would balloon by 25 percent if somebody – anybody – could offer its 150 million people a steady supply of electricity, he says.
But because politics has kept bills unreasonably low, he adds, the grid has enjoyed little investment.
Nigeria didn't build a single power plant in the last 20 years of the 20th century. It didn't maintain one either. Today, Africa's most-populous nation currently produces the same amount of electricity as New Hampshire. Alabama alone could power five Nigerias.
Two-thirds of the electricity used in the country comes from obnoxiously loud generators that cost a fortune to run, then break, then cost a fortune to fix.
But privatization won't come easy.
The people who sell generators and import fuel to power them will pose a threat to President Goodluck Jonathan's moves to privatize the sector, says Elizabeth Donnelly, Africa Program Manager at the London-based Chatham House think tank.
"This could potentially be a minefield," she says. "There are rather entrenched interests of Nigerians who don't want to see the sector sorted out."