Rebuilding a Struggling Utility in Nigeria

Last month, NRECA International signed a $10 million, five-year contract to take over the operation of a struggling distribution utility in the city of Aba, located in south-central Nigeria, and transform it into a profitable company that provides high-quality service to its customers.

The contract is with Geometric Power, a private company that NRECA International has worked with in the past, said Dan Waddle, senior vice president of NRECA International. The company, which is just now acquiring the rights to the utility, approached NRECA International about taking on the project.

More than 10 years ago in an effort to increase power access to its population, the government in Nigeria privatized the national utility resulting in 10 regional distribution companies. Today, these utilities are struggling, and are still unable to meet national goals.

The NRECA International team will face the daunting task of taking over a utility that before being acquired by Geometric Power, had been poorly run, had limited resources, and historically managed to collect payment from only about half of the approximately 165,000 households it serves.

“This is going to be an extremely challenging project,” Waddle said. “We’ll be taking over a distribution system that’s in a very poor state of affairs, with less resources than we’d like.”

When the work begins this spring, NRECA International will assign three full-time employees to the utility, supported by a technical team of 10 NRECA engineering, commercial and management specialists. The NRECA team will evaluate the training needs of the existing distribution utility team and design a program to build capacity and improve technical, commercial and customer-service skills.

“Our goal is to make it a high-functioning utility that provides quality service and makes a profit,” Waddle said. “This gives us an opportunity to determine how we can improve performance. It’s an important opportunity not just for us, but for the power sector.”

The Nigerian contract is the largest of about a half-dozen African contracts that NRECA International has been awarded in the last year, signaling longstanding leadership in the areas of utility development and operations in countries like Ethiopia, Liberia, Uganda and Haiti.

“We hope that this project in Nigeria results in a big win for the community in Aba and we can support our client to demonstrate how to achieve high quality of service and establish a financially self-sustaining distribution utility,” said Waddle.