Letters of credit (L/Cs) will make sure that Nigeria's long-term and very large scale plans to develop a reliable power generation and transmission grid stay on track according to a government minister.

A total of US$7.3 billion is committed to the construction of power plants across the country under the country's National Integrated Power Project (NIPP), which will take 25 years to roll out completely.

Strategy change

Despite its plentiful oil and gas stocks, Nigeria has never managed to install and maintain a reliable power generation and transmission system.

The National Electric Power Authority (NEPA), which had been the state-owned agency responsible for generation, distribution and transmission, was generally considered inefficient and has been replaced by the Power Holding Company of Nigeria (PHCN).

Under pressure

It is driving the government reforms of the power sector, a process that involves most state-owned interests in the electricity services industry being divested and an increased participation of privately-owned contractors in the sector.

Nigeria's minister of power, Liyel Imoke, is currently under pressure over high levels of expenditure and the probity of contract management under the NIPP, but he appears convinced that L/Cs will ensure that contracts in the project will ensure that contractors deliver what they promise.

L/C milestones

"L/Cs were opened by us and could only been drawn on based on milestones. It would be unbelievable to say that contractors who haven't been to site have drawn 100 per cent. If so, there are questions that must be asked," he says.

Imkoke sees "no reason why a project with a L/C should not be delivered" and says that under these arrangements, there is "no excuse for non-performance".

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