Manitoba Hydro takes on 28 million new African customers

(Photo: Jean Claude Moschetti/REA/Redux)

As Manitoba Hydro battles power outages caused by melting spring snow in Canada, overseas the Crown corporation is becoming one of Africa’s key power players. Most recently, subsidiary Manitoba Hydro International (MHI) won a $23.7-million contract to manage the Transmission Co. of Nigeria, the state-owned power utility. MHI has a three-year mandate to reorganize the company, move it toward profitability and prepare it for privatization.

Between government interference, political instability and labour strikes, doing business in Africa can be difficult. But MHI, created in 1985 to offer management and training services to foreign clients, has found a niche as a turnaround specialist, a kind of Dr. Phil for the power sector. With the Nigerian contract, it serves 28 million households, compared to 542,000 at home.

“The Transmission Co. of Nigeria, well, it’s pretty huge in terms of users,” says Arthur Melet, an analyst with IDC Energy Insights based in Dubai. The contract places MHI in a favourable position for winning future contracts in Nigeria, the continent’s second-largest economy.

MHI has already met with challenges, however. Although it first landed the contract last July, just as work was about to begin in September, CEO Don Priestman said MHI did not have authority to proceed. Then in November, Nigerian President Goodluck Jonathan announced the contract had been cancelled, saying the correct procedure wasn’t followed. The uncertainty continued until last month, when Transmission Co. CEO Olusola Akinniranye finally announced that MHI had “fully taken over the company.” Today, the handover is so fresh Manitoba Hydro spokesman Glenn Schneider says “the issue is sensitive” and that “no one is available authorized to comment.”

The Canadian company is engaged in a battle for the African power market as countries sell off state-owned utilities in an effort to upgrade their infrastructure. America’s Blackstone Group, China’s Sinohydro, Germany’s Siemens and Korea Electric Power Corp. are just some of the firms jostling to get in on the action.

Though Africa has 15% of the world’s population, it accounts for only 3% of energy consumption. Most sub-Saharan African countries have an electrification level under 30%. Excluding South Africa, the entire installed generation capacity of the region is 28 gigawatts, equivalent to that of Argentina. Experts see privatization as necessary to shift the continent’s economies from commodities and agriculture to industry.

“They’re going to have a difficult job,” Melet says of MHI’s Nigerian contract. But given the potential upside, it’s worth the trouble.