X-RAYING FG’S NEW STRATEGIES FOR INCREMENTAL POWER SUPPLY - Soul 2 Soul Mates Blog

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1/14/2018

X-RAYING FG’S NEW STRATEGIES FOR INCREMENTAL POWER SUPPLY

X-RAYING FG’S NEW STRATEGIES FOR INCREMENTAL POWER SUPPLY
Speaking recently on the critical sectors under his watch, Minister of Power, Works and Housing Mr. Babatunde
Fashola, stated, “I am concerned about the development of Nigeria, not about the next election. Enduring development of Nigeria is what drives my decision about power; it is what drives my decision about roads and what drives my decisions about housing.”
Fashola said this while responding to questions during a television programme THISDAY monitored from Abuja. He said despite the fact that 2018 is a pre-election year and usually a time when government’s attention is primarily fixed on electioneering programmes, at the expense of real development programmes, his commitment to the sectors would remain intact. The minister promised to define the trajectory of Nigeria’s power sector in 2018.
Promise
From existing statistics, 2018 looks promising for the power sector. That is judging by efforts initiated in 2017, which are expected to advance power supply from the current year. Many analysts believe that a committed implementation of the Power Sector Recovery Programme – a plan initiated by the government with support from the World Bank to optimise the potentials of the power sector – could be a game changer for the sector. They, however, fear that the 2019 general election could be an upset to the full implementation of the PRSP.
PSRP to the Rescue
Considered a life saver for the ailing power sector, the PSRP can be described as the government’s trump card in its plan to restore the power market to both commercial and technical functionality. The series of policy actions embedded in the plan, many believe, would help Nigeria’s privatised electricity market get out of its current difficulties. The project promises to reset the way the electricity market operates and equally encourage diverse investments that would develop its potentials.
The government said it had embedded in the PSRP, “A series of policy actions, operational, governance and financial interventions” to be implemented over the next five years, and from which it hopes to restore the financial viability of the power market. Using the PSRP, the government would also seek to improve market transparency and service delivery, take up consumer satisfaction as priority, and reduce losses and energy theft recorded by the market. All these, it explained, would holistically add up, in the next five years, to deliver a brand new power market that would be responsive and responsible.

Starting from 2018, the government would be expected to use the PSRP to restore the financial viability of the power market, improve supply reliability, strengthen market’s governance, and most importantly, place a premium on transparency and contract-based market. Within the PSRP’s operational timeline of 2017 to 2021, the government said it would first commit to fund projected future sector deficits, as well as required market support measures until tariffs are adequate enough to support the market’s liquidity.
More Generation Capacity Expected
Supported by a N701 billion payment assurance provided by the Central Bank of Nigeria for the Nigerian Bulk Electricity Trading Plc to meet its obligations to generation companies, generation in 2017 grew and new peak records of 5,155.9MW and 5,222.3MW were reached on December 8 and 18, respectively. Similarly, it was reported that the country’s generation capacity rose to about 7000MW, and was stable above 4000MW even during the dry season when the reservoirs of the hydro plants are usually low on water levels.
In 2018, more generation capacity is expected.
Moreover, Nigeria’s first project-financed power plant – the 459MW capacity Azura-Edo power plant – began to generate electricity for the national grid from its first turbine, the 153MW capacity GT-11. The plant is expected to come to full generation, and add 459MW to the grid. Azura-Edo, which achieved its first power out seven months ahead of its projected delivery date, would complete its cycle of testing on the plant and fully supply its entire capacity by May 2018.
Other plants include the 40MW Kashimbila hydro power plant, the 240MW Afam fast power plant, 30MW Gurara Phase 1 hydro power plant, and 215MW Kaduna gas/LPG/diesel power plant.
If achieved, such improvement in generation could directly translate to more power supply to Nigerian homes and offices. It could also mean that homes and offices or industrial outfits would have to consume less of diesel and petrol to run their independent generating sets, while saving money on the running and repairs of the generators.
Power Distribution
But there is also the important factor of the ability of the distribution networks or companies to improve their capacities to take more power to their consumers, provide meters to end instances of unfair estimated tariffs, and perhaps conduct appropriate and factual enumeration of their customer base to determine cost reflective tariffs to be applied to their consumers.
To address these, Fashola, indicated that the government would in 2018 initiate a new policy expected to be driven by the Nigerian Electricity Regulatory Commission to keep the distribution networks in line with the operational trajectory of the sector. The minister disclosed that about 2000MW of electricity were left unused in the system following the inability of the Discos to pick up the loads, and subsequently asked manufacturing bases and industrial clusters across the country in need of electricity to take up the excess load through the eligible customers’ regulation the government signed off in 2017.
NERC has been reluctant to approve up to three circles of tariff reviews for the Discos due to the commission’s doubts about the indices used by the Discos to compute their tariffs, especially the sample size or population of customers in their network. It is expected that appropriate enumeration of electricity consumers in Nigeria would be conducted by NERC in 2018, to first establish the true basis for tariff calibration and subsequently cut down instances of electricity theft and loss of revenue.
Fashola had explained that it was impossible to have a fair tariff in an electricity market that has just about seven million households as its recognised customers out of Nigeria’s 180 million people. He added that proper consumers’ enumeration was required to establish the true basis for calibrating tariffs in the sector. He also noted that the Discos would have to improve on their deployment of meters to consumption points, and that until these were done, approving a cost reflective tariff for the market looked difficult.

According to the minister, “We need to do something with the entire value chain, from tariff to metering to energy conservation, consumer education, to payment of debts by ministries and departments and ordinary consumers, and all of these are contained in the power sector recovery programme.
“Tariff is important. My opinion as at today is that before we can review tariffs, we should increase metering, we should also increase consumer audit to actually properly dimension the economy and see whether the unit cost is understated or overstated. Because, if you have a market, an electricity market where seven million households are all that is in the database as consuming electricity in Nigeria, I am not sure that data is correct.”
Transmission
The change of guard at the Transmission Company of Nigeria has come with improvements on its work ethics and expansion drive. With a new head, Usman Gur Mohammed, who was seconded from the African Development Bank, the restructuring in the TCN has brought some improvements and standards in its projects’ planning and execution capacity.
Upon his resumption in 2017, Mohammed, who was initially resisted by the labour unions in the firm, reportedly instituted a good measure of appropriate corporate governance in the operations of the TCN. He also initiated and completed a financial audit of TCN’s account that were left unattended to for long and equally decentralized the process of decision-making to allow TCN’s regional segments act with some level of operational autonomy.
The TCN has gone on to revamp transmission projects that had been abandoned, and developed project-based work plan that has attracted some multilateral investments from the World Bank, AfDB, and Islamic Development Bank, among others. It equally developed a Transmission Rehabilitation and Expansion Programme, which would enable it prioritise and execute critical transmission projects across the country, as well as clear its stranded containers containing various transmission equipment at sea ports in Nigeria.

According to TCN, out of 759 containers abandoned by contractors at the sea ports within the last five years, 454 have been cleared with payment for 193 containers made while payment for the remaining 112 containers is still outstanding. The company stated that some of the containers cleared from the ports had been sent to its various project sites in Yola, Gulak, Katsina,Jos, Dambatta, Ganmo,  Abeokuta, Onitsha and Benin, as well as Odoguyan, Ede, Igangan, Okene, Walalambe, Akwanga, Kachia, Kumbotso and Kaduna.

However, TCN’s record of two system collapses in the early days of 2018 show that it still has a lot of work to do. Even though one of collapses was attributed to bush fire, the second that happened in the Odukpani end of its transmission network, means that Nigeria’s transmission network is still vulnerable to fluctuations, and would need to be fixed to guarantee stable transmission of power to distribution ends.
The TCN stated that it would in 2018 embark on key transmission projects, including the rehabilitation of some of its abandoned projects. It said through its TREP, which has attracted significant interest from several donors, like the World Bank that has put in $486 million, it has set out strategies for completing existing projects either through in-house capacity or through the fast tracking of existing contracts.
Mohammed told Fashola recently during the commissioning of a transmission facility, “Through this process, several transformers and substations will be completed in the first quarter of 2018. This substation reinforcement and many others you would commission between this month and March 2018, Honourable Minister, are part of the success of our new strategy in project implementation that significantly empowered the regional offices.”
He further explained, “As we commissioned many transformers in TCN, we have discovered that there are several transformer capacities all over the country that were constrained by transmission line limitation.

“TCN intends to embark on massive re-conductoring of transmission lines this year. This is expected to significantly increase the wheeling capacity of TCN (between 2,000MW to 3,000MW). TCN is already in discussion with World Bank to use the balance in NEGIP to procure the conductors.”
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