In size and economic status, Nigeria under the pre and post independence time was rated as the giant of Africa. Sadly, its inability to generate power to unlock its economic potential tends to put such claims in doubt. In this report CHIKA IZUORIA and GEORGE OKOJIE write on options for revamping the nation’s power sector
In economies like those of Nigeria and other climes where a lot of potentials are waiting to be unlocked it is hardly surprising that so much emphasis is placed on power sector.
That is perhaps why keen observers of the Nigeria power sector are worried about the future of power generation and distribution in the country as the combination of present realities seems not to tilt towards the right direction or give the picture of what the people expected.
The federal government had on November 1, 2013 physically handed over 11 distribution companies to private investors but about five months after the widely celebrated exercise most of the new owners have yet to inject the needed funds and manpower into the network to improve their distribution capacity.
The whole exercise is gradually being turned into a comedy with the Discos still battling with technical losses, they claimed is responsible for their inability to distribute every megawatt received from the Transmission Company of Nigeria.
In fact observers have said the Discos are not deploying funds for infrastructural development, saying that is why there has been no improvement in power distribution. They said that about 20 per cent of the power sent to the Discos is not accounted for due to technical losses.
Need For Energy Efficiency Audit and Regulation
Amid unfulfilled promises from the power sector drivers the former minister of Power in Nigeria Professor Barth Nnaji said to achieve efficient electricity supply in the country there was need to conduct an audit into the power demand of the entire country just as Lagos State Government had done.
He said, “We cannot know the amount of power we need unless we do an audit. So, Lagos was right when it said it requires 10,000MW. If Lagos with a population of 20 million needs 10,000MW, you can imagine what Nigeria with about 170 million people needs. So, that means something has to be done.”
The former minister noted that the country would not be able to accelerate its socio-economic growth unless the power challenge was overcome, stressing that the top 20 countries of the world like China, which is currently the world’s largest producer of power, South Africa and Mexico among others generate power in excess of their demands.
Nnaji suggested further that proper alignment of the entire value chain of power generation, transmission and distribution, the development of emergency power system, increased partnership with Independent Power Plant (IPP) producers, the creation of necessary institutional frameworks and facilitation of an enabling environment would go a long way to accelerate power delivery to the state.
Ostensibly worried over laxity on regulation, Nnaji affirmed that there was need to establish strong institutions and regulations that would ensure continuity and protect the consumers and investors.
According to him, it has become imperative for the country to have a very strong regulator stressing that the Nigerian Electricity Regulatory Commission (NERC) is a very critical element in the power reform.
The former minister said only strong institutions similar to the ones in the telecommunication sector would guarantee the sustainability of the power reforms.
“What we wanted to do in the power reforms was to create those institutions and environment, whereby if we leave, they will continue to function. These are the kind of structures created in the telecom, so that if somebody comes today and wants to take away your phone, you will fight because you do not want to go back to those days you have to pay to get a line to your house. You are now a free mobile entity – you and your phone and your phone company.
“That is what we wanted to achieve but you can only achieve that through institutions – institutionalising the policies; institutionalising the reforms and NERC is a very critical element in this. It is really the institution that ensures that people, who are producing power conduct themselves in the way they are supposed to and that they do not price out the public,” he added.
Nnaji who noted the importance of NERC added that the regulator has to be strong and with the will to deliver and also advocated for the creation of economic clusters to ensure that power is delivered to the people.
“The best way, I personally, have seen in being able to deliver power reliably is to have economic clusters. If you have economic cluster, you try to deliver power reliably there and sort out all the problems there. Economic clusters are very important and you can create economic clusters within a distribution company,” he said.
Nnaji said there was nothing stopping Lagos State Government from creating economic clusters, adding that Agbara Estate, for instance, could be carved out as an economic cluster.
He stressed the need for a cost-reflective tariff to ensure that companies that generate power recoup their investment and make profit.
“If we are really serious about having electricity in Nigeria, then we must be able to have cost-reflective tariff, meaning a tariff that allows the person who is building power plant to recover his investment overtime and be able to make a small profit because power sector is not where you make huge profit,” he added.
Security Of Investment And Right Pricing
For the power sector overhaul to gain the confidence of the investors and consumers experts say there is need for security of investment and right pricing.
According to the Chairman of Falcon Petroleum Ltd., Mr Chima Ibeneche security of investment, right pricing and efficient usage of available electricity were critical considerations to accelerate the delivery of power to the people.
He said, “There should be efficiency in power generation and distribution in order to sustain the delivery of power in the country.
“The pricing must also be right otherwise power can be priced out of the reach of many consumers because if the price is not efficient, it can make downstream use of power uneconomic.
“Again, we will also need to ensure that regulatory and law enforcement agencies work together so that those who are making efforts and investment to bring power to Lagos or where ever they are investing in the country can ensure their revenue is delivered,” he said
The commissioner, rates and market competition, Nigeria Electricity Regulatory Commission (NERC), Mr Eyo Ekpo said to accelerate power delivery, there was need to remove all the impediments identified so far by the stakeholders.
He urged the state governments to consider tax incentives and other institutional reforms that could endear the private sector to invest in power opportunities in the state.
“Government can provide or acquire the land, facilitate right of ways for gas pipeline and transmission equipment, reduce taxes or give some kind of tax incentives. That is, enabling the private sector. All these can help to accelerate the delivery of power to the state,” he said.
Harping on the initiatives taken by the Lagos State government to accelerate the delivery of power to the state, the General Manager Lagos State Electricity Board Mrs Damilola Ogunbiyi said work was ongoing to set up a one-stop shop to fast-track the handling of all issues relating to right of way and power infrastructure development in the state.
She added that apart from the three functional power plants in Akute, Lagos Island and Alausa, work was ongoing on two other plants.
Ogunbiyi beckoned on the private sector for increased partnership with government to solve the power challenge in the country.
Embracing Embedded Power Project Option
As a way forward experts opined that embedded power project option will lead to regional power stability in the country.
Mr Oladele Amoda, chief executive officer, (EKEDC) said the embedded power production option if embraced could pull the magic wand if the states can adopt the option as well as ring fencing which his company, Geometric power, is doing in Eastern part of the country.
He said ring fencing optimises the cluster initiative and identify customers within the cluster arrangement.
The EKEDC boss maintained that it will soon embark on promoting the partnership arrangement with the private sector to tap into regional power promotion.
The company said this would largely free it from depending so much on supply from the national grid which is grossly inadequate.
He said the new measure would help bring into the system about 400 mega watts to boost supply around its network.
Eko Disco helmsman added that the national grid supply has recently dropped to an inconsequential level causing massive load-shedding and electricity rationing to consumers.
Amoda who gave details of the plan said the company has the capacity to receive about 700 mega watts of power from the grid but at the moment receives less than 250 mega watts leading to poor electricity supply to customers.
He said it was as a result of the lingering problem and bitter complaint from consumers coupled with its resolve to keep its commitment for better services that it is launching the embedded power supply initiative to its consumers within the next one year.
Amoda explained that the embedded programme is the electricity generating plant that is connected to the regional electricity distribution networks.
He added that the need for the embedded power generation is to avoid rationing electricity supply to consumers within the network, saying that would also save the zone from depending on the national grid.
“Under the embedded scheme, the energy supply control of the zone will not be subjected to grid manipulation or issue of incessant system collapse. The company is starting gradually to round up with about 400 mega watts embedded energy supply by next year.
“So many power companies have indicated interest to partner in the scheme under the Private Partnership Agreements (PPA) of which the zone will inform the Nigerian Electricity Regulation Agency (NERC) before rolling out the first embedded electricity generation into the system by July 2014.
“About 35 companies have so far obtained application form to partner with EKEDC on the embedded power supply, but it is looking up to 100 companies to key into the scheme” he said.
He said the company is also discussing with some big companies such as Flour mills, Honeywell and others who generates more than what they can use on captive power solution.
Curbing Jeopardy Of Vandals
While pledging the readiness of the private sector to support the government in its desire for an efficient power supply, the Sahara Power Managing Director, Mr Adesina submitted that the activities of vandals not only amounted to an economic crime, but a disservice to humanity.
He pointed out that once the supply of electricity was impaired due to their nefarious activities, millions of life suffered the adverse consequence.
Corroborating this line of thought, the Nigerian National Petroleum Executive Director for Gas and Power Dr David Ige said although the Federal Government has increased the availability of gas “astronomically” to ensure power stability in the last three years, the rapid bursting of gas pipelines has constituted a clog in the wheel of progress. He called for the cooperation of all stakeholders including the people to tackle the menace.
Ige said, “About three years ago, the total gas supply was three million cubits, but that has been tripled now to about one trillion cubits. We have grown gas supply astronomically but we have got to confront the activities of vandals who are frustrating government’s effort to ensure stable power supply. Whenever any of our gas pipelines is vandalized, about 30 per cent of our gas supply capacity is affected.’’
