Survey: Stakeholders proffer solution to Nigeria’s power challenge

 

 

Stakeholders in the power say the involvement of more credible investors and alignment among players were key to resolving Nigeria’s energy crisis.

The stakeholders made the input in a survey conducted by the News Agency of Nigeria (NAN) in Lagos on problems and challenges of power generation and distribution in the country.

They said the Generating Companies (Gencos), the Transmission Company of Nigeria (TCN) and the 11 Distribution Companies ( Discos) need to collaborate on how to improve power supply in the country.

According to the Manufacturers Association of Nigeria (MAN), the nation loses about N7.5 trillion annually to irregular electricity supply, with about 17 million small and medium scale businesses spending over N2 trillion annually in running generating sets.

For a country with a population of over 180 million people, the less than 4,000MW of electricity being currently generated has remained a source of concern to stakeholders and the Federal Government which is vigorously pursuing reforms in the sector.

Mr Sunday Oduntan, Chairman, Association of Nigeria Electricity Distributors (ANED), told the News Agency of Nigeria (NAN) in Lagos that the blame game among the three layers in the electricity value chain must stop.

Oduntan said:” There is a value chain in electricity and wherever there is a value chain, it means that each layer is interdependent on each other.

“We have generation at the top, transmission in the middle and distribution below the value chain.

“I believe that there is a need for technical and commercial alignment of the value chain.

“That means if you are generating 10,000MW, you must be able to transmit that 10,000MW and also be able to distribute that 10,000MW to the end users. That is what we mean by technical alignment. ”

According to him, commercial alignment means that each of the layers has to be commercially viable.

“For the distribution, we are selling at the price that is less than the buying price.

“The cost of production is higher than what we are selling for electricity and that is why people are now calling for cost reflective tariff.

“It means selling at the cost that will reflect the cost of production which is appropriate pricing,” he noted.

Oduntan also claimed that the TCN could not wheel (transport) more than 5,500MW, adding that the desired result to attain 24-hour electricity in Nigeria would only be achieved by investment in power generation, transmission and distribution.

He said 25 out of the 28 power plants in Nigeria were thermal based which operate on gas, while the other three were hydro plants.

Oduntan said: “Most of the power plants are not able to produce to optimum because of gas constraints and majority of our source of power in this country is through gas.

“Egbin Power Plant in Ikorodu is the largest thermal power plant in West Africa  but has never produced to its optimum capacity because of gas constraints.

“In this case of generation, gas is an issue. For transmission, we have dilapidated infrastructure despite the investments so far which is making it difficult for them to wheel power and if they cannot wheel it, there is no way we (Discos) can get it.

“The distribution companies need to expand their distribution network. Why you cannot blame them too much is that their distribution capacity is 6,288MW while transmission can only do less than 5,500MW.”

Aligning with the ANED’s position, an energy expert, Dr Damola Omole, Head, Power and Energy Strategy, Dangote Industries, urged the government to urgently look into the issue of supply and cost of gas to the thermal power plants.

He also noted that there was need for alignment between the TCN and the Discos, stressing that over 2,000MW of electricity was not being supplied to the end users

According to him, Nigeria power sector loses between N1.5 billion to N2 billion daily in unrealised electricity revenue due to this lack of synergy between the layers in the value chain.

Omole said the situation had made Nigerians to rely on alternative means of power supply which cost N78 per kilowatt while supply from the grid was at N32 per kilowatt.

He said the implication of this on the manufacturing sector included reduced production, job losses, outright closure of factories or relocation to other African countries.

Suggesting a way forward, the energy expert warned against increasing tariff, noting that it would only amount to funding inefficiency.

Rather, he advised the government to intensify efforts to encourage more players to invest in the sector, distribution companies to minority stake and thereafter sell its major stake to more credible players.

“Consumers should be metered before effecting tariff increases as estimated billing is generally unfair, ” he added.

Similarly, Mr Sural Fadairo, President , Energy Consumer Rights and Responsibilities Initiative, blamed the distribution companies for failing to live up to their expectations.

Fadairo said: “These were companies who bided and were given approval to distribute electricity to Nigerians but have not been able to do so adequately, citing various excuses.

“From a consumer point of view, they have been exploiting Nigerians with estimated bills without commensurate supply of electricity and this needs to stop.

“They have been given deadline to provide meters to customers within their areas of operations but as we speak majority of them have not been metered.”

He said it would have been ideal for the government to revoke some of the discos licenses for poor performance,  stressing that this would however be difficult due to legal implications.

Fadairo said the decision by the government to invite more investors to the sector was a welcome development, noting that the new entrants must be companies with expertise, funding and integrity needed to pursue the reforms in the sector.(NAN)