2013 year review on power
In the course of the year Nigeria experienced a mix grill of good and bad situation. Good because it marked a turning point in the anal of development of the power sector. While the bad aspect of this is that we continue experience blackout in most cities and towns.
Hand over
On November 1, 2013, Nigerians saw the historic hand-over of 14 out of the successor companies carved out of the defunct Power Holding Company of Nigeria (PHCN) by the federal government to private investors.
The nation recorded what was widely seen as a significant milestone as the private sector took over the nation’s power sector.
Nigeria’s power sector, which had operated for several decades as a state monopoly, with the federal government having the exclusive rights to own electricity generation, transmission and distribution facilities, is now being driven by private investors, whose entry is expected to revamp the sector and impact positively on the nation’s power supply.
Power plants Inauguration
In early October the president, Goodluck Jonathan, unveiled the brand new434 MW Geregu thermal plant in Kogi State. Before then, shortly after the government had handed over share certificates to those who had bought controlling stake in Power Holding Company of Nigeria.
The unveiling of Geregu was also followed by with the inauguration of the 500 megawatts Omotosho Power plant.
Gas Supply
The sector, over the years, has been bedevilled with the menace of gas supply shortages to power plants, sabotage and system collapse and limited transmission capacity, which still constitute a critical challenge to the private investors.
Nigerians had expressed high hopes of an end to incessant blackouts upon the entry of the private sector. But the hopes may have been punctured by the sudden downturn in power supply in many parts of the country few days after the hand-over.
Most Nigerians celebrated the Christmas without electricity, this is because the power situation has deteriorated with just a few cities and towns enjoying very little supplies.
Sources within the power industry said there would not be any appreciable improvement in power supply until end of b January when the fixing of the damaged Ecravos – warri pipelines would be completed.
Confirming the level of progress made so far on the repair works, Saidu Mohammed,managing director of the Nigerian Gas company said that his organisation is making efforts to see that the lines are fixed early enough. “You know that after the pipeline was bombed we discovered other points that have been vandalised.
The damaged pipeline has impacted heavily on the power plants cited in the western part of the Niger Delta region.
Just as the Nigerian Gas company as bout completing the new Escravos –Warri gas pipeline which would have increased the through put of the pipeline from one billion standard cubic feet of gas per day to two billion, it was bomber in June this year.
Before the bomb blast that damaged the pipeline the Nigerian Gas Company NGS was supplying 420 million standard feet of gas through the two pipelines .But since the incident the volume of gas supplies to the power plants has been reduced to 300 million standard cubic feet of gas which is distributed between the power sector and other industries. The stranded 120 million standard cubic feet of gas is capable of generating 400mw.
This means that 400 megawatts of electricity is lost daily due to the incident. A situation that has affected the generation capabilities of power plants like Egbin power plant which now generate between 500 and 600 megawatts as against it installed capacity of 1320 megawatts.
Funding
In the course of the year the African Development Bank (AfDB) has approved a (N29.4billion) $184.2 million loan to drive Nigeria’s power sector privatisation agenda, and a further $3.1 million to propel its vision 2020 power target of 40,000MW.
The Board of Directors of the AfDB group approved an African Development Fund (ADF) Partial Risk Guarantee (PRG) programme of 184.2 million dollars and an ADF loan of 3.1 million dollars for capacity building.
Retirement
The board of the Transmission Company of Nigeria fired its chief executive Officer, Don Priestman, and has appointed a new CEO to manage the firm.
No official reason was given for the termination of Priestman, it was suspected to be as result of internal wranglings in the agency.
The board of the TCN has approved the appointment of Mack Kast as the new managing director/ceo.
Assessing the developments in the industry, analysts described the entry of the private sector as the beginning of good thing to come, but adding that it is the staring point of a long-drawn journey fraught with pitfalls as the new owners may struggle to undo decades of rot in the electricity sector.
“It is pertinent to remember that this is really the ‘beginning of a journey’ and not the ‘end of a journey’ as some has mistaken it to be,” Atedo Peterside, chairman, technical committee, National Council on Privatisation had said.
While noting that the purpose of privatising the Discos and Gencos was not just to transfer ownership of the assets, Peterside stated that the primary purpose was to bring into play new owners with ‘deep pockets’ who could finance and/or access financing for the rapid restoration of lost capacity and/or add significantly new capacity to make up for decades of government neglect and mismanagement.
Apparently, Nigerians want to see the ‘rapid restoration’. But it is believe that the situation would only improve as soon as issues ranging from dilapidated equipment to inadequate generation capacity, gas supply and weak transmission are effectively addressed.
“Everyone who has been following this process would know that quick fixes should not be expected. These are indeed challenging times. What’s currently being experienced could be regarded as teething problems which every new comer to an industry, process or program, typically experiences.
“I know that NERC, BPE and the government are in talks with these investors to help mitigate some of the challenges they are facing,” said Ayodele Oni, an energy law and policy expert and senior associate in top law firm, Banwo & Ighodalo.
Oladiran Ajayi, energy expert and a senior associate with Templars law firm, said the handover to private investors was never going to be a silver bullet to solve electricity challenges or even to bring immediate returns to the investors.
“For improved power supply we will have to build up capacity on the generation side of the value chain. For a new power plant to come on stream, it will require a lead time of at least two years. So both the customers and Nigerians in general will have to wait sometime to see the results of the handover in tangible terms,” he said.
Nigeria, with a population of 170 million people, is estimated to need about 40,000 megawatts (MW) of electricity over the next decade, but currently has less than 6,000MW of available capacity.
By: OLUSOLA BELLO & FEMI ASU