Stakeholders score power sector low in Transparency, efficiency

Stakeholders in the energy sector in their assessment of the operations of the power sector industry have scored the sector low in the area of transparency and efficiency in the year 2016.

They observed that the industry even after privatisation still grapples with poor plant maintenance, lack of adequate spare parts and vandalism of electric utilities, saying that there is the challenge of adverse macro-economic changes (devaluation of the Naira and inflation), gas pipeline vandalism, limited gas supply, regulatory uncertainty, lack of respect for contract sanctity and government policy inconsistency.

Analysts observe that despite private investment into the power sector, issues with collection, transmission, gas supply among others have limited the impact that private sector would have had in the sector.

In 2016 revenue shortfalls of 25 million naira a month posed a critical issue for power companies. This is a significant amount of money and this is leading to a situation where discos are unable to pay back to NBET and NBET is unable to pay the Gencos.

Reports show that Gencos are asking for a debt of about 146 billion naira and these are just the Gencos that where privatised. There are also issues with NIPP and the IPP that were run by shell and the likes which the government owes about 90 billion naira.

Sunday Oduntan, executive director, research and advocacy, Association of Electricity distribution companies observe that as long as the same fundamental issues and challenges exist in the power sector, there are no miracles to seeking the turnaround that we all desire. No investor will invest in a sector that returns, approximately, 50 kobo of every Naira of energy that is delivered.

The ANED spoke person further observed that despite government promises to power companies in 2013 when the deal was signed, current realities indicate a sharp contrast adding that these have adversely impacted the liquidity situation in industry.

He pointed out that government have failed to honour any of its commitments to investors as the issues of improvement in gas supply have not materialise because Pipeline vandalisation have constantly resulted in an average of 50% reduction in generation, for the period of May, June and July.

“There was a Commitments to Investors of Tariffs reflecting reality however unchanged forex despite devalued Naira, N194 versus CBN’s N305; Unrealistic generation projections and Inflation increased from assumption of 9% to a current 17.9% have not helped operators” he said

Inadequate and dilapidated power transmission and gas distribution infrastructure, low economic returns for gas projects and lack of access to gas reserves by those willing to develop them have further strained the process of achieving progress in the gas to power arranging Dada Thomas, Chief Executive Officer of Frontier Oil Limited observed.

Thomas maintains that the DISCOs are primarily responsible for the illiquidity in the Gas-to-Power sector. According to him, “They are not metering properly and are therefore not collecting their revenues efficiently as demonstrated earlier”.

“They have continued the odious practice of estimated billing and they are not doing the things they contracted to do when they took over the franchises they bought. They argue that they are not getting enough electricity to sell, that the electricity tariff is not cost reflective and consumers are stealing power and as such are not making enough money to pay their loans let alone fund additional capital investments”. He said.

The energy expert is of the view that as long as the DISCOs are insolvent or not making enough money, they cannot invest in meters and the upgrade of distribution infrastructure. The money they are making is barely enough to service their loans and the banks are no longer willing to lend money to the Power sector especially the DISCOs.

Ayodele Oni, an energy expert observed that the alarming increase in vandalism of gas pipelines within the oil rich Niger-Delta region of Nigeria which general serves as the transit region for a large portion of the pipelines in the earlier part of 2016 in frustrated the process of achieving the require boost in the power sector.

Oni observed that the devastating attacks on the oil and gas installations and infrastructure have led to a further drop in power generation as a direct consequence of gas supply constraints. Thus, the federal government is considering a virtual pipeline system, to reduce reliance on the physical gas pipeline system.

KELECHI EWUZIE