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Electricity - the Power to Zero Transformation(AllAfrica Via Acquire Media NewsEdge) THE power supply around Lagos is particularly worrisome. From time to time, there have been pockets of protests over epileptic supply or outright outages within the Lagos area. Often, protesters moved in droves from one street to the other in the areas affected, carrying placards expressing the problems and the challenges to their businesses. Lagos is not the only state where power outage or poor supply is enshrined. Across the country, it is different strokes for different folks with residents always resorting to abuses and name-callings whenever electricity DISCO officials come around their neighbourhood. Many businesses and establishments that had given employment to many had shut down completely. Many others who would have been engaged in self-employment are roaming the streets jobless. Poor power supply and incessant outages have crippled development in Nigeria. Officials of Ikeja Distribution Zone Public Relations blamed the situation on the power generation company, stressing that they had a short fall of supply. "We don't generate power, we only distribute what we have. Electricity is not something that we store in a place. Unfortunately, we are at the receiving end. We got 328 megawatt instead of 937 megawatt to satisfy the consumers under our zone. We can't stop people from protesting, but we call for their understanding. We also call for more power generation," the officials said. The setbacks: World-wide, a power system is known as a versatile and relatively cheap and cost effective means of providing energy in any nation or community. It usually consists of three main hierarchical stages known as generation, transmission and distribution. The power system is the effective and indispensable machinery for the rapid industrial and economic growth of any nation. But electricity supply in Nigeria is characterized by frequent power failures and load shedding. The problems range from corruption, poor maintenance, inadequate funding and lack of energy remix. The appalling levels of Nigeria's infrastructure, namely power supply, water, telecommunication and even, petroleum products supply, are all indications of an economy that is unhealthy as a result of inability to meet electricity demand. Poor power generation in Nigeria is also a consequence of poor maintenance, planning, inadequate funding, poor electricity pricing, monopoly, lack of energy mix, inadequate gas supply, vandalisation, poor inventory management and drought. In the last few years, Nigeria witnessed a lot of activities in the electric power sector in with reforms being at the core of such activities. With the completion of payment by core investors and concessionaires, the natural expectation of the citizenry is to experience an improvement in electric power supply to their homes and businesses. What many Nigerians fail to realise, however, is that funds running into billions of dollars are still required to experience any sustainable improvement in power supply. Power roadmap: The Federal Government of Nigeria's Roadmap to the Power Sector Reform specifies that to meet Nigeria's Vision of being among the top 20 countries by the year 2020 we need to have 40,000MW installed generation capacity. Achieving this requires investments in power generating capacity alone of at least US$35 billion per annum for the next 10 years beginning from the year 2010. Many have even argued that Nigeria requires an additional US$13 billion to the US$35 billion Roadmap's 10 year estimate (totalling US$ 48 billion) as it is estimated that it costs an average of US$1.2 million to build a 1MW power plant in Nigeria. Nigeria requires large investments in the other parts of the electricity supply chain especially to develop gas fields, gas processing facilities and gas pipeline networks. A reasonable level of investment is also required to upgrade existing power stations and electric power grid and distribution networks. Indeed, Nigeria lags massively behind the average African and her grid capacity per capita rounds on a one decimal point basis to zero. The average Nigerian who uses 136KWH per year, consumes just three percent of the power of the average South African, five percent of the average Chinese citizen and, under a quarter of the average Indian. Nigeria is bad at generating and distributing electricity. From statistics, epileptic power outages are characteristic of Nigeria power sector which for long was starved of investment: first as a state-owned monopoly and now, following privatization, from poorly conceived price controls and private regional distribution monopolies that have scared away necessary capital, impeded competition and discouraged new entrants into the market. The government projected an increase in available installed grid capacity to 10GW by the end of 2014 which according to experts, is already woefully inadequate in the context of present demand. Lack of electricity is constraining Nigeria's economy and inhibiting her growth. In September 2013, when President Goodluck Jonathan handed over control of 15 state-owned electricity companies to new private owners, it was hoped that the move would encourage essential investment, but that appears to have been a fiasco. State owned electricity companies: It should be recalled that President Jonathan once presented a power reform roadmap where it was predicted that by December 2013, Nigeria would be generating 14,000MW of electricity. But that goal was an overestimation because based on statistics, the total power generation currently is less than 5,000MW. The poor state of power supply in the country even with the takeover of power facilities by the private sector is raising the issue of competence of the new operators. Already, some electricity consumers are blaming the poor state of affairs in the power sector on sabotage by the disengaged staff of the PHCN to prove that the unbundling of the PHCN was not in the interest of the masses, while others think that the new operators lack competent hands to pilot the affairs of the companies. But Professor Chinedu Nebo, the Minister of Power, had dismissed these allegations, saying that the drop in electricity generation was due to gas supply challenge, which was already being squarely addressed by the Federal Government. Don't blame distribution companies--DG, BPE: In the midst of the outrage against poor power supply and incessant outages, the Director-General of the Bureau of Public Enterprises, BPE, Mr Benjamin Dikki, at a pally with journalists last July in Lagos urged Nigerians to be patient with the government in its efforts at increasing power supply in the country. Reacting to complaints that the power sector has not recorded sufficient difference even after it has been handed over to private investors, BPE urged Nigerians and Labour unions to desist from blaming the generation and distribution companies on the delay in getting the desired results in the sector. "The major headache we have is that of the supply of gas, to fire our plants. So, the issue is not for the people to get angry with the distribution companies who don't have the power. The major problem we have for power supply now is not the private sector investors who have taken over the distribution and generation companies. The investors are just trying to manage what the system generates and make sure they rationalise it, so that every part of the distribution companies have some measure of light. So, I want people to understand that the distribution companies are not to blame; it is the power they receive that they distribute. The generating companies also are constrained by a lack of gas supply which the government is addressing. "Some of the National Integrated Power Project plants that the constructions have been completed cannot be piped because there is no gas supply. If today we have sufficient gas to fire 6,000 megawatts, Nigerians will see the fundamental difference between when these companies were not privatised and now," Dikki said. He blamed part of the problems to vandals who blew up gas pipelines supplying gas for power generation. "It took NNPC a couple of months and millions of dollars to be able to fix those holes and restore the supply of gas. I understand the NNPC are also finalising that. Now, we have to take the fire fight approach to it and the president has directed that $300 million from the Eurobond be channelled to the development of gas infrastructure," the DG had said. Of vandalisation, corruption and weak economic health: Gas pipeline attacks have remained a scourge in the industry. Peak demand has been less than half of installed capacity in the past decade, yet, load shedding occurs regularly. Poor service delivery has rendered public supply a standby source as many consumers who cannot afford irregular and poor quality service revert to expensive alternatives to minimize the negative consequences of power supply interruptions on their production activities and profitability. An estimated 20 percent of investment in industrial projects is allocated to alternative sources of electricity supply. From the time of National Electric Power Authority, NEPA, to the period of Power Holding Company of Nigeria, poor electricity service has been the outcome of ageing and poorly maintained generating, transmission and distribution infrastructure. Weak financial and economic health of NEPA/PHCN also contributed to the problem. This derived from the prevalence of a regime of price control that had little concern for cost recovery. There appeared to be inadequate economic incentives for the company to engage in efficient production and investment behaviour due largely to the price subsidies and cross subsidies. The multiplicity of economic and non-economic objectives associated with the erstwhile state ownership imposed pricing policy that did not generate sufficient profit margin. Notably, the largest debtors to NEPA were the federal, state and local governments. Going by Barack Obama's initiative with Africa Leaders Summit and the lofty promises of the "Power Africa" initiative, it appears the problems with the development of Nigerian power generation and distribution are basic economics, and internal failures of local policy. Old wine, new bottles: In November last year, when new independent owners took over the distribution assets of the PHCN, there was hope that power supply would improve. But that has not been the case. Rather, electricity generation has continued to worsen, thereby making the immediate investments in the areas of proper metering of all customers, procurement of new transformers, upgrading of other distribution infrastructure, reduction in the number of customer interruptions, rolling out of new customer connections and other network expansion programmes, uneconomic. By the terms of the agreement with the federal government, through the Bureau of Public Enterprises, BPE, the new owners of the 11 Discos would commit $1.8 billion for the upgrade and replacement of ageing infrastructure over a five-year period from 2013 to 2017, at an average of $357.663 million yearly. Under this arrangement, the new owners ought to have invested $357.663 million in 2013 to improve distribution infrastructure but the protracted privatisation process delayed the handover of the assets until just two months to the end of the year. Apart from the owners of large Discos such as Ibadan, Ikeja, Eko and a few others, most of the new investors are yet to commence massive upgrade or replacement of the physical infrastructure to improve power supply because there is no electricity to distribute. Over time, there are allegations that dwindling supply of electricity from the power plants is not encouraging immediate investments in the distribution facilities. In Enugu Electricity Distribution Company, EEDC, for instance, it was alleged that the efforts of the new owners could not improve supply and in the commercial city of Onitsha, electricity supply had reportedly reduced due to the nationwide shortfall in electricity generation. There was reported poor supply of electricity since January 1 due to inadequate supply from the national grid in Enugu metropolis and Abakaliki in Ebonyi State. Massive investments: But the Ikeja Electricity Distribution Company, IKEDC, which was acquired by a joint venture between Korea Electric Power Corporation, KEPCO, and the New Electricity Distribution Company, NEDC, have commenced massive investments, especially in new technology. The Koreans have reportedly delivered the initial report of the inventory they carried out at Ikeja Disco. The Managing Director of Korean Electric Power Nigeria Limited, Mr. Yeom Gyoo Chull, expressed confidence that with the company's discipline and technology, their partnership in Nigeria would produce records that would be notable globally. "Already, we have begun a review of the infrastructure and processes at the Egbin power plant and Ikeja Electricity Distribution Company. This is an ongoing process aimed at setting the foundations for world-class services to our customers," he said. In Ibadan Electricity Distribution Company, IEDC, the largest distribution network in the country which covers Oyo, Ogun, Osun and Kwara states, as well as some parts of Kogi, Ekiti and Niger states, it was learnt that the new owners had also embarked on new investments. The new management at Ibadan had reportedly completed a new 33KV feeder station that radiates from the Ayede Transmission Station to the company's injection sub-station at bypass, also in Ibadan, to de-congest an existing overloaded feeder. Existing infrastructure: The new management was also reported to be carrying out studies and analysis of the existing infrastructure to identify the critical areas of need although the current power allocation to Ibadan Disco is less than half of the total energy requirements of the company. According to statistics from the BPE, the new owners of the Discos and their commitments in the next five years include Kann Consortium Utility Company Limited, which plans to invest $183.03 million in Abuja Disco from 2013 to 2017; Vigeo Holdings' $121 million in Benin Disco; and Interstate Electrics' $136 million in Enugu Disco. Vanguard also learnt that Integrated Energy Distribution and Marketing Limited is investing $219 million in Ibadan Disco and $65 million in Yola Disco; Aura Energy Limited, $113 million in Jos Disco and Sahelian Power SPV Limited, $151 million in Kano Disco. West Power & Gas Limited is equally investing $225 million in Eko Disco; KEPCO/NEDC Consortium's $293 million in Ikeja Disco; and 4Power Consortium's $127 million in Port Harcourt Disco. Kaduna Disco has an investment of $149 million which has Northwest Power Consortium as the preferred bidder in the yet-to-be concluded transaction. But despite these attempts poor power supply remains. Copyright Vanguard. Distributed by AllAfrica Global Media (allAfrica.com). |