The Federal Government’s allegation that electricity distribution and transmission firms are not leaving up to expectation has again reopened the issue of non-performance of investors. Stakeholders, however, argue that the challenges are more than meet the eye. They say the problems, which are encompassing affect operators in the value chain, writes AKINOLA AJIBADE.

The recent pronouncement by the Minister of Power, Saleh Mamman, that poor distribution and transmission mechanisms are central to the problems of the electricity, may have revealed the gory state of the sector, which was privatised by the Federal Government in 2013.

Not only has the statement, made last week in Abuja and which the Minister promised to relay to the Presidency, has revealed the dismal growth of the sector, it has to, a greater extent, shown that the industry is yet to provide stable power six years after it was sold to private investors.

In fact, statistics reeled out by Mamman, lent credence to this assertion. According to him, the sector generates 13,000 megawatts (Mw) of electricity, while its transmission capacity is 7,500Mw.

Of this, the Minister said only 3,500Mw is distributed to more than 200 million Nigerians, a figure, which many observers believe, is too insufficient to meet the needs of the economy.

Prior to this period, the government has tried to re-invigorate the sector by providing it with funds and other assistance. In recent times, the Federal Government has bailed out the sector with N700 billion.

Besides, the investors who bought the assets of the defunct Power Holding Company of Nigeria (PHCN) have offered some financial and technical assistance to the sector.

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Records show that the management of Egbin Power Plant has invested substantially in the plant to improve its performance. Others have invested in those power assets bought during the privatisation.

All these pale into insignificance as the sector is unable to provide stable electricity to Nigerians, a development, which made many to conclude that the industry is far from recording growth.

Sector’s problems

According to the Chief Executive Officer, Change Partners International, Mr Akachukwu Okafor, the problems are not limited to a particular segment. In an interview with The Nation on phone, he said the problems were multi-dimensional.

Okafor said: “It is believed that gas is the main problem. I can tell you that there are many problems; these are multi-dimensional.

“The most important challenge facing the sector is not only generation. There are other problems, such as transmission, distribution, metering, energy theft, and poor revenue caused by the unwillingness of consumers to pay for energy used.”

He said the inability by the Nigerian Electricity Regulatory Commission (NERC) to  make provisions for laws in the sector, and the government’s interference, among others, have stalled the growth of the sector.

The Managing Director, Power Cam Nigeria Limited, Mr Jide Ogunleye, toed a similar line, saying that it is difficult to link the problems in the sector to an agency or institution. He said every operator in the value chain shares in the problems.

“Whether generation, transmission, distribution, metering, or power facility assembling, the problems affect every sphere or facet of the sector. No agency can be isolated from the crises facing the industry,” he added.

DisCos’ opinions

The Director of Research and Advocacy, Association of Electricity Distribution Companies (ANED), Sunday Oduntan, said it was wrong to blame the power distribution firms for the lapses in the sector.

He said other operators were also guilty. He noted that the power generation companies (GenCos), Nigeria Bulk Electricity Trading Company (NBET), Transmission Company of Nigeria (TCN), among others,  share in the blame.

“How can you explain a situation where the power generation companies do not have enough gas? How can you explain a situation where the transmission companies transmit only part of the energies?

How can you explain a situation in which the power distribution firms are unable to distribute enough electricity to the consumers? They can only supply few volumes at their disposal to the consumers,” he said.

Oduntan said issues, such as N500billion, which the Federal Government claimed to have paid the firms, debt free balance sheet, payment of the debts owed the firms by Ministries, Departments and Agencies (MDAs), among others, were not achieved, and as such, limits the growth.

He noted that the inflation rates were as high as 17 per cent for three years, coupled with the fact that the sector’s generation averaged 3,500Mw in the past few years.

Electricity tariffs, Oduntan said, is not cost-reflective due to the fact that consumers are not paying the right cost of the electricity they are consuming.

More worrisome is that Oduntan said the government does not deem it fit to adjust the tariffs, until early this year, when it announced plans to review them.

The problems, Oduntan said, had resulted in AT&C losses of over 50 per cent, stressing that power distribution firms had tried to minimise losses despite the challenges.

GenCos

The Executive Director, Association of Power Generation Companies (APGC), Dr Joy Ogaji, said the firms were battling huge cost of production, a development, which according to her, is affecting generation. She said the government had imposed administrative charges on the firms.

This, Ogaji said, coupled with the decision of the government to implement the Value Added Tax (VAT) of 7.5 per cent, which she claimed would have a far-reaching consequences on the sector.

The Director, Centre for Energy Studies, University of Port Harcourt, Prof Wunmi Iledare, said the administrative charges imposed on the activities of the power generation firms would affect their returns on investment.

Iledare said: “It is additional charges, which would affect their returns on investment. Already, GenCos are having problems with gas. The firms are not getting the product as at when due. And when the firms get the product, they get it at a higher cost. This is affecting the performance of the GenCos.”