The Nation Newspaper

Category: Energy

  • ‘Why we adopted standards for oil industry’

    The oil and gas industry demands and the need to keep up with best international practices in Nigeria has spurred the Standards Organisation of Nigeria (SON) to adopt ten America Petroleum Institute (API) Standards for the country, writes EMEKA UGWUANYI.

    The Standards Organisation of Nigeria (SON) has just adopted 10 standards from the America Petroleum Institute (API) to update and enhance operations in the oil and gas industry.

    Its Director-General/Chief Executive, Osita Aboloma, disclosed this during a joint Technical Committee (TC) meeting on oil and gas/petroleum and petrochemicals convened in Lagos.

    The DG, who was represented by the Director, Standards Development, Mrs. Chinyere Egwuonwu, said all the standards are critically relevant to operations in the oil and gas industry, hence the need to adopt them in collaboration with the stakeholders as Nigerian Industrial Standards (NIS).

    According to him, adopting of international standards as national standard is not a new development, especially where the standards are elaborated by global leaders such as API who since 1919 has established a clout for convening subject matter experts in establishing, maintaining and distributing consensus standards for the oil and gas industry.

    He said: “The API standards being adopted are recognised not only for their technical specifications but also for their third party accreditation which facilitates acceptance by international bodies and has been a cornerstone in developing standards for the worldwide oil and natural gas industry.”

    However, Aboloma cautioned that “in adopting international standards we must ensure that the standards are not in conflict with our statutory regulatory requirements and special consideration should be on or environmental factors, economic considerations, security of products, national interest and most of all global best practices.”

    He noted that the nation’s oil industry does not exist in isolation, therefore, the standards adopted will ensure the availability of the NIS, enhancing market competiveness, prevention of dumping of goods, promoting export and a reliable basis for technological transfer and industrial development.

    The Joint Chairmen of the TCs, on Oil and Gas/Petroleum and Petrochemicals, Prof Joseph Ajienka, of the University of Port-Harcourt and Prof Sunday Ojolo of University of Lagos that stood in for Prof Boniface Okorie, of the University of Nigeria, Nsukka (UNN) respectively, in their varying capacities spoke separately during the meeting.

    The two dons appreciated the Director-General of SON for giving them the opportunity to serve, while exhorting all the participants to carry out what was described as a call to national duty with zeal and ensuring their comments and contributions are vibrant and robust enough to achieve the purpose of the Technical Committee.

    The API standards adopted and rechristened NIS include include API RP 50 2013 Natural Gas Processing Plant Practices for Protection of the Environment; API RP 520; 2014 Sizing, selection and Installation of Pressure-relieving devices in Refineries Part 1 Sizing and selection; API RP 520 2: 2015, Sizing, Selection and Installation of Pressure- Relieving Devices in Refineries Part II Installation; API 553: 2012 Refinery Valves and Accessories for Control and Safety Instrumented Systems; and API 554: 2007 Process Instrumentation and Control.

    Others are API 12L: 2008 Specification for Vertical and Horizontal Emulsion Treaters; API 2000:2014 Venting Atmospheric and Low-Pressure Storage Tanks; API 12F:2008 Specifications for Shop-Welded Tanks for Storage of Production Liquids; API 12D: 2008 Specification for Field Welded Tanks for Storage of Production Liquids; and API STD 610: 2011 Centrifugal Pumps for Petroleum Petrochemical and Natural Gas Industries.

    The Deputy Director Standards Development/Head Chemical-Tech, Mr Agboola Afolayan, moderated the proceedings while the Head Lagos 1 office/Group Head Liquefied Petroleum Gas (LPG), Nwaoma Olujie, supported driving of the process, which culminated in the adoption of the API standards.

    Stakeholders from the oil sector include representatives of Cakasa Nigeria Company Limited, Peachlite Engineering Consulting Services, Winelight Analytical Systems, Lopa Energy Limited, Addax Petroleum, Dorman Long Engineering, Mobil Producing Nigeria and agencies such as Nigeria Society of Chemical Engineers, Federal Institute of Industrial Research oshodi (FIIRO), which is under the Federal Ministry of Science and Technology, Nigeria Institute of Mechanical Engineering and the Nigerian Institute of Welders.

  • How flared gas commercialisation can work

    Efforts by the Federal Government to curb gas flaring have been on for decades without any appreciable results. The outcome has been loss of billions of naira and negative impact on the environment and health hazards in the oil producing communities. However, the plan to handover gas flare sites to firms that will gather, commercialise and monetise the flared gas under the Nigerian Gas Flare Commercialisation Programme (NGFCP), if vigorously pursued, may be the solution long-sought after, writes EMEKA UGWUANYI.

    BARRING changes, the preferred bidders for the Nigerian Gas Flare Commercialisation Programme (NGFCP) would emerge before the end of this month.

    The Nigerian Gas Flare Commercialisation Programme was initiated by the Federal Government to harness the flared gas and put it into productive use.

    Under the NGFCP, the Federal Government will seek qualified investors with financial, technical and technological expertise to harness the flared gas.

    The Department of Petroleum Resources (DPR) has evaluated the Statement of Qualification (SOQ) of over 254 firms

    The DPR Deputy Director, Gas Monitoring and Regulation, Olusanya Bajomo, who spoke to reporters during the evaluation in Lagos, said the 850 firms that earlier showed interest dropped to 254 when a fee of $1,000 (about N360,000) was attached to the application form.

    He said the fee was introduced to enable DPR identify the firms that were serious, adding that after the evaluation, the successful companies would move to the next stage.

    Bajomo said: “The NGFCP is government’s flagship programme that will create opportunity to take flared gas under the provision of the Petroleum Act, and also authorised gas commercialisation through third party companies in order to promote investment and get people who are qualified technically and have the capability and experience to work in the Niger Delta to harness the flared gas.’’

    The DPR Deputy Manager, Gas Production and Monitoring Unit, Olawole Ogunsola, said the  Federal Government, through the DPR and other stakeholders, is interested in credible companies with technical capacity and financial capability to take flared gas to market, assuring that “there is no constraint to the number of firms that should undertake the programme. But, ultimately, you will find out that as you go along, some will drop by the side, it’s like a funnel, it would go narrower until we get to the key companies that will be able to take the flared gas to market, so, government is not constraining it so that we will get the best out of the process.”

    He said the law “in paragraph 35b of the first Schedule of the Petroleum Act” stipulates that the government has the right to the flared gas, so it has invoked that right by means of deregulation of the flared gas (Prevention of Waste and Pollution) Regulation of 2018, already signed into la w by Mr President.

    “By that regulation, the government owns the flared gas and the producer has no title to the flared gas. It can allocate it to competent companies that can take it to the market place;so, it’s government’s right.

    Ogunsola said to make the programme work, there are mechanisms in place to encourage the operators of such fields “ such that it guarantees certain volume to the third party off-taker and they (the operators) can get some fees in terms of connection agreement and be saved from the penalty of flaring.

    “We are designing a programme that will intensify the scheme. First, the regulation has increased the flared gas payments. If you are producing 10,000 barrels of oil and below you pay two dollars,” saying  that is already “an incentive to them to make it happen”.

    Harnessing and commercialising flared gas has become imperative in view of its financial benefit to the country and protection of the environment and health of the oil producing communities. For example,  according to a DPR’s report, “National Gas Flare Commercialisation Programme (NGFCP) is key to Nigeria’s flare-out agenda with a target for zero routine gas flaring in Nigeria by 2020.”

    The report said flared gas in Nigeria can attract $3.5 billion investments and enough to generate 2.5 gigawatts (Gw) of power or produce 50 million barrels of oil equivalent (boe). It also noted that the flared gas can produce 600,000 metric tonnes of liquefied petroleum gas (LPG) per year, produce 22 million tonnes of carbon dioxide (CO2), feed two-three liquefied natural gas (LNG) trains and generate 300,000 jobs, among others.

    It further noted that though Nigeria’s gas flaring level is dropping, the quantity of gas flared last year was as high as 324 billion standard cubic feet (bscf), which is a worrisome volume. The report said about 888 million standard cubic feet of gas was flared daily in 2017. This is despite Nigeria’s efforts at increasing utilisation and commercialisation of flared gas over the years. It stated that Nigeria still ranks the world’s seventh highest gas flaring country, adding that the DPR has identified about 178 flare gas sites or points spread across the Niger Delta in onshore and offshore oil fields; therefore, the agenda is to achieve zero gas flare in Nigeria by 2020. Flared gas constitutes about 11 per cent of the total gas produced in the country, it added.

    Ogunsola continued: “Bidders will have flexibility of choosing which flare site (s) to bid for, determine the gas price, and their end-use market or gas product, as well as the technology to be deployed. Interested parties will need to demonstrate project development experience and proposed proven technology, which we expect to be in commercial application.”

    Also, oil and gas firms last year, according to the Nigerian National Petroleum Corporation (NNPC) flared a total of 282.08 billion standard cubic feet of natural gas, which was put at a loss of N234 billion.

     

  • Agusto & Co upgrades Axxela to Bbb+

    Axxela Limited, Gas & Power Portfolio Company, said its corporate credit rating has been upgraded by Agusto & Co., one of Nigeria’s foremost rating agency, from “Bbb” to “Bbb+” with a positive outlook.

    Commenting on the upgrade, Axxela Limited Chief Financial Officer, Timothy Ononiwu, said: “This rating upgrade reflects Axxela’s financial and operational stability particularly as we expand our footprints across Nigeria and West Africa. This outcome recognises the progress we have made as an organisation thus far, and we are excited about our future.

    “We remain committed to providing gas and power solutions for businesses and industries across the region whilst delivering value to our stakeholders. Interestingly, our new rating profile is symbolic as we prepare to embark on a debt issuance programme to drive our growth and development projects”.

    Speaking on the new achievement, Axxela Limited Chief Executive Officer, Bolaji Osunsanya, said: “Axxela continues to deliver exceptional performance across all the markets in which it operates with an intense focus on excellence and innovative service delivery.”

    According to Agusto & Co., the upgrade is underpinned by the company’s acceptable profitability, adequate working capital, satisfactory cash flow, moderate leverage and an experienced management team. Furthermore, the rating takes into cognizance Axxela’s revenue diversification initiatives resulting in gas trading in neighboring West African countries, as well as the ownership of the Company – Helios Investment Partners – a private equity firm with over $3.6 billion funds under management.

    The rating agency also noted that it expects the Company’s financial performance to improve, leveraging its growing and expanding customer base as well as the positive impact from gas exports.

     

  • Ibadan DisCo joins fight against neonatal, infant mortality

    Ibadan Electricity Distribution Company (IBEDC) has donated a Draeger incubator, baby Apnea monitors, beddings, to the pediatric ward of the University of Ibadan College Hospital and renovated the children outpatient clinic play area (CHOP).

    According to IBEDC’s Chief Operating Officer, Mr. John Ayodele, “This gesture is part of IBEDC’s changing lives, one child at a time” Corporate Social Responsibility Campaign to care for the Nigerian child. We have done similar activity with the education career fair day and Energy club activations in partnership with USAID in various schools to promote safety, energy conservation and career awareness for young girls and boys through mentorship by young IBEDC subject matter experts and sponsorship of Nigerian Society of Engineers (NSE) School quiz competition. We have also extended this gesture to the Rest Anchor charity foundation for indigent children.

    IBEDC also identified with Nigeria’s gallant soldiers fighting insurgency in the North-East by supporting   the Nigerian Army Wives’ Association (NAOWA) 2nd Division Chapter Ibadan with items for their annual Children’s day party

    Our care for the children also pours out to their mothers, the women, in partnership with USAID, the D.I.S.C.O for women conference was held with over 500 women drawn from various professions and walks of life for talks on empowerment.

    Importantly, IBEDC is joining in the fight against Neonatal, Infant and Under Five morbidity and mortality in Oyo State first and gradually to other franchise areas of Osun, Ogun and Kwara States.

    Neonatal, Infant and Under-five mortality rates remain high in Nigeria. The country has the third highest mortality rate in the world accounting for nine per cent.

    According to the UNICEF, “one in every five Nigerian children never reach age five; a child born in Sub-Sahara Africa and South Asia is nine times more likely to die in the first month than a child born in a high- income countries’’.

    Millions of babies are born too early every year the world over and preterm birth complications accounts for over 1 million deaths in 2015.

    These mind-boggling but preventable deaths prompted IBEDC to give an incubator and Apnea monitors to keep the preterm babies and babies born with special needs safe and stable to increase their chances of survival.

    Globally, the Neonatal mortality rate fell 49 per cent from 37 deaths per 1,000 live birth in 1990 to 18 in 2017, but that decline is slower compared to other mortality rates, WHO said.

    118 countries already had an under-five mortality rate below the Sustainable Development Goals (SDGs) target rate of 25 deaths per 1,000 live births and 12 per 1,000 live births in new births.

  • NIPCO to extend gas facility to 25 off-takers

    NIPCO Plc, one of the distributors of Liquefied Petroleum Gas (LPG),  plans to extend its 10,000metric tons (mt) production to 25 LPG off-takers approved by the Nigeria LNG Limited for distribution across the country.

    Its Managing Director, Sanjay Teotia, who stated this during the conferment of an award by the Nigeria Association of LPG marketers (NALPGAM), on the company in Akwa Ibom State, said the company’s storage and distribution system have been within the context of the Annual Contract Quantity (ACQ) approved by the Nigeria LNG, which, according to him, has been followed to the advantage of stakeholders.

    Teotia, represented by the company’s Assistant General Manager, Corporate Affairs, Lawal Taofeek, said NLNG has maintained global standards in its dealings with its stakeholders, saying the company has been fair to all in the distribution of the product under the ACQ and to  buyers, pointing out that this has contributed to the growth in the use and utilisation of the clean and smoke-free cooking fuel.

    He said: “The company’s efforts in the sector are aimed at improving the gas value chain by providing avenue for storage and dispense to bottling plants’ owners and other ancillary operators in the LPG market. In the course of NIPCO’s intervention, the transport infrastructure and delivery system were improved upon with scores of LPG delivery trucks to bottling plants and over 60 skids inaugurated by the company across the country.

    “Our plant with a combined capacity of over 10,000mt has not only served as veritable channel for storage of the product alone but also distribution to gas markets plants across the nation and servicing of over 25 LPG off-takers approved by the Nigeria LNG Limited.

    “NIPCO’s storage and distribution system has always been within the context of the Annual Contract Quantity (ACQ) approved by the Nigeria LNG which had been meticulously followed to the delight of all stakeholders.

    NALPGAM National President Nosa Ogieva-Okunbor noted that since the entry of NIPCO into the industry in 2009, the face of the business had changed positively with more avenues to source the product for the benefit of end-users.

  • Compliance with quota vital to market stability, says OPEC

    The Organisation of Petroleum Exporting Countries (OPEC) has said the critical value of commitment production quota by members is vital to maintaining market stability in times of uncertainties

    The Joint Ministerial Monitoring Committee (JMMC) of OPEC stated this when it reviewed the August monthly report prepared by its Joint Technical Committee (JTC) and recent developments in the global oil market, as well as near-term prospects in 2019 and 2020.

    The JMMC noted the overall conformity of 159 per cent in July, this year was 22 per cent higher than in June, and the average conformity of 134 per cent since January was the highest to date in the year. This high level of overall conformity has offset uncertainty in the market due to ongoing economic growth worries.

    The JMMC underscored the growing importance of the Declaration of Cooperation in supporting oil market stability, which along with ongoing healthy oil demand so far has arrested global oil inventories growth and should lead to significant draws in the second half of the year.

    The JMMC also noted that, going forward, the forecast for oil market fundamentals by major forecasters remains robust in 2019 and 2020.

    The JMMC urged participating countries in the DoC to continue their strive in achieving full and timely conformity with voluntary production adjustments based on the decisions of the 176th meeting of the OPEC conference, July 1, and the sixth OPEC and non-OPEC Ministerial Meeting, July 2.

  • Samsung donates to IDPs

    Samsung Heavy Industries Nigeria (SHIN) has donated electrical equipment, clothing and other relief materials to the victims of herdsmen and Boko Haram insurgents’attacks in Jos, Plateau State.

    SHIN’s gesture is coming less than one year after the Korean ship building giant funded eye surgeries for 102 Nigerian patients with cataracts. The patients, who were at the risk of blindness, recovered their eyesight with Vision Care, an organisation under the World Health Organisation (WHO).

    Since 2015, Samsung has worked with Vision Care in the yearly Eye Camp to give free cataract surgeries to individuals who cannot afford the treatment.

    In this latest gesture, SHIN said a missionary group from Korea constructed a school in Jos for the villagers in Rhizha, where four missionaries are teaching about 560 children and also providing counselling to victims, mostly women, suffering from the trauma from Boko Haram insurgents’ attacks.

    As part of its humanitarian assistance, SHIN said it has continually donated to the missionary group for many years and lent a helping hand to the community and its people.

    SHIN said the villagers have suffered from attacks by herdsmen with many losing their family members and livelihoods to these acts of violence. However, these acts of violence have not deterred the missionary from creating this initiative to assist the community.

    The missionary group from Korea has been able to construct a church and a school, while Samsung has donated electrical goods, including television sets, which will be used in the school by the children.

    Samsung has also donated other electrical items for the benefits of the entire community. Items, such as clothing, were also delivered to the villagers.

    In a letter of appreciation to SHIN, a member of the Korean missionary, Jae Seo, said: “I have been working in Nigeria since 1991 as a Korean missionary. Among our works here in Northern Nigeria, one of our joys is that we see a big progress of the children at our school.  At present, we have 88 students and soon on September 25, more students will join us. Our school is still at the baby-stage since it is only three years old. We have hardly any electronic equipment.

    “Thank you for your donation of 10 laptop computers, 10 TVs and 10 refrigerators along with 100 pieces of T-shirts and caps. All of us at EMS Rija Academy say, ‘Thank you so much for your generous donations’.”

  • Why commitment to contracting cycle reduction is key

    Contracting cycle in Nigeria’s oil and gas industry is among the longest in the world. Over the years, relevant government agencies, including the regulatory bodies in the petroleum industry, have been making efforts to reduce the length of time to seal a contract for implementation. With a new Minister of State for Petroleum Resources, Chief Timipre Sylva, and the Nigerian National Petroleum Corporation (NNPC) Group Managing Director, Mallam Mele Kyari, in the picture, will the tide change? EMEKA UGWUANYI asks.

    Reform and transformation of the country’s oil and gas industry should go beyond rhetorics. Considering Nigeria’s age in oil exploration and production of over 60 years, it is supposed to be the clear leader and model for other oil producing African  countries and beyond.

    However, the African biggest producer still battles with challenges of elongated contracting cycle that should have been addressed long ago.

    Delayed contracting cycle is considered a disincentive as it costs the country money in the end. In the past, it took an average of 36 months to conclude a contract process in the industry. The implication, according to an industry analyst, is that if a transaction that is meant to be closed within a period of low oil price gravitates to a period of high price per barrel, the country, not the oil firms, pays more.

    According to the analyst, no company does a contract at a loss; therefore, if the price of oil increases, the cost of other ancillary factors of production, including labour, will  increase and the company will have no choice than to adjust the contract sum to reflect the increase. This is one of the reasons cost variation of contracts is common in Nigeria and, as a result, the country loses money and value from many of its projects.

    Now, will the new Minister of State for Petroleum Resources, Chief Timipre Sylva, and th Group Managing Director (GMD) of Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, who is less than two months in office, be game changers, the analyst asked.

    It is a fact that a transparent contracting process not only boosts investor’ confidence, it confers integrity on the nation, the analyst said.

    In 2009, NNPC, in pursuit of greater efficiency, best practices, transparency and cost-saving procedures in the contracting process in the industry, signed a Memorandum of Understanding with about 24 oil and gas majors in the country for the Nigerian Petroleum Exchange (NIPEX) project, which was designed to deliver value and enhance local content.

    The then NNPC GMD, Dr. Mohammed Sanusi Barkindo, noted that NIPEX was meant to streamline responsibilities of oil firms, regulators and other stakeholders, and to prepare  the ground for the major transformation that will ensue from the passage of the Petroleum Industry Bill (PIB).

    He explained that NIPEX was made up of both the Electronic Marketplace and the Joint Qualifications System designed to reduce the contract cycle time, improve transparency of contract decision making, improve visibility for each operator and NNPC on contract approval status as well as achieve overall contracting cost reduction for the industry.

    Some of the oil firms that signed the MoU  include Petrobras, Addax, Agip, Texaco, Conoco-Phillips, Shell, NPDC, CNOOC, KNOC, Total, BG, Statoil, NAOC, Pan-Ocean, Sahara, ExxonMobil, Chevron and Conoil.

    Ten years on, Nigeria is still struggling to cut contracting process period to less than a year, while the PIB continues to be on the table at the National Assembly and Presidency.

    What the government is doing

    Last year, the Nigerian Content Development and Monitoring Board (NCDMB) and International Oil Companies (IOCs) under the aegis of the Oil Producers Trade Section (OPTS), a section of the Lagos Chamber of Commerce and Industry, and some indigenous oil firms, signed a Service Level Agreement (SLA) aimed at  shortening contracting cycle.

    According to the Board, long-contracting cycle delays take-off and completion of projects, leading to increased costs.

    The SLA commits the 28-member OPTS firms to comply with the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, essentially to submit to the NCDMB documents, like their quarterly job forecasts, Nigerian Content plans, bidders lists, Nigerian Content Evaluation Criteria and Nigerian Content technical bids, among other information in relation to oil and gas industry contracting and procurement cycles.

    The Board also pledged to respond on specific timelines, noting that if it fails to meet the set deadlines, the companies can proceed with their tendering processes after duly informing the Board.

    NCDMB Executive Secretary Simbi Wabote signed for the Board, while the Managing Director of ExxonMobil Nigeria, Paul McGrath who is also the Chairman of OPTS signed for OPTS. The Managing Director of the Nigerian Agip Oil Company (NAOC), Massimo Insulla, his Chevron counterpart, Jeff Ewing and that of Total Exploration and Production Nigeria, Nicolas Terraz, witnessed the event.

    The SLAs with the OPTS are meant to  achieve six months’ contracting process period. The NCDMB said through its efforts, the cycle had been cut significantly to 14 months from 24-36 months in the past. Wabote noted that the SLA signed with the NLNG in 2017 has improved the turnaround time of approvals between the two establishments, adding that the Board was working to sign a similar agreement with the Indigenous Petroleum Producers Group (IPPG).

    Wabote had last month during the third briefing of the Board, restated that the SLAs’ NCDMB signed with the Nigeria LNG Limited, International Operating Companies under OPTS and Independent Petroleum Producers Group have helped to shorten the NCDMB interface on the tendering cycle in the industry from 36 months to nine months.

    Also, in April, this year, NNPC said it has  fast-tracked contracting cycle for upstream operations from 24 months to nine months with a strong commitment to further reduce the process to less than six months.

    NNPC’s immediate past GMD Dr. Maikanti Baru stated this, adding that shortening of the process would allow for free flow of investments into the industry with far reaching effect across all tiers of its operations – upstream, midstream and downstream.

    Also, Kyari on assumption of office last month, pledged to make efforts to drastically reduce the contracting cycle in the industry.

  • Are DisCos technically bankrupt?

    The electricity distribution companies (DisCos) are in need of funds, such that they cannot procure equipment let alone expand their networks to take loads and give Nigerians regular electricity. In recent years, the distribution segment has been labelled the weakest link in the power value chain, necessitating calls for recapitalisation of DisCos, EMEKA UGWUANYI writes.

    The recurring system collapse, rejection of loads by electricity distribution companies (DisCos) and the continuous drop in transmitted power, inability to promptly pay power generators and gas suppliers are pointers to the ills of the power sector.

    In the past, the transmission arm of the sector was regarded as the weakest link but, currently, the DisCos have taken over as the weakest link and they are not making any defence about it or efforts to improve on this status.

    At a power industry seminar organised for reporters in Lagos, one of the resource persons noted that power is a major hindrance to Nigeria’s objective to be one of world’s 20 economies by 2020. It is expected that the combined installed generation capacity in Nigeria will rise to 14,000Mw by 2020, in line with the power sector road map and Vision 2020. He noted that the vision is endangered because power supply is pivotal to growth and Nigeria is not close to the quantum of power that will grow the economy to that level.

    Specifically, he noted that the DisCos are technically bankrupt looking at the entire business, especially information technology and other infrastructure when benchmarked with international best practices.

    The analyst listed some of the challenges confronting the DisCos. According to him, electricity tariff needs to be adjusted to market reality or be fully subsidised. He listed inflation, foreign exchange challenge and other macroeconomic realties as part of DisCos’ problems.

    “DisCos have to pay for the power purchased and loads are rejected because they go where they make revenue losses through energy theft,’’ he said. He frowned on the cross-subsidisation of tariff.

    Transmission Company of Nigeria (TCN) Managing Director Mr. Usman Gur Mohammed called for the recapitalisation of the DisCos, noting that without boosting their operation, the efforts of the generation and transmission segments of the power value chain would be futile.

    He said: “When this administration came on board, transmission was the weakest link in the power value chain. But, as at today, transmission is not a weak link. We cannot say we have solved all the problems of transmission but any problem we have in transmission, we have a solution to it.

    “We raised the capacity of transmission from 5000Mw to 8100Mw in the last simulation we did in December 2018 and since then, Nigerians have seen all the capacity we have been adding, including those from Niger Delta Power Holding Company of Nigeria (NDPHC). We have raised $1.661 billion for investment in transmission and we are putting it across the country.

    “We have also changed the qualification criteria for doing projects in such a way that the mistake that happened in the past where we met 800 containers in the ports stranded for more than 15 years will not happen again. Since we came in, there is no container that came in that we have not recovered. Of 800 containers that have been stranded, we have recovered 775.

    “In spite of all that we are doing, the customers that are connected to the grid are only about 20, other people are connected through the distribution network. We, in TCN, have actually simulated the investment requirement of the DisCos and hired a consultant that certified what we have done. The investment requirement of the Discos is $4.3 billion.

    “If we don’t invest in the DisCos and expand the distribution network, there is no way Nigeria will get the benefit of business.”

    Vice President Yemi Osinbajo also confirmed that the DisCos are the weakest link. Osinbajo, who spoke at a forum in Abeokuta, the Ogun State capital, said the Federal Government has increased installed power generation capacity to 13,427 megawatts (Mw), while additional 660Mw is expected from some power plants before the end of the year.

    He said later, several solar power plants would come on stream. The national grid already has transmission capacity of 7000Mw,  from about 5000Mw. This is due to the completion of several transmission projects. On the contrary, the distribution capacity of the 11 distribution companies (DisCos) is significantly low hovering around 4000Mw. This low capacity has limited the capacity to deliver power to end-users, despite the substantial generation and transmission capacities. DisCos also lack the ability to provide distribution assets and metering to consumers..

    The Vice President acknowledged the need to expand the grid and to recapitalise the DisCos, among others. He stated that despite the efforts of the government, the evidence and structure of the market could not deliver on government’s promises for power for domestic and industrial use. As a result of this, a substantial change of strategy is necessary. There is a need for a change of strategy.

    He said: “At the heart of that strategy is recapitalisation of the DisCos first. We have to come up with more resources in one way or the other. Part of that recapitalisation process is in the Siemens’ phased electrification roadmap, which was commissioned by President Muhammadu Buhari recently. The whole idea of the roadmap is to deploy financing and technology on commercial terms agreed with transmission and distribution companies in partnership with the German Government and Siemens to increase transmission and distribution capacities to enable power delivery of at least 7000Mw to consumers.

    “In phase two, to eliminate all the bottlenecks in transmission and distribution to enable full utilisation of existing generation of power to deliver at least 11000Mw to consumers, and in phase three, to upgrade and expand generation, transmission and distribution for end-to-end power delivery of 25,000Mw.”

    On the other hand, Discos reportedly are only concerned with how to boost monthly revenue, especially through estimation billing system and deployment of modern technologies to facilitate bill collection, without reasonable investments to take more loads and give more power to consumers.

  • Magodo residents praise Ikeja Electric for improved supply

    Residents of Magodo Estate, Lagos have commended Ikeja Electric Plc (IE) for providing stable electricity to customers within the estate, following the signing of the Premium Power Agreement.

    The initiative is a power purchase agreement under the willing buyer-willing seller deal by the Nigerian Electricity Regulatory Commission (NERC). It entails a commitment to specific service level standards while the customer agrees to pay a tariff that is above the MYTO tariff.

    A resident of the estate Mr. Innocent Nwankwo, expressed satisfaction with the level of supply they were getting from Ikeja Electric.

    He said: “We enjoy 24 hours supply and we believe this initiative is giving us value. We have a mixed development in Magodo estate. There are those who operate business and there are residential. We all need adequate supply. And we were able to agree on this. In my opinion, if other communities show interest, I think Ikeja Electric can replicate this initiative.”

    Another resident, Adewale Anthony,  pointed out that initiatives, such as Premium Power, will enhance growth and development within the community.

    According to him, “What we really want is now possible – and that is constant power that enables us to use it when we need it. By giving us the opportunity to enter into this agreement, we were able to make a choice of what we want in terms of supply availability. Since the signing of the contract, we have been enjoying the supply.”

    Since the implementation of the Agreement on August 15, residents of the estate have been on 24-hour supply. Under the agreement, there will also be access to dedicated customer care and technical teams for prompt resolution of queries or technical issues within the estate.

    At the contract signing, two weeks ago, IE Chief Operating Officer Mrs. Folake Soetan expressed confidence in the success of the trend-setting agreement, which, she noted, was in line with the Federal Government’s “willingseller-willing buyer” policy.

    “We are confident that this agreement will serve as a model for other power agreements in the power sector because, while it is in line with the Federal Government policy, it also reflects our unwavering commitment to our customers. This has also been made possible by the Nigerian Electricity Regulatory Commission’s directive to DisCos to provide an enabling environment with exceptional service delivery,” she said.

    The Chairman, Board of Trustees, Magodo Residents Association, Chief S.A. Owojori, also commended the technical teams from both sides for a job well done. He described the signing ceremony as a significant achievement in the community’s efforts at enjoying uninterrupted power supply, noting that the agreement, if judiciously implemented, will strengthen the relationship between the community and Ikeja Electric.