Tag: Electricity

  • Five firms get N18.261b electricity stabilisation fund

    Five firms get N18.261b electricity stabilisation fund

    The Central Bank of Nigeria (CBN) has disbursed N18.261 billion to five electricity companies under the Nigerian Electricity Stabilisation Facility (NESF).

    During the exercise it advised companies benefiting from the N213 billion NESF to use the money for what it is meant.

    The CBN Governor, Godwin Emefiele, gave the advice yesterday in Abuja at the Nigerian Electricity Market Stabilisation (NEMS) Signing Ceremony where the N18.261 billion was disbursed.

    The five firms, are     Eko Electricity Distribution   Company Plc, which received N5.164billion; Ibadan Electricity Distribution Plc, N11.367billion; Jebba Hydroelectric Plc, N816.831million; Kainji Hydroelectric Plc, N234.815million and Shiroro Hydroelectric Plc, N678.650 million.

    These companies are expected to pay 10 per cent interest on the facility. Two per cent is for administrative cost, another two per cent will go to the banks and the six per cent balance goes to CBN.

    Emefiele said the National Electricity Regulatory Commission (NERC), “will not allow electricity distributors to go home with obscene profits, but with time and the introduction of right assets, electricity tariff will come down and since they have ten years repayment period, consumers will not feel the impact.”

    He appealed to the power firms to use the money they are getting from the Federal Government “for what they are meant for, to clear hurdles and purchase MD metres to improve on distribution and also improve your revenues for Gencos, for spare parts and maintenance so that things can begin to run better than they are right now.”

    He explained that the CBN “sees this N213 billion Nigerian Electricity Stabilisation Facility as a way to kick-start the electricity market in a way that ensures that the sector can deliver tangible improvement in power supply for all Nigerians. We see this facility as a major initiative to reset the economics of the power sector.”

    Emefiele said the CBN is working in partnership with the banks to provide this facility to address recent shortfalls in power sector revenues caused by needed adjustments in the electricity tariff and legacy gas debts,” adding that the facility will be paid back over the lifetime of a reset electricity tariff that is within the next ten years.

    In exchange for this intervention, Emefiele said the government, “fully expect parties that are collecting these funds today to ensure that the funds are repaid as when due; ensure that all inputs into the generation of power are ramped up in a consistent manner; invest the funds in the necessary improvements in generation plant maintenance, transmission upgrades and distribution networks including transformers and better metering for end consumers.

    Explaining the structure of the facility, he said: “This has been structured as a ten year facility so that the burden of the repayment will not be too much on you (electricity companies) so that it does not affect your cash flow even though the assets are yours this is a national assignment and all energy should be geared towards achieving stable power supply for our people.”

  • Electricity consumers bemoan scarcity of pre-paid meters

    Electricity consumers have expressed disappointment over the inability of the distribution companies (DISCOs) to provide them with pre-paid meters.

    They lamented that they have been forced to live with pains associated with the arbitrariness that goes with ‘estimated billing’ system of the DISCOs.

    Some of the consumers complained that they have even paid for the metres but have not been given, wondering why it should be so, especially now that the sector is in the hands of entrepreneurs who, government said, are better managers of business.

    A man who identified himself simply as Samuel said he  cannot understand why the investors cannot supply metres to their customers.

    “These so-called investors seem not to know what to do. In my view, the first step to   profitabilit would have been to provide customers the pre-paid metres free of charge. “Then they should monitor how often they vend because people may want to sabotage the system. It is when people pay for energy consumed that they will make money.“

    Another customer in Egbeda, a Lagos suburb expressed frustration. “I am on estimated billing. I am forced to pay between N7,000 and N10,000 monthly. I do not run a manufacturing outfit,” he said.

    This is coming even after the Nigerian Electricity Regulatory Commission (NERC), had in October 22 last year, ordered DISCOs to provide metres to their customers within 45 days to reduce the problems of consumers.

    The Nation check revealed that customers daily besiege offices of the DISCOs for pre-paid metres.

    But a staff of IKEDC, who spoke on condition of anonymity, said the firm might roll out metres before April, adding that efforts are on-going to give metres to customers soon.

    ‘’The metres may be free. Nobody knows. But what it is certain is that the company would roll out metres soon.

    The General Manager, Consumer Services, IKEDC, Ms Olubukola Ojurongbe, had in an earlier interview with The Nation, said the company was making efforts to solve all the metering problems facing it. Ojurongbe said the DISCOs were not responsible for the scarcity of pre-paid metres in the country, promising that IKEDC was not folding its arms on the issue.

  • Group protests high electricity tariff

    Business owners under the aegis of Cooperative Business Society of Abuja (CBSA) have protested the astronomical hike in electricity tariff in the Federal Capital Territory, FCT.

    The grouped, which described the actions of Abuja Electricity Distribution Company, (AEDC) as inimical to economic and business growth in Nigeria, said the hike was a flagrant disregard of the Multi-Year Tariffs Order as contained in the  National Electricity Regulatory Commission ( NERC) guideline, and a set back to business growth, especially with world economy facing turbulent time and coming a few days to the general election

    Recently, the AEDC jacked up the Abuja electricity tariffs for businesses from N22.08 to N35.03 per kilowatts for commercial power consumers in the FCT, an increment of about 58 per cent.

    The group in their objection letter and petition signed by 25 heads and managers of business entities that formed the cooperative group, stated: “We the undersigned business society group in Abuja hereby objects to the sudden increase by 58.55 per cent in electricity kilowatt from N22.08 to N35.03for commercial power consumers in the FCT.  According to the multi-year tariff order for the NERC, the maximum electricity increase for 2015 is five per cent.

    “We are shaken by this blatant disregard to the commission’s guideline and total lack of interest in the business operating in the capital city. Many businesses have collapsed under the ever increasing weight of cost of operation and harsh economic environment.’’

  • Fed Govt misses 5,000Mw electricity  generation target

    Fed Govt misses 5,000Mw electricity generation target

    The Federal Government has failed to meet its target of generating and supplying 5,000 megawatts (Mw) of electricity to Nigerians by end of this year. Today is the last day of 2014.

    Although there is a slight improvement in the generated power, it is still 887.71Mw less than the promised target.

    But the Transition Electricity Market (TEM) will take effect from tomorrow, according to Minister of Power Prof. Chinedu Nebo.

    Out of the 4,112.29Mw that the electricity generation companies produced as at December 29, the Transmission Company of Nigeria (TCN) was able to evacuate  4,034.48Mw. It was unable to wheel 77.81Mw, according to statistics of the Nigerian Electricity Supply Industry (NESI) on the website of the Federal Ministry of Power yesterday.

    According to the data, the energy generation was  4,112.29mw while the market hit a peak energy generation of 4,389.70Mw on December 29.

    With the statistics, the electricity market has soared within nine days in terms of power transmission from 3,666.7Mw to 4,034.48Mw.

    This shows that in the period under review, the market raised energy sent out by 367.78Mw.

    The market also increased energy generation by 277.41MW, as the power generation in the penultimate statistics of December 21 was 3,732.27Mw.

    In terms of peak power generation, the market rose from the 3,912.3 on December 21, to 4,389.70 Mw.

    In the history of the NESI, the highest peak power generation ever was the 4,517.6 Mw achieved December 23, 2012.

    The Nigerian Electricity Regulatory Commission (NERC) said its new Multi- Year Tariff Order (MYTO) will be effective from tomorrow.

    Residential customers, according to the commission, will be exempted from the tarriff hike that will affect other categories of electricity consumers across the nation.

    Prof. Nebo had said by January 1, 2015, the Transition Electricity Market (TEM) would take effect.

    The ministry’s spokesman Mr. Timothy Oyedeji,said the vesting agreements in the market will become operational and become sacrosanct from tomorrow.

    He said the stakeholders would begin to trade by the contracts they signed into.

  • Reject increase in electricity tariff, activist tells Nigerians

    Reject increase in electricity tariff, activist tells Nigerians

    Lawyer cum activist, Mr Morakinyo Ogele has urged Nigerians to reject the plan by the Nigeria Electricity Regulatory Commission (NERC) to increase electricity tariff.

    He described the planned increase in electricity tariff as “a bad Christmas and New Year gift” to over 170 million Nigerians, majority of whom are already living below poverty line.

    Ogele in a chat with The Nation on Thursday described the proposed electricity tariff hike as “wicked, oppressive, ungodly and unacceptable”.

    He warned the NERC to drop the plan and not to add to the burden of Nigerians who are already impoverished by massive corruption and bad governance.

    The human rights lawyer also vowed to take a legal action against the NERC, Power Generation Companies (GENCOs) and Distribution Companies (DISCOs) if the planned increase is not shelved.

    Ogele regretted that the electricity authorities have failed to make power supply available to Nigerians maintaining that the proposed hike cannot be justified when majority of Nigerians are living in darkness.

    He said, “We are saying no to increase in electricity tariff because it cannot be justified in a country where electricity is not available.This is wicked, ungodly, oppressive and unacceptable and we in the human rights community are going to resist it.

    “In many parts of the country, citizens are going through epileptic supply of power while others don’t have electricity at all despite paying their bill either through pre-paid meters or analogue meters.

    “Most of the artisans including hairdressers, market women, barbers and those whose livelihood depend on electricity have been rendered jobless by poor power supply.We are going to fight it through protests, court action and other legitimate means. This must not be allowed to stand because government is about making life easier for the masses.This tariff hike is one suffering too many, I call on all Nigerians to resist it like we resisted the subsidy hike in January 2012”.

  • Uneasy calm at Seme Border over electricity

    Uneasy calm at Seme Border over electricity

    Nigeria’s land border with Republic of Benin at Seme is the major gateway in and out of the country from and to other West African countries. But, residents of the town are becoming increasingly discontented with lack of electricity supply from the National Grid. RAYMOND MORDI reports.  

    The proprietor of the Lord’s New Generation Schools, Seme, Lagos, Oluwaseun Falola, is not happy with the state of affairs at one of Nigeria’s international borders with the Republic of Benin. He is not happy because the land border that constitutes the major gateway in and out of the country, as far as other West African countries, are concerned, is not connected to the National Grid and does not enjoy electricity supply from any of the successor companies of the Power Holding Company of Nigeria (PHCN). The situation has been like that for close to a decade.

    Falola believes the country can benefit more in terms of revenue from the area if electricity is provided.

    His words: “This is a border town. It is a very important centre of commerce. In this case, Seme is situated along the coast, close to the Atlantic. It should be developed into a tourist attraction to generate more revenue for the government. We have over 50 villages around Seme Border; the area is known as Badagry West Local Council Development Area (LCDA). It is not only Seme alone that is suffering from this light problem. All the villages within the LCDA do not have access to light.”

    Chief Ibidun Joshua, who is indigenous to the area, said there is practically no government presence in the area. He noted that it is ironic that the so-called giant of Africa is not living up to expectation in terms of citizens’ well-being.

    He said: “There is no hospital here, no industries and no government presence whatsoever. There is no standard primary or secondary school in this town. Most of our children attend private schools.

    “The only public primary school here has no decent classrooms and no fence. The pupils would be in class, watching vehicles zoom past on the road leading to the border. Besides, the area is water-logged. The environment is not conducive enough to teaching and learning. The same thing applies to the only government secondary school in the town. Is it when we resort to riots that the government would pay attention to our needs?”

    Joshua said the community has not had light for the past seven years and that their kith and kin across the border are enjoying uninterrupted supply of electricity.

    “We speak the same language with the people at the other side of the border. Indeed, it was in 1974 that the boundary was demarcated and we were placed on this side, while some of our kinsmen were put on the other side. Our people are becoming impatient with government in so many areas, But, I believe once government gives us light, other things would follow,” he added.

    Falola wants the Federal Government to do something to address the problem because it is tarnishing the image of Nigeria.

    “In the neighbouring villages across the border in the Republic of Benin, the light never blinks,” he said.

    Seme border is a thriving centre of commerce. Interestingly, Nigerians from the four corners of the country are to be found there. As should be expected, there are also citizens of other West African countries living there, particularly those from the neighbouring Benin, Togo and Ghana.

    According to some residents, there are five different communities of Nigerians living there. This is made up of the Egun people or natives, the Yoruba community, the Igbo community, the Niger Delta community and the Hausa community. Their major occupation is fishing. Aside from those employed by government agencies at the border and other ancillary service providers, most of the settler elements in the area are engaged in trading.

    The entire community is adversely affected by the problem. All the Federal Government agencies here like the Nigeria Customs Service, Nigeria Immigration Service, the Nigeria Police, Port Health and the National Drug Law Enforcement Agency (NDLEA) are feeling the pinch.

    They buy diesel in large quantity to provide electricity for their operations. But, other residents believe those working with government agencies are not bothered about the problem because they make enough money at the border to fuel their generators.

    Chief Emmanuel Adeyemo, a retired Major and leader of the Yoruba community in the area, said government is treating Nigerians living along the border as aliens. “All the politicians we have been voting for at various levels, thinking they will do something for us, have disappointed us,” he told our correspondent.

    Adeyemo, a native of Ogbomoso in Oyo State, came to Seme on November 29, 1984 when he was posted there as part of a 17-member security team to secure the border. Today, he is a traditional title holder in Seme and has risen to become the leader of the Yoruba community. He has no immediate plans of leaving the place because he regards the area as home.

    Similarly, Captain Umaru Usman (rtd), a native of Kano State and the spokesman of the Arewa community in Seme, said it is only during the period of electioneering campaign that politicians suddenly remember that people living along the border are Nigerians.

    “I am tired of complaining about this matter. We have been complaining about it for some time, but nothing has come out of it,” he said, adding that it is unfortunate because it would be difficult for him to adjust to life outside the border.

    “I regard this place as my home now because those indigenous to this land have been generous enough to give us land to bury the remains of our relatives. In my custom, wherever you bury the remains of your close relatives is home,” he said.

    The situation on the other side of the border contrasts sharply with what obtains on the Nigerian side, as communities and businesses in that axis have power supplied to them by the government of Benin Republic.

    There are six commercial banks operating in Seme at the moment. It used to be 11, but five have closed shop over the light issue because the cost of running their operations is extremely high. They rely on generators for their operations. The banks operating there include First Bank, Union Bank, Zenith Bank and Diamond Bank.

    Some Nigerians doing businesses around the border town prefer to live across the border. They stroll in and out of the country at the beginning and at the close of work. Falola lived across the border for five years between 2006 and 2011.

    “I preferred to live there because there was light there to make life more meaningful. There was light to charge your handset, power your radios and television and equally to sleep. I cannot afford to sleep in heat. But, when the molestation against Nigerians became too much, I had to return to the country. When any misfortune befalls the people of Benin, the blame is invariably heaped on Nigerians, particularly the Igbo,” he said.

    In spite of the availability of electricity, he says Benin Republic can never be compared to Nigeria; in population, knowledge and education, infrastructural development generally and resources.

    “Nigeria is miles ahead. It is just this issue of unavailability of light that is the problem. We have everything we need to be a great country. Our problem basically is putting square pegs in square holes,” he added.

    There was an attempt during former President Olusegun Obasanjo’s first tenure to provide electricity to Seme and its environs, but it failed. The late Olusegun Agagu, who was then the Minister of Power and Steel laid the foundation stone for the project on November 23, 2000. The communities were eventually connected to the National Grid in 2006. But, after a few months, according to Falola, the light went off.

    “What we learnt then was that the cables that were used were inferior. Like every other Nigerian contractor that wants to maximise profit, the contractors used inferior cables,” he said. Other accounts say vehicles plying the route started colliding with the electric poles, causing disruption in power supply.

    In Joshua’s view, the job was given to a wrong contractor. “When we noticed the way he was executing the job, the community wrote to government, complaining about the poor quality of the job of the contractor. But government ignored us. Eventually, when it was time to inaugurate the project, the late Olusegun Agagu, who was then the Minister of Power and Steel, by-passed the community and went straight to Customs Barracks to inaugurate, without involving members of the community.

    How can they install high tension wires along the expressway? No sooner, vehicles started damaging the poles and no efforts were made by government to repair the damaged poles.

    The community tried to intervene on a number of occasions to remedy the situation on self-help. They raised money and tried to repair the damaged poles. According to Usman, representatives of the five communities went to Ikeja in 2011 to procure a transformer. But, the transformer is still in the premises of the late Baale of the town.

    He added: “We also spent money trying to prepare the place we were supposed to mount the transformer, but as we speak, it is still lying intact within the late Baale’s compound. I spend N1, 000 to buy fuel to power my I-better-pass-my-neighbour generator every day.”

    In the last effort, which brought some disaffection between members of the community and the local government authorities, the sum of N500, 000 was allegedly raised through voluntary self-help effort and handed over to a high-ranking official of the local council. He had promised to use the money to appeal to PHCN officials to do something about the power situation at the border. But, he allegedly pocketed the money and nothing came out of the attempt.

    Now, everyone is fed up. “You cannot approach any household now to say they should contribute money towards fixing the light,” one of the residents noted. Unless, government intervenes, Seme and its environs are likely to remain in darkness for a long time.”

     

    end private schools…The only public primary school here has no decent classrooms and no fence. The pupils would be in class, watching vehicles zoom past on the road leading to the border. Besides, the area is water-logged. The environment is not conducive enough to teaching and learning.

     

     

     

     

     

     

     

     

     

  • ‘Look beyond national barriers in addressing power challenges’

    Council member, ECOWAS Regional Electricity Regulatory Authority, Ghana, Mrs. Ifey Ikeonu, has advised stakeholders in the power sector to look beyond the country for solutions to the  sector’s problems.

    Mrs Ikeonu gave the advice in a presentation titled: ‘Improving regulatory governance through benchmarking’ at the West African Power Industry Convention (WAPIC) in Lagos.

    She said the biggest challenge in the region remains bridging the gap between electricity supply and demand with average access rate of electricity in the region being about 30 per cent.

    She said: “This is a very huge gap that requires a lot of proactive and innovative solutions if we are to meet the sustainable energy for all goal of providing universal access to electricity by the year 2030. The region is blessed with an abundance of natural and renewable resources and we must try to articulate the right strategies that will attract the required financial resources needed to put in place power infrastructure across board. We should leverage on the resources within the region, to rapidly improve access to electricity.”

    As Ikeonu observed that West Africa leader’s vision for the electricity industry should be sustainable and integrated as well as reliable and affordable. She said such integrated electricity would serve as the bedrock for economic and social development and growth of the region.

    “My advice will be to emphasise that stakeholders begin to look beyond national barriers in addressing the electricity sector challenges in the various countries of West Africa. We must learn to rely on our joint resources be it natural, human or financial in tackling these challenges.

    “Furthermore, we need to pay attention on the governance of the sector because a sustainable power sector can only be built based on a clear, predictable and transparent regulatory framework,” Mrs Ikeonu added.

    Mrs Ikeonu said to ensure the smooth operation of the regional market, member-states were mandated to establish an independent regulatory authority where none exist, adding that there was need to protect the independence of the regulatory authority.

    Mrs Ikeonu said member-states should  ensure that the regulatory authority had legal personality, budgetary autonomy, adequate human and financial resources to carry out its duties. Ikeonu said that the Council was faced with challenges of absence of information technology and communications infrastructure to facilitate integration.

    “Importance of benchmarking in the power sector cannot be over-emphasised, benefits includes, establishment of credible targets for performance improvement.  Enables best practices from the industry to be incorporated into the benchmarked functions and stimulates competitive behaviour and encourages innovation,” she said.

    Mrs Ikeonu said the Council is building blocks for the takeoff of the ECOWAS regional electricity markets, adding that the council had finalised the regional market rules and would be adopted by the Council following the conclusion of the methodology for the regional transmission tariffs.

    “We are also working on the development of the contractual templates for cross-border electricity trading in the region. The adoption of all of these regulatory tools will signal the commencement of the first phase of the regional market and I am eager to see this in place as soon as possible,” she said.

  • Electricity tariff ‘ll go up Dec 1, says NERC

    Electricity tariff ‘ll go up Dec 1, says NERC

    In spite of the erratic power supply situation in the country, the Nigerian Electricity Regulatory Commission (NERC) yesterday said it will increase electricity tariff with effect from December 1  this year.

    It blamed data collected from the Central Bank of Nigeria (CBN) and the National Beurea of Statistics (NBS) which showed inflation rate, gas price and falling exchange rate for the inevitability of its decision.

    NERC said throughout the period from  December 1 this year to May, 31 next year, the retail tariff will be based on the generation of 3,676megawatts (Mw) of electricity.

    Its Tariff and Rates chief, Roland Achor, who spoke  in Abuja at a meeting with Electricity Industry Stakeholders on the Bi-Annual Minor Review of Multi Year Tariff Order (MYTO-2), said tariff increase has become imperative in view of the prevailing circumstances.

    He said: “So the last available deduction capacity that we used was 3,424Mw, throughout the period from Dec 1 to  May 31, 2015 retail tariff will be based on the generation of 3,675Mw. That is what we are going to use to come out with the new tariff.

    “The effective foreign exchange to $1 is N156.29k. Recently, the commission with BPE (Bureau of Public Enterprises) in collaboration with the Ministry of Petroleum Resources have agreed on a new bench mark commencing Dec 1 and the new price is $2.50 and a transportation cost of 80 cent effective  Dec 1.

    “The exchange rate takes care of foreign exchange risks in the power sector. The equipment required are always foreign denominated, so we allow the foreign exchange rates to take care of the risks. From the data we received from CBN, it shows that the foreign exchange rate as at Sep. 2014 is N154.75 to $1 while the exchange rate as at last year was N158.57 and if you look at our model, we bench marked it at N178 to $1.”

    According to him, it is important to note that the commission allowed one per cent above the CBN rate to cover for letters of credit and other bank charges. He said,  currently, if the one per cent which is the premium is added, the new foreign exchange rate to $1 is N156.29 commencing Dec 1, 2015.

    He said: “It should be noted that the minor review we did in May was at $1.8 for both pricing and transportation. “Before 2012, there where only three standard tripod that was used for the manual review which was inflation, exchange rate and gas price.

    “It was projected that by 2008 we were supposed to generate 4000Mw, in 2009, 6000Mw, 2010, 1000Mw and 2011 16,000Mw it was gathered that all of these projections ended in fiasco.

    “Based on information we got from the system operations department, it shows that on a six months average ending  Sep 30, 2015, the total division (sic) capacity was 3,675.41 Mw, the gross capacity estimated was to be 5,556 Mw.

    “The inflation rate compensate for the rising cost of doing business, it equally allows investors pay their staff living wages.

  • The gas supply nightmare

    The gas supply nightmare

    One year after the privatisation of the power sector, Nigerians are yet to enjoy stable electricity due largely to inadequate gas supply. Experts say that unless a sound policy framework is put in place to ensure optimal production and delivery of gas to power Generation Companies (GENCOs), the nation’s target of 20,000 Megawatts (Mw) of electricity by 2020 would not be met, writes AKINOLA AJIBADE.

    With an estimated 187 trillion proven gas reserves, and 600trillion unproven gas reserves, Nigeria, ordinarily, should not be agonising over shortage of gas to power her turbines and guarantee steady supply of electricity to her citizens. In fact, experts say that Nigeria has enough gas to power the whole of Africa. They said the gas that is flared daily can generate enough electricity for the country.

    Besides, countries that do not have gas are not having electricity problems. For instance, as President, Liquefied Petroleum Gas Association of Nigeria (LPGAN), Mr. Dapo Adesina, noted, South Africa, with 55 million population, generates about 40,000 Megawatts (Mw) of electricity despite not having gas in abundance. In the absence of gas, Isreal also uses coal to generate electricity, ditto Rwanda that generates 350 megawatts of electricity through renewable energy sources.

    But Nigeria, despite her quantum of proven gas reserves, has not been able to ensure a fairly stable supply of electricity either through the use of gas, hydro or renewable energy sources such as coal, wind, solar or bio-mass. Rather than do so, The Nation learnt that a combination of the activities of pipeline vandals, infrastructural decay, long distance between the locations of the power plants and the gas pipelines, and inadequate incentives for investors who invest in gas plants, conspired to frustrate efforts at achieving uninterrupted gas supply to the power plants.

    For instance, rising incidents of outright sabotage of some crucial gas pipelines is blamed for the recent drop in gas supply to the power sector. The Nigerian National Petroleum Corporation (NNPC)’s reported that saboteurs were responsible for the destruction of Escravos gas pipeline in 2013. The Corporation said the Escravos-Warri stretch of the Escravos Lagos Pipeline System (ELPS), and the Trans Forcados crude pipeline, were destroyed, adding that investigations conducted by the Nigerian Gas Company (NGC), its subsidiary, revealed that the pipelines were punctured.

    The NNPC said 20 ruptured pipelines have been identified at the last count, all due to deliberate sabotage. “The cumulative effect of the above interruptions is a real degradation of power supply to Nigerians. The Ministry of Petroleum Resources (DPR) and NNPC would continue to make efforts to ensure gas supply in a difficult situation,” the NNPC explained.

    The challenge of gas supply, which has become a torn in the flesh of the new core investors in the power sector, government and electricity consumers in general, may have been accentuated by the dynamics of the nation’s power sector. Gas- powered plants require huge volume of gas to generate electricity. For instance, as the President, Petroleum and Technology Association of Nigeria (PETAN), Emeke Ene, noted, Nigeria’s power sector operates on 80 per cent turbines and 20 per cent hydro, which means that the power plants need an uninterrupted gas supply to guarantee steady electricity supply.

    Ene said the power sector uses more than 70 per cent of the domestic gas production, while the remaining percentage is shared among the petrochemical and fertiliser companies.“The capacities of the turbines are different, ditto the volume of gas required to generate power. The turbines are designed to meet certain production targets. The plants can only meet their targets when they access gas regularly. For Nigeria to increase power generation from 5,000 Mw  to 10,000 Mw gas must be supplied regularly to the sector.” Ene explained.

    The Chief Executive officer, Niger Delta Exploration and Production Company (NDEPC), Lai Fatona, agrees with him, noting that turbines require millions of standard cubic feet of gas per day for optimum performance. Fatona said 200,635 standard cubic feet of gas per day is needed to produce 1,000 megawatts, while 2.635 million standard cubic feet of gas per day would give the country 10,000 megawatts of electricity. Giving a breakdown, Fatona said while 10,031 standard cubit feet of gas per day will produce 50 megawatts, 20,063 standard cubit feet of gas per day will provide 100 megawatts.

    Similarly, the NNPC said power firms need millions of metric tonnes of gas per day to generate electricity and attain optimal level. Also,the Special Adviser to Minister of Power on Investments, Finance and Donor Relations, Olajuwon Olaleye, said power and oil and gas sector needs each other for growth. Olaleye said failure to develop one affects the other, arguing that the two should be developed if Nigeria’s power situation would improve like that of United States, Germany, and other developed economies.

    Power supply in Nigeria has been dropping for a long time now. At present, Nigeria survives on less than 5,000 Mw of electricity, a level considered a far cry from the 20, 000 Mw of electricity the nation targets to realise the much-trumpeted Vision 20: 2020. Between July to September 2014 alone, power supply dropped below 3, 500 Mw, the lowest this year. According to analysts, this means that the impact of the privatisation of the power sector, which saw the assets of the now defunct Power Holding Company of Nigeria (PHCN) sold to fifteen new private investors, is far from being felt one year down the line.

    The expectation was that the sale of the assets would bring succour to Nigerians most of who have been groping in darkness for long, but this has not been the case, as there has not been much improvement in electricity supply even as consumers daily complain of estimated bills.  Experts blame this on government’s inability to wheel enough gas to the sector for the purpose of generating electricity. The occasional drop in the water level of the hydro power plants also contributed to the poor power supply in the country.

    And as the Chief Executive officer, Frontier Oil Limited, Dada Thomas puts it: “There is no adequate infrastructure in place to ensure speedy and uninterrupted supply of gas to the power plants. This has a cumulative effect on the operation of the power sector, which relies on gas for sustenance. There is the need to explore opportunities in the marginal oil fields across the country. Some oil wells have huge gas reserves. The  Uquo Marginal Oil Field in Eket, Akwa-Ibom State is one of the wells that boasts huge gas reserves. Frontier Oil Limited and Seven Energy International partnered to develop the field. Now, the field has the capacity to supply millions of metric tonnes of gas power plants to areas in the South -South region.’’

    However, government says it is making efforts to address the gas supply challenge. Speaking during the recent third edition of the Worldstage Power Conference in Lagos, Olaleye said government is making frantic efforts to produce 20, 000 Mw by 2020 as part of on-going plans to become one of the biggest economies in the world. He assured that with the construction of the 10 National Independent Power Plants (NIPPs), and the decision of the government to provide gas to the plants to enable them meet their target of 5,000 megawatts of electricity, as well as plans to increase hydro power projects, among other initiatives, power generation would improve soon.

    He said power plays important role in achieving meaningful development, arguing that no country can achieve growth without a robust energy programme. Hear him: “Nobody can underestimate the importance of gas to the power sector. Globally, the bulk of electricity is generated through turbines. Though many counties are exploring opportunities  in the off-grid electricity, gas helps in generating electricity sufficient to grow the economy. Based on this, the Federal Government has put in place machineries to solve the gas problem, one of which is the recent increase in the price of gas  from $1.5 per 1,000 standard cubit feet of gas to $2.5 per 1,000 standard cubit of gas.”

    Olaleye explained that the aim of increasing the price of gas  was to encourage more investment in gas in order to fast-track the growth of the power sector. He said another effort aimed at addressing gas shortage is the on-going collaboration between the Ministry of Petroleum Resources, the Ministry of Power, the Nigerian National Petroleum Corporation(NNPC), and the Nigerian Electricity Regulatory Commission (NERC), among other stakeholders to provide modalities on how to make gas available to the power firms to improve electricity generation.

    While stating that the problems in the sector are nearing solution, Olaleye said government is advocating the adoption of energy mix in the country. According to him, government sees energy mix as a platform to improve electricity supply in the country. The Commissioner for Energy in Lagos State, Taofiq Ajibade, also said that energy mix is the only option through which Nigeria can overcome its electricity challenges. He said the issue of combining various sources of generating electricity is vital to the growth of the economy, urging the federal and state governments to embrace the idea

    According to the commissioner, Lagos receives 930 Mw of electricity from the grid, which is not enough to meet the needs of its population. That is why the state government set up Independent Power Plants (IPPs) and invested in solar energy, among other projects to compliment whatever it is getting from the grid,” he added.

    The Minister of Power, Professor Chinedu Nebo, said the government is set to inject additional 4, 000 Mw of electricity to the current power capacity with new renewable energy contracts for 14 hydro power projects. He said the government is planning to provide a renewable energy policy that would set the guidelines for the use of solar and coal for power generation, adding that the country is blessed with natural resources that can be used to generate power.

  • ‘Electricity tariff increase likely’

    ‘Electricity tariff increase likely’

    Electricity consumers should expect increase in the tariff following the decision of the Federal Government to increase the price of gas from $.50 to $2.50 per 1,000 cubit feet, President, Liquefied Natural Gas Association of Nigeria, Dapo Adehsina, has said.

    Adeshina warned that the development would have ripple effects on various stakeholders in the entire energy value chain, adding that consumers would in the end pay for the increase in cost of natural gas in form of higher tariffs.

    He said: “The planned increase in the cost of gas would lead to a corresponding increase in electricity tariff by the power distribution companies.  The power generation companies would buy gas from the International Oil Companies (IOCs) at a higher price and in return, pass the cost to the power generation firms. The firms would transfer the cost to the power distribution firms, which would further pass it to the consumers via increased tariffs.’’

    He said the development is going to benefit the IOCs because it would increase their revenue greatly.

    “The IOCs such as Texaco, Chevron, Shell, and Exxon Mobil, as gas producers would generate more revenues as a result of the increase in the price of the product. 50 per cent increase in price of gas is not a small thing. However, it is you and I as the consumers are going to bear the cost by paying higher tariffs.’’ he added.

    According to him, more people would invest in gas utilisation activities, as a result of the increase, arguing that the development would not affect the price of liquefied natural gas otherwise known as cooking gas.

    “Natural gas and LPG are not the same thing.  While the latter has more comprehensive functions and capacities, the former is not. So, there is no way the increase in natural gas price would affect the price of LPG,’’ he said.

    The power firms had indicated interest to increase the tariffs few days after taking over the assets of the Power Holding Company of Nigeria (PHCN) last November. This was met with stiff opposition from the Nigerian Electricity Regulatory Commission (NERC) that queried the rationale behind the planned increase in tariffs.

    Its Chairman, Sam Amadi said the companies can only increase the tariffs after they stabilised power supply.