The Nation Newspaper

Tag: power sector

  • FG crafts new charter for power sector service delivery

    The Federal Ministry of Power,  Works and Housing has designed a new charter for standardization and efficient service delivery in the power sector.

    The Servicom Office of the Presidency is expected to approve the charter before it becomes effective.

    Acting Servicom Coordinator, Nnena Akajemeli made this known Thursday during the two -day workshop on process standardization and service improvement in the ministry in Maitama, Abuja.

    In his address, the Permanent Secretary Dr. Louis Edozein noted that there was general perception that the engine of governance does not give good service.

    According to him, the perception was based on real deficiency in quality services that the citizens provided and “the way we conduct government business. We have to change.”

    He said that the workshop was relevant as it was designed to equip participants with the tools to make the change to higher level of efficient and service gradually in the ministry.

    The Permanent Secretary said that the objectives of the workshop were to inspire staff to be focused on the mission, vision and core   Values of the ministry and motivate them to achieve same.

    The objectives were also to increase competence in citizen focused delivery and  to improve knowledge on how to deliver set service standards.

    Edozien added that the workshop was designed to strengthening Effective Grievance Mechanism (GRM).

    He said that “it is also expected that your contributions through the workshop will bring positive. Hangs in terms of enhanced service delivery in your offices and he power sector of the ministry at large.

    “I am therefore using this medium to implore you to take advantage of the workshop and apply the “Change Begins with Me” approach to our various schedules in the office for us to achieve common goal in the sector in providing effective and efficient service delivery.”

  • EU to spend €150m on power sector in Nigeria, says Delegation head

    EU to spend €150m on power sector in Nigeria, says Delegation head

    The European Union (EU) will spend €150 million (N50 billion) on development of the power sector in Nigeria, Michel Arrion, the ambassador and head of EU Delegation to Nigeria, said yesterday.

    Arrion spoke at the fifth Edition of the EU-Nigeria Business Forum (EUNIBF) pre-event briefing in Lagos.

    He said the grant would be used mainly for training young engineers and funding some technical aspects of the sector.

    According to him, the EU is collaborating with the National Power Training Institute of Nigeria (NAPTIN) to inject young engineers into the sector.

    Arrion described the energy sector as an important aspect of the economy, saying that nothing would work well if the sector was not adequately funded.

     “The EU is already financing a transmission project in Katsina State and we have spent over €5 million, about N1.6 billion, on it,’’ he said.

    Arrion said the business forum would focus on creating opportunities for EU and Nigerian Small and Medium Enterprises (SMEs) to create their businesses through the Enterprise Europe Network (EEN).

    “We want to identify opportunities in the textile value chain and proffer options for accessing long term finance for the critical power sector in Nigeria.

    “The Fifth EUNIBF has been designed to discuss business opportunities and address bottlenecks to investments, particularly in the power sector.

    “We will focus on diversification of the economy through SMEs,” he said.

    The Counsellor, Head of Trade and Economics Section of EU, Filippo Amato, said EU granted over €750 million to Nigeria between 2008 and 2013.

    Amato said €512 million had been spent from 2015 till date.

    In 2014 alone, Nigeria’s total trade with the EU stood at €39 billion, with the EU accounting for 31 per cent of Nigeria’s total trade.

    Amato said the investment stock in Nigeria grew from €23.8 billion in 2013 to €25.3 billion in 2014.

    He said, however, with the fall in oil prices, EU-Nigeria trade declined by 26.7 per cent to €29billion in 2015.

    “Nigerian exports to EU declined by 35 per cent while imports declined by seven per cent over the period.

    “Unfortunately, about 97 per cent of exports to the EU are oil and gas.

    To reverse this trend, he said the Fifth EUNBF aims to strengthen the EU-Nigeria business relations through identification of opportunities in the global textile value chain; expose Nigerian SMEs to opportunities in the EU market through the platform of the Enterprise Europe Network (EEN) and explore the financing options available for funding of the power sector and diversifying the energy mix in the country.

  • Don urges FG to revisit power sector privatisation

    Prof. Park Idisi, a lecturer, Department of Agriculture, University of Abuja, has urged the Federal Government to revisit all sectors privatised to local and foreign companies.

    Idisi told the News Agency of Nigeria (NAN) on Wednesday in Abuja that this should be done to ensure that companies that bought the sectors provided adequate services and employment to the youth.

    He said the government should revisit all sectors privatised, especially the power sector.

    He said the sector was bought by investors that lacked competitive philosophy and intention to improve or develop the industry.

    He said no reason should stop government to revisit the power sector, as the companies that bought the industry had failed to provide citizens energy needed.

    ” They keep bringing bills every months without power supply; they only want to make quick money with the collaboration of some top Nigerians,” he said.

    He commended the current administration on its giant stride to revisit Ajaokuta Steel Industry, adding that such effort should be applied in the power sector.

    Idisi said there were models to be used if government wanted to revisit the sector and make it functional, adding that experts would be able to proffer such solutions.

    He said if not for corruption, Nigeria would not necessarily need to privatise its assets to provide jobs and grow the economy.

    According to him, Lagos State is developing faster because the government is handling its responsibilities by providing employment to youths and creating enabling environment.

    NAN reports that recently, business mogul, Aliko Dangote, suggested to the Federal Government to reverse power sector privatisation, as it was done wrongly.

    Dangote said the buyers lacked understanding of the complexities of the sector.

    The privatisation was conducted in 2013 to 18 companies, 11 distribution companies, six power generation companies and one transmission company.

     

  • ‘Why foreign investors shun power sector’

    Foreign investors have rejected the invitation of the Federal Government to invest in the  power sector because of its low prospects.

    This happening as the country is seeking ways to invest $20billion yearly in the sector over the next five years  to generate 20,000 megawatts (Mw) of electricity to boost power supply.

    It was gathered that the investors, mainly from United States, China, Korea, United Kingdom, Germany and other countries from Europe, are seeing Nigeria as an investment risk nation. As a result of this,  they not ready to invest in the country.

    A source, who pleaded anonymity, said many investors, who attended the recent World Bank conference in Washington, United States, discussed the possibilities of investing in the sector and concluded that it was not safe.

    The source, a management staff of one of the eleven power distribution companies (DisCos) and participant at the conference, said foreign investors saw the country’s electricity industry as lacking prospects.

    The source said: “The prospects of recouping money spent on investment in the power industry is increasingly dimmed by factors such as pipeline vandalism, inability of the power generation companies (GenCos) to access gas for production, poor supply and collections rates.’’

    Chief Executive Officer, Mojec International Limited, Ms Chantelle Abdul, said foreign investors would have loved to invest in the power industry were it not its lack of investible prospects.

    She said: “The sector is one of the most attractive aspects of the economy.  I just came back from Washington, and investors there said the sector lacked investible propositions. The investors, like many others, considered parameters such as patronage, yielding point,  profit margin and others, and concluded they may not be able to recover their investments as at when due. For millions of dollars invested at the top of the chain, there were no commensurate collections at the bottom chain.’’

    She said investors were aware of the potential in the sector, but are not ready to invest, until the industry overcame its many fundamental problems.

    Nigeria, Africa’s largest economy, hardly generates 5000Mw of electricity. Peak generation hovers around 2000Mw and 4000Mw.

    This development has led to the near extinction of the manufacturing sector as companies that could not cope with the crushing cost of generating power to run their plants have either closed shops or relocated to neighbouring West African states.

  • Power sector loses 3,946MW to constraints

    Power sector loses 3,946MW to constraints

    The Nigeria Electricity Supply Industry (NESI) yesterday said it lost a total of 3,946 Mega Watts (MW) to gas and line constraints on Tuesday.

    According to its daily briefing on the power sector, the Nigerian Electricity System Operator (SO) of the Transmission Company of Nigeria (TCN) sent out  3,546MW to the 11 distribution companies (DisCos) on the day under review.

    Were there no constraints in the sector, the generation companies would have produced 7,492MW on Tuesday.

    Although there were no losses due to water management and high frequency constraint, the recorded losses due to constraints culminated in a loss of N1.8billion in the sector.

  • Liquidity, major challenge facing nation’s power sector – NERC

    Liquidity, major challenge facing nation’s power sector – NERC

    The Nigerian Electricity Regulatory Commission (NERC), says the challenge bedeviling the nation’s power sector is lack of access to liquidity to promote investment in the sector.

    The Acting Chairman of NERC, Dr Anthony Akah stated this in an interview with the News Agency of Nigeria (NAN) in Abuja on Friday.

    “There is no doubt that every country has challenges and the power sector in Nigeria has its own challenges, and one of the challenges that we have is the issue of funding.”

    He said that investment in the power sector required huge amount of fund, noting that the non-availability of adequate fund constituted a hurdle to speedy development of the sector.

    He said that in a bid to enforce standard in the industry, NERC was ensuring that all players stick to the specified rules and regulation governing the sector in Nigeria.

    “We need to make sure that we rightly price tariff and also make sure that there is market discipline that the companies play according to the rules.

    “We need to make sure that we increase monitoring mechanism to ensure that all the players adhere, or we have them sanctioned.”

    He said that NERC was guiding against the abuse of market power by stakeholders in the value chain.

    Akah said that the commission as the sector regulator was also ensuring that consumers get the right value for the tariff paid on electricity.

    He said the commission was also developing the best regulatory framework to attract investors to the sector.

    “What we are doing is to make sure that we give the investors that are coming, a fair return on their investment.

    “We want to make sure the tariff we guarantee is right, so that at the end of the value chain, the distribution companies would be able to remit the money.”

    The NERC acting chairman also identified inefficiency in revenue collection by the distribution companies as a major challenge facing the sector.

    “The challenge of inefficiency in revenue collection is too high, the regulator has a lot of ample power to deal with these issues, but we are also facing a challenge.

    “Right now some distribution companies have gone to court and got restraining order on NERC on enforcing the market rules.

    “The market rules say that if you are not able to remit the money covering the power that was sent to you as a distribution company, your license will be withdrawn.”

    Akah explained that full collection and remittance of the needed percentage of the fund by the distribution companies to other players in the electricity value chain would improve liquidity.

    The acting chairman said NERC and the FG were making plans to pay up the debt owed distribution companies by MDAs, adding that the payment would also ensure liquidity to the sector.

    He said the commission was developing a mechanism to smoothen electricty payment by consumers.

    “We are also to ensure that all the consumers pay for the electricity they consume.

    “Some of the consumers had said they were not going to pay, saying that they were not getting the service for their payment, but now they are paying,” he said.

  • ‘Vandalism, lack of fund major ills of power sector’

    Pipeline vandalism and illiquidity are the biggest problems confronting the power sector, the Managing Director and Chief Executive Officer, Frontier Oil Limited, an indigenous oil and gas firm, Thomas Dada, has said.

    In an interview, he said though   pipeline vandalism had  taken the sector many steps backwards,  lack of fund due to huge indebtedness to operators had become worrisome, adding that the government was the biggest debtor.

    He blamed the electricity distribution companies (DisCos) for the paucity of fund.

    According to him, the DisCos neither meter customers properly nor collect bills from them. ‘’Operators of the DisCos didn’t do what they promised when they took over those distribution companies. The reality is that many electricity consumers don’t pay for the power they consume, he said.

    To him, the transmission segment of the power sector value chain is the weakest. He said the NBET sat on millions of dollars, yet the sector was collapsing. He questioned the reason NBET would not use that fund to rescue the sector, noting that channelling that money into the sector would be fine.

    He advised the government to support the power system for at least 10 years, subsidise it to enable power supply become stable. When consumers get used to stable power supply, the sector could then come up with a tariff hike, he added.

    ‘’There is resistance to electricity tariff increase because consumers are getting little supply but paying more. He urged the Federal Government to use the money saved from oil subsidy removal to positively ensure that the power sector is improved meaningfully.

    Dada said: “Gas equals power and equals economic growth,” noting that in a country where there is no gas and no power, the economy would break down.

    He warned that until gas is adequately produced for domestic use and power generated and distributed properly, the diversification of the economy which is the yearning of the people may be far from being attained.

    Thomas said: “We are not going anywhere with state of the power sector. We have to do something far-reaching. NBET can’t be sitting on that kind of money and the sector is crumpling before our very eyes.”

    Dada said the government got it wrong through wrong policies, even those wrong policies were inconsistently applied. Since independence, he said, the country had generated only maximum of five gigawatts of electricity.

    “The government has no business running business. The power sector is not a social service, it is a business and it has to be allowed to run as a business. We have to respect sanctity of contracts. We have to keep our words, and not when an investor puts in his money today, tomorrow the rule is changed.”

    According to him, when gas production for domestic use is reduced, the power available for the economy is also reduced. ‘’We need to solve the problem of vandalism and lack of liquidity in the sector. The pricing of gas is just not adequate to earn the returns and attract investment we yearn for as producers,’’ he added.

    He urged the government to summon the political will and do something constructive to arrest the situation, adding that the government needs to do something sustainable to ensure that the gas-to-power value chain was rescued from total failure.

  • Power sector loses 142mw due to water constraint

    Power sector loses 142mw due to water constraint

    •Supplies 3,175MW

    Constraint caused by shortage of gas to power reduced from 4,307 Mega Watts (MW) of August 5 to 3,967MW on Sunday.

    On the day under review, the Nigeria Electricity System Operator (SO) of the Transition Company of Nigeria (TCN) sent out 3175MW to the 11 distribution companies (DisCos).

    The Nigerian Electricity Supply Industry (NESI) that made this disclosure on its website yesterday, reported that line constraint was 240MW. It noted that water constraint that was 142MW rose marginally by 1MW.

    All the constraints, on the day under review, said NESI, resulted in loss of an estimated equivalent of N2,088, 000, 000 on August 07 2016 due to constraints.

    It said: “On August 07 2016, average power sent out was 3175MWh/hour (up by 27MWh/h). The reported gas constraint was 3967MW. The reported line constraint was 240MW according to TCN. The water management constraint was 143MW.

    1. The power sector lost the estimated equivalent of N2,088,000,000 on August 07 2016 due to constraints.”

    It would be recalled that the power sector that did not report any constraint due to water supply for over a month, first said that on August 5, it recorded 142Mega Watts (MW) water constraint.

    Although the spokesperson of the company, Mrs. Seun Olagunju did not receive our Abuja correspondent phone call to inquire what led to the water constrain, The Nation learnt that it was due to some undisclosed mechanical issues in the Kainji Hydro Power Station.

    The source that spoke to The Nation in confidence said that “they (TCN) are doing as much as they can possibly do with the mechanical constraint.”

    Another source said that the company was trying to be more efficient by not using all its water and make some reservation for other days.

    He said: “They are restricting the water because they want it to last. There are two options with an hydro electric dam. You can use all the water when you have it. You can manage it so that the day you don’t have water you have water in storage. They are not even using all their water.”

    According to the Nigerian Electricity Supply Industry (NESI) website that published the power performance daily summary, on the day under review, the Nigerian Electricity System Operator (SO) sent out 3,135MW to the 11 distribution companies.

    The report however noted that the sector recorded 265MW line constraint.

    All the losses, said the NESI, was an estimate of N2.7billion.

    It said: “On August 05 2016, average power sent out was 3135MWh/hour (up by 59MWh/h). The reported gas constraint was 4307MW. The reported line constraint was 265MW according to TCN.  The water management constraint was 142MW.

    “The power sector lost the estimated equivalent of N2,263, 000, 000 on August 05 2016 due to constraints.”

  • Nigeria’s power sector woes: Underfunding, greed or sabotage?

    Nigeria’s power sector woes: Underfunding, greed or sabotage?

    He said it ranges from cut down in production, job loss, to outright closure or relocation to other countries by operators.

    He decried the erratic power supply, saying that companies opt out of the grid completely because outages often occur in the middle of production processes, a situation that causes enormous damage and makes them incur so much loss.

    His words: “Most companies such as Nigerian Bottling Company (NBC) Plc., Nigeria Flour Mills and other multinationals generate their own power. They don’t rely on supply from the grid. And for the last three years, study showed that our members spend an average of N20.8 billion per month.”

    The Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said members of the group, including the large, medium, small and micro businesses, have all resorted to alternative energy sources.

    Yusuf listed such sources being used to power machineries as natural gas and outright construction of power stations in order to cut cost of production. He said some of the companies still manage to operate on supply from the grid but keep big diesel generators as back-ups whenever there is an outage.

    He said: “Those hard hit by the situation are the small, medium and micro enterprises that rely on petrol powered generators.  I think something has to done if this country is to move forward. We cannot continue this way as a nation.

    “Where in the world does the manufacturing sector run generators as major source of energy supply? Government should see to the plight of the manufacturers in the country before all the industries relocate to Ghana as we are experiencing currently.”

    The way forward

    The Energy Institute says the country requires a combination of on-grid and off-grid sources of energy to meet its citizens energy needs. The Institute’s Chairman, Mr. Osten Olorunsola, who was a former Department of Petroleum Resources (DPR) director said the adoption of the available energy sources remains the way out of the energy crisis.

    Olorunsola s recommended energy mix as a viable option since the country has tried a single method of generating electricity without much success. The Federal Government, he noted, should leverage energy sources such as coal, solar, gas, hydro, biomass and others to lift the power sector growth and sustainability.

    He said: “Energy mix is the way out of the problem Nigeria has found itself in. We have no choice than to use a combination of different sources of energy to generate the required electricity.

    “The government needs to marry both the renewable energy and traditional energy sources together to attain the goal of providing stable electricity for Nigerians.  While solar and wind are used to generate renewable energy, gas and hydro are used to provide the traditional energy.

    “Other countries have adopted this strategy, and Nigeria should not be an exception. Another problem is that we have a lot of skills gap, so we have to help brush up and sharpen the capabilities of all our engineers and other energy related professionals.

    “Northern part is blessed with solar while the eastern part has huge coal and gas reserves, but the failure of the government to make use of different sources of energy have not augured well for the country.”

    The DISCOS urged the government to stop pipeline and power equipment vandalism and compel government ministries, departments and agencies (MDAs) to pay the arrears and future electricity bills.

    NERC’s former Chairman Dr. Ransome Owan, now Aiteo Power Limited’s Managing Director urged consistency in government’s policies.

    Speaking at a forum in Lagos, Owan insisted on the need for government agencies to adopt good policies including those inherited from past administrations, if such policies will advance the sector.

    Managing Partner of Lonadek Oil and Gas Consultants, Dr. Lola Amao, said the power sector more than ever should assemble those with the ‘out of the box thinking capacity’ to design strategies for the  sector to experience a turnaround on sustainable basis.

  • Fed Govt woos Iranians, others into power sector

    Fed Govt woos Iranians, others into power sector

    The  Federal Government has made overture to Iranians and other foreign investors to tap into the numerous opportunities available in the Nigerian power sector.

    The Minister of State for Power, Mustapha Baba Shehuri said  with the present administration of President Muhammadu Buhari’s commitment to improving the nation’s power sector through various innovations and initiatives, the country is now an investment friendly nation in Africa.

    According to a statement, the  minister spoke when Iranian business delegation, led by the Vice-President of Dam and Water Works Construction Company (SABIR), Mohammad Ghaedi paid a working visit to the Ministry, in Abuja.

    Shehuri said with a population of over 160 million and with the highest peak power generation of over 5000megawatts (Mw), Nigeria has the highest electricity demand in Africa and urged Iranians and other foreign investors to tap into the numerous opportunities available in the sector.

    The minister further stated that the government is trying to meet the nation’s energy supply and access through investment in energy mix, such as gas, small and mini hydros, wind, solar and bio-mass energy.

    On investment opportunities in the power sector, he said the government has signed a Power Purchase Agreement (PPAs) with 14  different companies to produce 1,125Mw solar power in nine states and Abuja using  sun as source.

    This he said is to demonstrate government’s commitment to the development of a robust energy mix, while also achieving its programme of incremental power supply.

    The minister further said at the National Council on Power (NACOP), which took place in Kaduna, the Minister of Power, Works & Housing, Babatunde Fashola launched a document titled “Nigeria Power Sector Investment Opportunities and Guidelines” on investment opportunities in the Nigerian Electricity Industry.

    Shehuri who presented the document to the Iranian investors urged them to go through it carefully because it would avail them with information on various investment opportunities available in the fledging power sector.

    The minister also added that government will continue to provide enabling environment for power investors, stressing that it would provide security for their investments, while the sector will continue to be led by the private sector.

    Earlier, Ghaedi said  Iranian investors are ready to invest in the power sector, as Iranian business men are already establishing partnerships and exploring the abundant opportunities in the sector.