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Tag: Stable power

  • Federal Govt targets $10b for stable power

    Federal Govt targets $10b for stable power

    • Vandals destroy transmission line

    The Federal Government is banking on the Public-Private Partnership (PPP) arrangement to bridge the investment gap in the power sector.

    Power Minister Adebayo Adelabu, who said that the government will need $10 billion to provide uninterrupted power, described the challenges in the power sector as enormous.

    Attacks by vandals of transmission facilities and other infrastructure remain one of the major challenges facing the sector.

    Yesterday, the Transmission Company of Nigeria (TCN) said some armed men attacked the construction site of its ongoing 330/132/33Kv transmission substation in Obajana, Kogi State.

    Last month, 17 states in the North were plunged into darkness for some days after bandits attack on the Shiroro-Kaduna transmission lines in Niger State.

    Speaking during a meeting with the Director-General of the Infrastructure Concession and Regulatory Commission (ICRC), Dr. Jobson Oseodion Ewalefoh, Adebayo said the government plans to engage the private sector in raising a portion of the $10 billion within the next five to 10 years to ensure steady electricity supply.

    The meeting centered on the financial and technical needs of the power sector through the PPP initiatives being championed by the ICRC.

    Adelabu welcomed the ICRC’s initiative, acknowledging that the government could not solely raise the $10 billion needed for the 24-hour power supply, especially with other sectors also requiring significant investments.

    Noting the importance of maintaining government ownership while using private sector funds, the minister identified concessions as the ideal approach to achieve this balance.

    He said: “Achieving 24-hour power supply within 10 years requires a funding commitment of around $10 billion, which the government alone cannot provide.

    “This is why we must partner with the private sector through Public-Private Partnerships (PPPs), while retaining government interest.”

    The duo noted the importance of leveraging on private sector expertise and funding to boost power infrastructure, with a shared goal of achieving regular electricity supply nationwide.

    Dr. Ewalefoh stressed the role of PPPs in addressing the power sector’s challenges, noting that while funding is essential, the issues are complex and multi-faceted.

    He pointed out that the private sector collaboration would provide not only capital but also technical expertise necessary for optimising existing infrastructure and building new power assets.

    Read Also: N6tr public power revenue will guarantee stable power, says minister

    He said: “Revamping the power sector requires planning, investment and time. Government cannot fund it alone. So, we must rely on the private sector’s financing capacity, which is why the ICRC was set up to regulate this leverage.”

    The ICRC DG added that the commission’s regulatory framework aims to streamline the process of attracting PPP investment to the sector, thereby boosting foreign direct investment and driving economic growth.

    Ewalefoh unfolded ICRC’s six-point policy designed to  accelerate PPP investment and streamline the processes to fast-track project delivery.

    He noted that despite simplifying the regulatory procedures to stimulate private sector involvement, stringent, oversight remains in place to prevent delays and ensure that only capable firms engage in these partnerships.

    The Commission now includes conditions in PPP agreements, where failure to meet these terms leads to automatic nullification.

  • ‘Why stable power is vital to quality education’

    ‘Why stable power is vital to quality education’

    Stakeholders have noted that affordable and stable power is key in the delivery of quality  education.

    They spoke at 2024 summit of  Education Writers’ Association of Nigeria (EWAN)  at University of  Lagos, with theme: “High Tariffs: Resolving Electricity Crisis in Nigeria’s Education Institutions.”

    UNILAG Vice Chancellor, Prof. Folashade Ogunsola, said education should be spared unstable and expensive power supply.

    She said most universities and institutions owe huge power tariffs.

    Former Minister of State for Education, Yusuf Sununu, hoped the summit will foster innovative measures to tackle electricity supply problems.

    Sununu hinted that Federal Ministry of Education is engaging public-private partnership model to address the problem.

    Spokesman of Association of Nigeria Electricity Distributors (ANED), Sunday Oduntan, noted that while Nigerians seek reliable power, non-payment of tariff will impede growth of the power sector.

    He noted  financial challenges was impeding the resolve to give 20 hours of power daily.

    Read Also: Initiative, foundation celebrate girl-child

    Representative of chief executive of Nigerian Electricity Regulatory Commission (NERC), Aisha Bello, reiterated the commission’s role in regulating and fixing tariffs.

    Rector of Yaba College of Technology, Dr Ibraheem  Abdul, said institutions should have the autonomy to choose their distribution band.

    Chair of EWAN, Mojeed Alabi explained the summit seeks to proffer solutions to the energy crisis in the sector, adding government must have the political will to invest in affordable power supply from basic to the tertiary level of education.

  • ‘Only market forces can guarantee stable power ‘

    Nigeria has been burdened with irregular supply of electricity, a development which is having a devastating effect on the economy. In this interview with reporters, the Chief Executive Officer, Century Power Generation Limited, Dr Chukwueloka Umeh says government interference will not guarantee stable power supply. He advises government to build infrastructure and market that would sustain the growth of the sector, among others. AKINOLA AJIBADE was there.

    Why has stable power supply remained elusive in Nigeria, considering measures by the Federal Government to fix the sector?

    The reasons behind acute power shortage in Nigeria are many. First, the Federal Government has failed to give the sector the attention it deserved. Power is key to the growth of any economy, and as such it must be given priority by any government that wants to record success. In Nigeria, it is a different case entirely. The government has failed to give the sector the attention it deserves. Let me, at this juncture, say that the government has misplaced its priority by giving prominence to some issues to the detriment of the power sector.  Instead of putting measures, which would enable power plants access gas for production of electricity in place, the government did not.

    The government did not deem it fit to provide infrastructural facilities that would aid the transportation of gas from marketers or suppliers to the power plants. That is why plants are complaining of being starved with gas, which is the feedstock they need to generate electricity. Though the country has enough gas, as it is reputed to be the largest ninth gas producer in the world, the nation’s poor and ageing infrastructural facilities have become a source of concerns in the industry. Secondly, the country lacked strong distribution networks, a development, which has hindered the distribution of electricity to the consumers by the firms approved to undertake such responsibilities.

    Nigeria is suffering in the midst of plenty, considering the fact that the country has one of the highest gas reserves globally.

    There is no doubt about that. I would give a simple analogy to explain this fact. A man is living on the bank of a river, which produces clean water. However, the man was unable to drink from the water due to problems confronting him.  He is finding it difficult to dip his bucket in the water in order to get some water to drink, among others. This made him to travel 20, 30 or more kilometers in order to buy water from someone else, who is taking water from the same river. This other man buys water in bottles and resells it to people. That is the tragedy of our situations in Nigeria.

    We have resources, which we cannot use in order to meet our needs. This is why Nestoil and its subsidiary, Century Power Generation (CPG), have invested in the widening oil and gas space. This is a company, which is owned by Nigerians and run by Nigerians. Nigeria is the only home we have. This implied that we have no other place to run to. So, if we are going to live here, do business here, we have no choice than to fix the problem(s) in the country.

    Nigerians travel overseas to buy things that they need for their businesses.  Also, those countries use resources bought from other areas, including Nigeria, to make things work. For instance, the economy of a country like China was very small 20 years ago, but it is much bigger now.  China’s Gross Domestic Product (GDP) was very small, but it is now bigger.  China’s GDP was small, compared to Japan. The question we must ask ourselves is: What did China do?

    The country invested in energy. And within 20 years, Chinese have turned their economy around. Today, China is now a global superpower as it has moved from a country, which manufactures products only to become a technology driven country today.

    What lessons can Nigeria learn from the China’s example?

    The lessons are many. The first lesson is in the area of energy development. China has been able to build infrastructure, build railways, roads, industries, spend more on locally produced goods, among others, because the country has provided its own. Nigeria can take a cue from China by investing significantly on power. The country must ensure that its energy sources are well implemented. With adequate power in place, Nigerian economy would become stronger in no distance future. The country would not find it difficult to produce many millionaires bigger industries would emerge among others.  I remember those days when Michelin was producing tyres in Nigeria; I remember those days when Nigeria was exporting products such as timber, palm produce and others. I remember those days when exchange rate was one pound sterling was equal to one naira and so on. Nigeria would not have some economic drawbacks if power had been stable in the country.

    What can the government do to stabilise power sector?

    The government should try and provide infrastructure, a development which will facilitate the production of electricity in the country. Also, the government should put in place a market that would guarantee the sales of electricity by the operators.

    What influenced your participation in the Nigerian power industry? 

    Issues in the Nigerian energy sector are compelling and require solutions. Is it gas shortage are we going to talk about? Is it failure of the power plants to return to optimal production? Is it the failure of transmission to evacuate enough electricity to the national grid we are going to talk about? Is it the general power outage in the country? There are lots of issues that need investigation and solution in the country. I worked in the General Electric (GE), in the United States for many years.  There, I participated in the development of gas turbines for both the airplanes and power plants. If I can do that in the U.S, I should be able to do the same in Nigeria, which is my country. I forget about the fact that I was paid in dollars in United States, coupled with the fact that I was enjoying the infrastructural facilities over there, Nigeria is my country.

    So, when I came back to Nigeria, it was easier for me to work in the Century Power Limited, where we are working on 1,500 megawatts power plant in Okija, Anambra State. This is a gas powered turbine that would be completed in 2022 and it would help in providing power to the people in the state and beyond.

    How realistic is 2022 slated for Okija Power plant inuaguration?

    The date for the commissioning of the plant is realistic as Century Power in conjunction with Nestoil, its parent company, is working to meet that deadline. However, the plant would be ready in either second or third quarter of 2020 in the event that we are able to mobilise enough funds for the project. To enable Century Power achieve this feat, governments have to come in. A lot of things need to be done by the government in order to make the plan a reality. The government needs to approve documents to achieve this feat.  We all know that things have changed in the country. Many officials in the Nigerian Electricity Regulatory Commission (NERC) and other bodies have been removed by the government and new officials appointed to replace them. This and many other problems have delayed the achievement of these projects.  There are documents, which the Ministers of Finance, Power, Justice and others have to approve. This is the only way through which Century Power can improve funding and accelerate the construction of those projects, which are critical to the growth of the nation’s energy sector.

    Failure by the Century Power Limited to get these documents signed means that the projects may not be completed. That is the why the company is seeking the support of the government on these issues. Any attempts by the government to assist the firm to complete the power projects in 2020 means that the government is indirectly working for the betterment of the lives of Nigerians.

    Why is it that power distribution companies (Discos) have been unable to distribute enough electricity to consumers?  

    The reason is not far-fetched. The stakeholders such as the power generation companies (GENCOS), the DisCos, the Transmission Company of Nigeria (TCN), the Nigerian Bulk Electricity Trading Company (NBET) and others in the energy value chain are not doing what they are supposed to do. The value chain is broken, and as a result, there is no cohesion among the stakeholders. Let us say Nigeria has installed capacity of over 12,000 gigawatts and there is problem with the distribution, how can the country provide uninterrupted power supply? The problem with the Discos, started during the privatization period.

  • Long road to stable power

    Long road to stable power

    Four years after the power sector’s privatisation, the anticipated improvement in electricity supply remains a mirage. Rather, what consumers got was an the increase in tariff. The service providers are blaming it on industry challenges. AKINOLA AJIBADE captures consumers’ frustrations and the private investors’ seeming lack of capacity to turn things around.

    INDUSTRALISTS, under the auspices of the Manufacturers Association of Nigeria (MAN), are up in arms against electrici distribution companies. They are worried by the toll poor generation, distribution and transmission of electricity is are taking on their businesses. According to them, rising cost of production caused by irregular electricity supply, which forces them to turn to generators, is affecting their bottom line and eroding their competitiveness.

    MAN President Dr. Frank Udemba Jacobs articulated the frustrations of manufacturers when he lamented that lack of adequate and reliable electricity was inhibiting the growth of the manufacturing sector, and that many companies had collapsed as a result of the crisis in the power sector.

    ‘’Due to power outages, many firms were unable to attain optimal levels. Some of them, for want of better opportunities, relocated to neighbouring countries such as Benin Republic, Togo, Ghana, and Cote d’ Ivoire,” he fumed. The MAN chief and industrialist added that the situation has resulted in massive job loss, with dire consequence on the economy. He described the situation as worrisome considering that the economy, at present, is barely strong enough to provide jobs for the teeming population. He wondered why Nigeria, despite her huge gas potential (87 trillion cubic feet of proven gas reserves) and over 600 trillion cubic feet of unproven gas reserves, could not provide enough electricity to catalyse the growth of her economy. He said the Federal Government seemed incapable of providing a lasting solution to the problems in the power sector.

    Giving details of the crisis in the power sector, an obviously embittered Jacobs said, for instance, that electricity generation fell to 2,500 megawatts (Mw) in the first quarter of 2017, but, a few months later, moved to 3,500, which is barely enough to guarantee substantial improvement in electricity supply to manufacturers and Nigerians. The issue, Jacobs said, has forced manufacturers to turn to alternative sources of power at great costs. He added that the Federal Government’s decision to increase the pump price of fuel from N85 per litre to N145 brought untold psychological and financial stress to families and businesses. He also lamented that the power sector was yet to overcome its challenges, despite receiving N700 billion lifeline from the Federal Government. He said he had tried, in his capacity as president, to get the Ministry of Power and the Nigerian Electricity Regulatory Commission (NERC) address some of the problems in the sector to no avail. Jacobs did not mince words when he accused service providers particularly power distribution companies (DisCos) of exploiting consumers by charging estimated bills even when they could not supply electricity. Describing  the crisis in the power sector as ‘’unfortunate,’’ the MAN chief said it has worsened the economic situation in the country. While lamenting that it has added to the woes of Nigerians who are still battling to survive the current economic downturn caused by recession, he put the problem on the doorstep of government.

    Individual consumers also hit

    Industrial electricity users are not the only ones screaming blue murder over the effects of the crisis in the power sector on their businesses. Domestic or individual electricity consumers across the country are also feeling short-changed. For instance, one of the consumers, Mr. Godwin Ajebor, described the crisis as pathetic.Ajebor, who is General Manager of TKY Frozen Fish Limited, located in Dopemu, Lagos, lamented that his firm has lost substantial revenue to lack of steady and reliable electricity supply by the service providers. He said his firm lost several cartons of chicken, turkey and fish to poor refrigeration, caused by irregular electricity supply.Hear him: ‘’We (TKY Limited) sell perishable products that must be in the freezers all the time. Due to power outage in the country, we are unable to refrigerate the products well. Often times, the Perkins brand of generator the company uses malfunctions, causing the products to go bad. And the revenue losses are huge.”Ajebor also complained that cost of fuelling the generators is enormous. According to him, the firm spends between N3.5million to N5million monthly on fuel. “When we add the cost of fuel and generator repairs, we spend about N8million every month. The firm also spend a lot of money to access foreign exchange to import products,” he added, calling on the Federal Government to address the crisis in the power sector.Similarly, Bamidele Owoepo, a resident of  Ejigbo, in Lagos State, observed that electricity supply has dropped significantly since March this year, with many states across the country unable to get power. He said many areas within the Lagos metropolis are in darkness, forming residents to spend huge amount of money on diesel to power their homes and offices.Owoepo, who is Proprietor of Alayo Comprehensive Secondary School, Ejigbo, lamented that he has been paying through his nose to get electricity. ’’I usually buy between 30 to 40 litres of fuel every day in order to provide electricity for my home and the school, which has been my only source of living. This means that an average of N10, 000 is being spent on fuel daily, in order to get light, he told The Nation. Also, Mrs. Funmi Davies, a housewife in Egbeda, Lagos, bemoaned the negative impacts prolonged lack of electricity was having on her business and family life.  She said she has been in darkness for months, stressing that her service provider’s failure to supply electricity to the area grounded her frozen fish business.  She added that other informal operators such as hairdressers, barbers, and welders, among others, are losing customers due to irregular electricity supply.

    Operators explain

    Investigations by The Nation showed that although, a litany of challenges face the service providers, inadequate capital to invest in network expansion and purchase of equipment especially pre-paid meters, appears to be the most serious. Many of the private investors who acquired the power assets when they were privatised in 2013 still lack the financial muscle to turn the sector around.Key operators including the power generation companies (GenCos), power distribution companies (DisCos), and the Transmission Company of Nigeria (TCN) are affected by the paucity of funds to run the electricity business efficiently. For instance, the Chief Executive officer, Eko Electricity Distribution Company (EKEDC), Engr. Oladele Amoda, said liquidity is the bane of the sector, since it affects every aspect of the power sector. He said customers are not paying for the power they consume.According to him, this has made it difficult for DisCos to generate enough resources to expand their networks and also provide reliable services to their customers. He noted that because of this, the power firms are merely struggling to survive.   The liquidity crisis in the sector may have been aggravated by the huge debt in the industry. For instance, the Director of Research and Planning, Association of Nigerian Electricity Distributors, Mr. Sunday Oduntan, put the debt owed DisCos by Ministries Departments and Agencies (MDAs) at over N1 trillion.He told The Nation that the debt accumulated because MDAs are not ready to pay the power firms. He noted that the debt, which stood at N800 billion in the third quarter of 2016, rose to N900 billion in the fourth quarter. It later hit N1trillion early this year. According to him, the MDAs accumulated the debt over a period of time, as some of the debts were incurred in the 80s.’’To say that the operations of the power firms were not affected by debts is an understatement. The DisCos are unable to meet their obligations to their customers because of the debts. Power companies cannot procure meters, transformers, cables and other equipment needed to make their job easier,” Oduntan noted.

    Shortage of meters

    The lean purse of the power distribution companies, according to the Minister of Power, Mr. Babatunde Fashola, was responsible for the metering problem in the sector. He said the 11 DisCos require N220 billion to provide meters to their customers, implying that each of the firms would need N20 billion to adequately meter its customers.Also, the Nigerian Electricity Regulatory Commission (NERC), said the DisCos have what it described as expanded networks, with the 11 DisCos running a network base of three million customers in 2015. The figure, NERC projected, will increase significantly this year. The agency said power firms have a strong task to meet, since less than one million customers have been metered in the country.The Head, Corporation Communications, Ikeja Electric, Mr. Felix Ofolue, however, said that his firm has increased its network substantially. He said that in the last two years, Ikorodu, one of the areas under Ikeja Electric, has welcomed new visitors, indicating that there has been substantial expansion of the network.

    GenCos blame scarcity of gas

     For power generation companies (GenCos), the perennial scarcity of gas is an albatross, The Group Leader, Generation, Sahara Power Group, Engr. Mike Uzoigwe, said the ability of power firms to access gas for operation has been stalled by the huge cost of Foreign Exchange (forex).Uzoigwe said the price at which power firms were buying gas in 2016, was higher than the price they bought the product in 2013. As he pointed out, “If power firms bought a unit of gas at N165 per dollar in 2013, and they are now buying the same unit at N420 per dollar, it will be difficult for them to break even. That is why they are unable to access enough electricity for production.” Group Leader noted that the high cost of forex resulted in a corresponding increase in the price of spare parts used by the power firms. According to him, Sahara Group bought Egbin Power Plant for $400million, adding that the company was paying more money to service the loan due to rise in the cost of foreign exchange. The Nation learnt that indeed, the operations of the power firms have been seriously hampered by the alleged refusal of banks to advance credit to them and the huge cost of foreign exchange for importation. The acting Chief Executive Officer, Ikeja Electric, Mr. Anthony Youssefor, said activities in the sector have slowed down, following the inability of many power firms to get forex to run their operations.He said it will be difficult for the management of Ikeja Electric to meter all its customers at the exchange rate of N350 to a dollar. “In view of the prevailing situation, no firm would buy a product and sell it below the selling price to its customers. This means that such firms are ready to incur debts,’’ Youssefor said.

    The way out

    Stakeholders say that the problem in the power sector is complex and requires urgent solution in order to encourage growth. For the Executive Secretary, Electricity Meters Manufacturers Association of Nigeria (EMMAN), Mr. Muhideen Ibrahim, there is the need for the Federal Government to evolve a tripartite agreement between indigenous manufacturers of meters, banks and the 11 DisCos.He argued that such arrangement will help resolve the liquidity problem in the sector. He said the government can achieve this goal by organising a metering conference for key stakeholders in the electricity value chain. The conference, Muhideen said, would enable the government to know how, when and where to channel its resources in order to get the funds for provision of meters in the industry.Listen to Muhideen: “The Federal Government should organise a conference, which would proffer solutions to the metering problem in the sector. At the conference, issues such as reviving and implementing metering plans that are provided by NERC modalities on how to raise funds for the power firms, among others, would be deliberated upon. “Through this, an agreement between the power firms, banks and the indigenous producers of meters would suffice. Also, the government would be able to sign a Memorandum of Understanding (MoU) with institutional investors on how to invest in metering and other strategic areas in the industry.The Federal Government had in 2013 sold the assets of the defunct Power Holding Company of Nigeria (PHCN) to private investors under a privatisation exercise. The exercise was later mired in controversies over alleged sale of the national assets to investors with little or no financial and technical capacity and know-how to run the sector and deliver efficient and cost effective services.Recall that the handover of the power assets to private investors had raised the hopes of not a few Nigerians that a major turnaround in the fortunes of the sector was in the offing. However, four years down the line, such hopes appear to have been dashed, at least from the perspective of electricity consumers most of who now feel short-changed.The thinking is that recommendations such as Muhideen’s and indeed, those of other concerned stakeholders and consumers, if implemented, will resolve the crisis in the power sector. This is hinged on the belief that steady and reliable electricity is perhaps, the most critical factor to catalyse the growth of the economy.

  • NNPC’s gas master plan raises stable power supply hope

    NNPC’s gas master plan raises stable power supply hope

    The countdown to increased power generation may have begun, with the East-West pipeline, popularly called Obiafu/Obrikon-Oben or OB3 pipeline, close to being completed.

    The pipeline work has been completed and the contractors are working on the terminal stations, it was learnt yesterday.

    The gas transmission pipeline system is being developed by the Nigerian National Petroleum Corporation (NNPC) and indigenous engineering, procurement and construction (EPC) companies.

    The contractors are Nestoil (Lot A), and Oilserv (Lot B). The pipeline system is strategic as it will boost the availability of gas to fuel  power plants, and at the same time deepen the availability of gas for domestic needs.

    When completed, the 127km x 48-inch pipeline system with associated plant facilities will be the biggest diameter-inch gas pipeline in the country with capacity of two billion standard cubic feet per day of gas (2Bscf/d). But for some factors, including about 20 months’ delay in being given access to the “right of way”, the project would have been completed by now.

    The pipeline system is a critical component of the Nigeria Gas Master Plan, which the NNPC has been nurturing over the past decade. Upon completion, it will transform the infrastructure landscape to a state that can enable domestication of natural gas demand and catalyse the economy into the world’s top 20 within a short  time.

    A project status update shows that the scope for Lot B is more than 80 per cent delivered and Oilserv Limited is on course to complete its scope by March 2018. This includes survey verification, bush clearing, welding and backfilling of its 65km stretch of pipeline, and backfilling.

    Oilserv has also successfully crossed 15 major roads with width ranging from 5.02 meters to 26.73 meters via Thrust-Boring mechanism. Using horizontal directional drilling technology, it has also crossed two major rivers – 642meters of Asimiri River, and 724meters of Ethiope River. It is currently completing the crossing of the 1,200metres Jamieson River.

    The excitement about the steady progress being made should not be lost on the nation. First, the dark days of power outage are fast coming to an end. The multiplier effect on industrialisation and economic growth is momentous. Second, this is the first time that the engineering design, and construction of the pipeline infrastructure system of this scale is being handled by purely indigenous EPCIC company,” the company said yesterday in a statement.

    Frazimex Engineering, a local company, handled the engineering design for the 127km x 65″ pipeline system.

    The NNPC has expressed strong satisfaction about the progress that Oilserv had made on the project.

    Oilserv is the first and only Nigerian company to fabricate, install and commission the largest oil manifold station (36inch Trans Niger Pipeline (TNP) Ebulu Manifold for SPDC). It is also the first Nigerian company to successfully execute pipeline repairs using Cofferdam and repair work using Hot Tap. When OB3 is completed, it will yet represent another “first” for  Oilserv.

  • Is stable power a matter of cash?

    Is stable power a matter of cash?

    The 24 power companies have got a N55.45 billion Nigerian Electricity Market Stabilisation Facility (NEMSF) from the Central Bank of Nigeria (CBN) to boost infrastructure. Will this lead to improved power supply? COLLINS NWEZE writes.

    Last Friday was busy in Lagos for power sector operators. The Central Bank of Nigeria (CBN), the Ministry of Power and other stakeholders in the sector met at the CBN’s Lagos office to discuss how to meet the government’s promise of a stable electricity supply.

    The promise has remained unfulfilled because of key operators’ cash crunch.

    At the meeting were the CBN governor, Godwin Emefiele and Minister for Power, Works and Housing, Babatunde Fashola  among others. The highlight of the event was the disbursement of N55.45 billion to 24 power companies to fix the power problem.

    Emefiele said the disbursement, the fourth in a series, was to improve the power situation.

    According to him, a review of the fund utilisation and reports of impact on beneficiaries revealed that the intervention had resulted in the restoration of 905 megawatts (Mw) of power into the grid as a result of facility turn around maintenance in previous disbursements.

    The CBN initiated a N213 billion Nigerian Electricity Market Stabilisation Facility (CBN-NEMSF) as a follow up to commitments it reached with other stakeholders to address debts owed by generating companies to gas suppliers.

    Emefiele said the new fund marked a major milestone in the effort of the apex bank, in collaboration with the Federal Government, to achieve a contract based electricity market, which featured the signing of Power Purchase Agreements (PPAs) Activation Agreement by Nigerian Electricity Bulk Trader (NEBT).

    The fund was disbursed to 24 industry participants, which include three distribution companies, 14 generation companies – National Independent Power Plant inclusive; one-service provider; and six- Gascompanies (Gascos) to further address the challenges of the sector.

    The breakdown of the fund showed that distribution companies received N8.67 billion; generating companies got N35.83 billion; gas suppliers N10.49 billion and service providers received N459.67 million.

    The CBN Governor explained that total disbursements to the distribution companies would be N49.73 billion, generating companies N54.29 billion, gas companies N15.73 billion and service providers N0.46 billion.

    Emefiele, however, hinted that new entrants into the scheme are two distribution companies (Benin and Jos) and eight generating companies, which include two IPPs (Agip/Okpai and Shell) and six NIPP plants (Alaoji, Geregu, Ihovbor, Olorunsogo 2, Omotosho 2 and Sapele 2).

    Fashola described the disbursement as a milestone. He called for collaboration between the various stakeholders to bring stable power to the people.

    He also called on consumers of electricity to pay their bills, adding that vandalisation of gas pipeline does not pay the country. “Vandalism of oil and gas pipelines does not help the people. It only increases pollution and translates to less revenues to the state and Federal Government,” he said, adding that funding is required to enable the power companies perform efficiently and effectively.

     

    Power sector hitches

    The CBN links the challenge faced by power sector reforms to unattractive pricing of domestic gas and legacy debts that have inhibited investment in gas supply and infrastructure.

    Also, affecting positive feedback on the reforms are anomalies in the tariff regime that do not allow the true cost of supplying electricity to be known as well as difficulties across the value chain in addressing capacity issues primarily due to a shortfall in revenues.

    It admitted that aside these hitches, the power sector reform is successfully being implemented with most of the milestones fully achieved. Presently, generation and distribution in the electricity industry is being managed by the private sector while the transmission network is government owned, under a management contract.

    The challenges are interconnected with the unexpectedly large revenue shortfalls in the industry, which needed to be fixed.  That prompted the CBN to institute the NEMSF where N213 billion was mapped out to settle legacy gas debts and shortfalls in revenue for operators to boost power supply.

    To achieve this, the CBN is collaborating with the Ministry of Petroleum Resources, Ministry of Power and Nigerian Electricity Regulatory Commission (NERC) to achieve the objective. Such feat would boost liquidity conditions in the Nigerian Electricity Supply Industry (NESI) and address hiccups that characterised the posts-privatisastion of the power sector of the economy.

     

    NEMSF in perspective

    According to the CBN, the NEMSF will be administered through deposit money banks and disbursed at 10 per cent interest rate yearly while the tenor shall not be more than 10 years.

    Also, a Special Purpose Vehicle (SPV) that complies with Section 31 of CBN Act 2007 will serve as an intermediary between the banks and the electricity market players while the NERC shall reset the Multi Year Tariff Order (MYTO) to ensure that it provides for the loan repayment including the costs of setting up and operating the NEMSF.

    The other power sector value chain players must also agree to specific service related commitments, which include ensuring that gas suppliers commit themselves to assured gas supply at higher volumes; generating companies and distribution companies  must be committed to utilising the funds for equipment/infrastructure acquisition, refurbishment and/or upgrade.

    The rule also include that all parties  licensed by the NERC to operate in the electricity market should agree to be immediately bound by performance agreements signed with the relevant authorities, which included the Bureau of Public Enterprise (BPE).

    Specifically, all parties will also be subject to additional oversight mechanism to be developed by NERC and CBN to ensure business continuity and that all power sector players meet obligations that are critical for continued electricity supply.

     

    Bankers’ Committee speaks

    The Banker’s Committee had at its August meeting last year in Lagos, agreed that leaving the gas  firms bugged down with the debt makes nonsense of huge funding already committed to the power projects. Local banks were estimated to have committed N320 billion out of the N400 billion realised from the sale of PHCN assets by the Federal Government

    Findings showed that many of the banks that raised huge capital to fund power projects are already counting their losses because of poor cash flow arising from gas shortage. The lenders are now being more cautious in lending to power, until the gas challenge is resolved. A quick resolution is expected to revive the attractiveness of the subsector to the lenders and create room for fresh loans and improved profitability.

    The Bankers’ Committee expressed willingness to support an initiative with government, where a Special Purpose Vehicle (SPV) will be set up to provide loans to clear that debt and overtime, the loan will be recovered through MYTO tariff deduction. The CBN will play a key role in assisting the banks to do that.

    The Committee said the whole essence of the power transformation is to achieve efficiency and ability to improve power supply, which have been hindered by gas shortage. “Obviously, gas coming into the power stations would affect the revenue. Many of the operators have not raised their production capacity because of shortage of gas,” it said.

    It said the gas companies have always been agitating that this debt be paid, otherwise, they will not produce and will begin to accumulate new debts.

    The Committee believes that most of the problems of gas-to- power would be resolved and Nigeria will begin to see a generating company that is inspired to increase the power generation.

    Already, the CBN has engaged the services of FBN Capital (Transaction Advisor), Meristem Securities (Fund Manager) and Detail Solicitors and Stream Sowers & Kohn (SSK) as legal team for the transactions.

     

    What banks are doing

    General Electric and Standard Bank had a $350 million infrastructure financing agreement for Africa. In a statement, the bank said the partnership seeks to provide affordable access to power infrastructure to augment traditional large scale grid capacity development.

    The partnership will target Nigeria, Angola, Tanzania, South Africa and Ghana. Others are Kenya, Mozambique, Uganda, Ethiopia and South Sudan. Financing activity will center on project finance, equipment finance, trade finance and advisory.

    Speaking at a ceremony to announce the partnership, President and CEO of GE Africa, Jay Ireland said the partnership came at the right time when there are concerted efforts to boost access to energy across the continent. He said partnerships of this nature would certainly support efforts by respective governments in finding captive power solutions to meet the growing demand for alternative fuels.

    Chief Executive, Stanbic IBTC Holdings, Mrs. Sola David-Borha said the bank was committed to partnerships of this nature that help energise the sector. She said the power challenges identified in the focus countries for this partnership were opportunities for growth through sustainable investment. She also disclosed that through the partnership, financing will also be available for off-grid solutions that rely on cleaner fuels such as biomass and biogas across Sub-Saharan Africa.

    The United Bank for Africa Plc (UBA) said it has so far extended $700 million (about N113 billion), in funding to various investors towards the acquisition of power assets in the privatised power sector. The bank’s Group Managing Director and Chief Executive Officer, Phillips Oduoza said: “It is a growth sector we are playing very big.”

    Another lender, Ecobank Nigeria said it will invest $25 billion in five years to help solve Nigeria’s power sector crisis. Its Country Head, Power & Energy, Olufunke Jones said the investment is in line with its policy to support the growth and development of the power sector in Nigeria.

    She said it has played a major role on the buy-side of the power sector privatisation exercise by providing financial advisory services, lead arranger role, acquisitioning financing and guarantees to distribution companies, generating companies and National Integrated Power Plants (NIPP).

    She said: “Nigeria has one of the largest gaps between demand and supply for electricity. To bridge this gap the country requires a combination of favorable government policies, private sector participation and Foreign Direct Investment (FDI) as well as transparency and persistent monitoring that will guarantee an improved business environment.”

  • Stable power not feasible until 2017, says Jonathan

    Stable power not feasible until 2017, says Jonathan

    President Goodluck Jonathan  hinted yesterday that the nation’s quest for stable light might not be met by the government until after two or more years .

    According to him, the interface between the federal government and the private sector on full privatisation of the energy sector to make steady power supply feasible in the country, would hopefully be completed in two years period.

    The president who dropped the hint while inaugurating the 750 Mega Watts Olorunsogo Power Plant Phase II, Papalanto, Ogun State, said that his administration had spent about US$8. 26 Billion in the bid to boost  the national electricity generation capacity by over 4, 700MGW.

    He said: “to stimulate the micro and medium enterprises, government must invest and must show significant concern for power and that is what we are doing.

    “And we promised this country that surely in the next two years, the interface between 100 per cent government control of power sector and 100 per cent control of the private sector will be sealed properly and Nigerians would take power for granted.”

    He explained that of the US$8. 26 billion invested or spent on power, US$ 650 million of the amount was committed to the Olorunsogo power plant inaugurated yesterday.

    There are 10 of such power projects spread across the nation including the two inaugurated in Kogi and Ondo states in 2014,he said.

    He  is scheduled to inaugurate  the Egbin power station today .

  • ‘Cost-reflective tariff only possible with stable power’

    There cannot be a cost-reflective tariff until a significant improvement in power supply is attained, the Director-General, Bureau of Public Enterprise(BPE), Benjamin Dikki, has said.

    The new power investors are seeking for a hike in tariffs to improve their earnings and compensate for the cost of doing business. However, the Nigerian Electricity Regulatory Commission (NERC) said it would not be right to increase tariffs in the face of poor electricity supply.

    Dikki said a lot still needed to be done to improve power, given his assessment of the operations of the power companies.

    The firms, he said, are trying to fix infrastructural problems to improve electricity supply, adding that it would take some time to achieve that goal.

    He said as much as BPE and NERC would be willing to look into the possibility of having a cost-effective tariff in the industry, the present power supply situation in the country may not make it possible for now.

    According to him,  NERC came up with Multi-Year-Tariff-Order (MYTO), after considering the variables involved in the production and distribution of power.

    He said: “For there to be increased tariffs, NERC has to look at the variables again, analyse them and see whether they align with the prevailing situation in the industry. MYTO is scientifically determined. This implies that the tariffs need to be painstakingly handled to achieve the desired results.

    “Once there is an improvement in power supply, consumers would not hesitate to pay the tariffs issued by NERC. Conversely, consumers would fault any attempt to increase tariffs as long as they having poor power supply.”

    He explained that gas has been a problem in the sector, adding that attempts to proffer solution  would require galvanising activities of the operators.

    “Gas is one of the variables in the industry. If all the variables are well taken care of, there would be an improvement in power generation, distribution and transmission. Once this happens, businesses would improve,” he said.

  • Stable power: Why June deadline is not feasible, by DISCOs

    Stable power: Why June deadline is not feasible, by DISCOs

    Can the new power firms meet the Federal Government’s deadline to ensure stable electricity by June? They cannot, say some stakeholders in the industry, who spoke with The Nation.

    President, Nigerian Liquefied Natural Gas Association, Mr. Dayo Adeshina, said the deadline was not realisable because of the recurring gas problems in the country. He said the inability to get enough gas to fire the turbines was affecting electricity generation and distribution.

    He said there was no end in sight to power outage because of the infrastructural decay, adding that it would be difficult to meet the electricity need of Nigerians, with power generation fluctuating between 3,000 megawatt (MW) and 6,000MW in the past two years.

    Adeshina said: “Meeting the June deadline for provision of stable power is practically impossible because the gas needed to feed the power plants is not available. A lot of plants are idle because there is not enough gas. The firms cannot produce at optimal capacity because they cannot get gas, a feedstock required in the industry.”

    According to him, failure to construct enough gas pipelines has prevented the firms from improving power. “Low investment in gas pipelines and vandalism have affected the firms’ capacity to increase power output and meet the need of the population. To improve power supply, the government should provide more pipelines in the next five years. Distribution companies need to invest in infrastructure to help in improving power supply,” he added.

    An official of Sahara Energy Resource, Neye Shonubi, said the Nigerian Electricity Regulatory Commission (NERC) was in the best position to speak on the issue. Shonubi, whose company owns Egbin Power Station and Ikeja Electricity Distribution Company, said the Commission knows whether the companies can provide stable power or not.

    The President, National Union of Electricity Employees (NUEE), Mansur Musa, said it was not possible for the firms to meet the deadline going because of the infrastructural decay in the sector. He said the deadline was a facade to cover up some issues.

    He said: “The water level in the dams rises in June and July every year. When this happens, there would be enough water for use by the hydro stations. If the thermal plants were able to access gas for operations during that period, the development would lead to an appreciable power supply and Nigerians would have no choice than to believe that the power is stable. However, there is a problem. Immediately the water level drops between August and December, the country would relapse into darkness and the reality would dawn on people that the country‘s power is yet to improve.”

    Musa urged the government to invest in infrastructure to grow the sector, adding that the firms do not have enough money for operation. The companies, he said, borrowed money from local and foreign banks to acquire the assets of the Power Holding Company of Nigeria (PHCN) and need to pay back at an agreed rate and period.

    ‘’That is why investment in infrastructure should not be seen as the major responsibility of the power firms. The government should come to their aid if meaningful growth would be recorded in electricity generation and distribution. For Nigeria to enjoy stable power in the next three or five years, the government should assist in providing infrastructure as recorded in its agreement with the companies on the issue,’’ he said.

    A worker of Eko Electricity Distribution Company, who pleaded not be named said stable power supply was far-fetched, because Nigeria relies on gas-powered plants.

    “Many of the plants are thermal, only Shiroro, Kainji and Afam are hydro- powered stations. With the stations experiencing a drop in water level, and the thermal plants battling shortage of gas, it is difficult to guarantee stable power in Nigeria,” he added.

  • Stable power soon, say Makoju, others

    Nigeria will enjoy stable power supply soon as power firms are adopting measures to address the sector’s problems , experts have said. In an interview in Lagos, they raised hopes that things would be over soon.

    Joseph Makoju, a former Managing Director of the Power Holding Company of Nigeria (PHCN), said the prospects for fresh investments, new technology and expertise of the new owners represented hope that the power challenges would be over soon.

    He said the gains of the reforms would soon be made known to Nigerians, giving the commitment shown by the government and the private investors.

    “I believe the future is bright for the sector. I see a lot of opportunities for uninterrupted power supply, capacity building and employment prospects for Nigerians in the long run,”’ he said

    He called for patience and understanding from Nigerians as the investors embark rehabilitation, upgrade and deployment of robust infrastructure.

    Abiodun Ogunleye, the Managing Director, PowerCap Nigeria Limited, urged Nigerians to be patient as the operators are overhauling the subsisting infrastructure to improve electricity supply.

    Ogunleye said achieving uninterrupted power supply would require patience from Nigerians since the companies are deploying new technology in achieving growth.

    “I am aware that the new investors are already thinking along the line of new technology and have plans to train and retrain their workforce. I believe we will get the breakthrough we all deserve in the near future,” he said.

    Abraham Williams, Project Coordinator, Dubril Consortium Ltd. said the handover of some power assets to the private sector had brought new lease of life to the sector.

    “The participation of the private sector would bring about more efficient and cost effective power supply arising from increased investment, enhanced infrastructure and opportunity for transfer of technical know-how to Nigerians,” he said.

    Fashola Charles, Managing Director, Seacof Enginering Ltd., said the power sector transition represented unprecedented milestone for the nation.

    “What private participation did to the telecom sector is what we will eventually witness in the power sector. But I believe a lot of consumer education and enlightenment programmes are required to make the average Nigerian know that the handover did not mean we would begin to witness uninterrupted power immediately. The good news is that it kicked off the journey of a process that would eventually get us there,” he said