Can uninterrupted power supply be achieved without adequate gas reserves? An expert, Bimbo Onafowokan, answers this question in the negative. Onafowokan, Managing Director/Chief Executive Officer, Power Systems Limited, in this interview with Ambrose Nnaji, speaks on the importance of gas to stable electricity. Excerpts:
What do you think should be done to address power problems in the country?
The importance of power generation in the development of any nation cannot be over emphasised. It is important for our development. Also, it is vital for its sustainability.
One school of thought said the privatisation of Power Holding Company of Nigeria (PHCN) would solve the problem.That is already being achieved. Everything must be done to ensure that by 2020, Nigeria is at least 50 per cent power sufficient, and not allow individuals to provide their own electricity in the most expensive way which we are doing at the moment.
To what extent has your firm been a solution?
We were born out of the deficiency in the power sector. The company was actually created to provide solutions in this area and in providing solutions. We have over time been selling generators. But at a time, we felt the need to do something different. We have gone into solar power and also into Direct Current in AC generators, popularly called inverters.
Why solar?
Solar is very well-recognised across the world. First, it is environment friendly, because there is no emission; there is no carbon in solar generation. And because we are in the tropics, the sun comes out at least six-seven months in a year.We have sunshine.We cannot continue to waste that sunshine. We convert this to energy and store them in batteries and use it to power our facilities at night. So, these are the ways we are deploying power technologically.
Recently, we have gone into the metering of power to support the privatisation programme of the Federal Government and that Lagos State, which has also gone into power production to meter for them. These are areas that we are trying to help develop our capacity to provide solutions to the government.
What informed your interest in metering?
Every business opportunity comes out of deficiency. When you see that there is a deficiency somewhere, it’s an opportunity for a market. The deficiency of pre-paid meter in the country is an opportunity. There are a lot of investments in the country, so there are opportunities. The meters will not only be used for electronic power, they will also be used for gas. The two inter-phases will use the same metering for gas and also for electricity. So, you have what is called the flow-meter.
As the gas is flowing, it is sending signals to the meter, as well as counting your electricity consumption in kilowatt per hour. As you draw the power, there is a calibrator that records what you draw as you are using the kilowatt per hour. That calibrator also sends information to the meter and on the same payment that you have made. You will draw payment to the power company and to the gas company. You will only pay once.You don’t need to go and pay to the gas company or to the electricity company.
Currently, what we have is estimated billings. Most of the meters we have are analog. So, what the PHCN does is give an estimated bill for the month even when there is no light at all. That will stop when you have a pre-paid meter because you only pay for what you consume. You are able to keep data of your consumption.
Overseas they have what is called peak and off peak rates. Peak rate is night rate, day time is low rate. So, if you need to do certain things that will demand a lot of power, you can do them during the day than in the night, you do those things that don’t demand much power because rates are higher in the nights.
How far have you progressed?
The first thing is research. We are in Research and Development. We try to find out what Nigerians need; what the problems of the ones that are in the market are; what the cost for us to develop a unit of meter.
Our target in the open market is between N20, 000 and N23, 000 for a single phase meter. Now, we are moving from what we want to what it is that we need to do to get to this price. We want the people to partner with our meters. We want PHCN themselves to buy the meters and to make sure that the materials are locally made. The materials that form the major part of that meter are available, so you will not have problems with fluctuations as much. These are the things we are researching on. Once we are able to install those meters and the distributing companies are able to pay for them and spread the cost to customers, it becomes self funding.
The Organised Private Sector (OPS) has predicted that the industrial sector may be in serious problem due to rising cost of energy. What do you think should be done to avert the crisis?
It is affecting us. For instance, 20 per cent of our turnover in this organisation is for providing alternative power, buying diesel to maintain generator. When you spend 20 per cent of your profit, that’s very huge. It’s a waste of resources that cuts across the Small and Medium Scale Enterprises (SMEs) and the OPS. These is money that you can use to provide very cheap power.
It affects the OPS because they have to provide their own power. And they provide it to make goods that are competing with those coming from across West Africa, Africa and across the world at cheaper prices because they don’t have to provide their own power, they don’t have to buy generating plants, they don’t have to buy diesel at a very high price, because their government is providing them power at very affordable prices and you bring the goods into the same market and the Nigerian goods are more expensive.
Take, for instance, in the cable industry, Nigerian cables are much more expensive than the cables that are coming from China, India and if we do not make laws to protect such industries, they would have folded up by now. So that prediction is certainly possible if we do not find solution to power problem in the country.
We have several alternatives to generate power. We have the thermal, which uses water and we also have coal as a raw material to generate power, and there is a lot of coal in the east, but it is not being explored because people are saying it is not environmental friendly. If you look at America, more than 40 per cent of their power is generated from coal. Coal is still one of the most reliable power generating technology in the world. So, these are the things we need to put in place.
The government has to change because some of the generating plants built by NIPP do not have power supply, and we are not building enough storage for gas so that if there is a problem in the pipelines, there is something to bank on. These are the areas we really need to improve on; these are the areas the government should support the organised private sector. We need to access cheap fund to build excess gas reserves. What we should be having is gas storage tanks spread across the country through where power is generated so that when they run out of gas, they can see an alternative supplier of gas to keep their plants running.
What are the opportunities in the gas sector?
The opportunities are enormous. Unfortunately, gas is not cheap. Managing gas is a lot of money because gas, as you know, is like air. It has to be compressed. It has to be under certain pressure so that it can be managed properly. Accessing funds in the local market to build such facility is costly.
A lot of people are afraid that they may be working for the banks or they may have to lose their efforts overtime if the funding is cut, because you can start a gas pipeline and then you will project that within the next one year, you will complete the pipeline at a certain cost, and when you start that because of cost of pipes that would have gone up in the market, you have to access more funds and if you don’t get those funds, you can’t recover your investment. So, these are the fears that they have. But there are opportunities in the gas business in this country.
Nigeria’s main sources of power are thermal and hydro. Is the restriction of power sources to these two the main cause of power problem?
It may not be the main cause, but it is one of the causes. Why people go into producing power is because of drought, because when there is enough rain, then we use thermal to support or you use coal to support and that’s what we should be doing. Having different and employing different technologies in producing power so that we can be power sufficient is important
If the country should diversify its sources of power generation and supply, which other sources do you think will serve the nation better and why?
I have said in different fora why we are not exploring coal. Why is the government not supporting coal mining in the country. We need to mine coal; we need to have enough coal reserves to encourage the organised private sector to employ forms to generate power using coal. We need to develop capacity; let’s do it the primitive way. Left to me, we need to have locomotives which we had ages back in the ‘60s and ‘70s. We did away with them because the mechanical way of driving engine came. We should have kept them going. We would have developed capacity to improve on them. We would have developed capacity to even use coal to generate power now. That is much needed; that is very important.
The government is insisting on privatising the power sector, do you think that is the best option of achieving stable power supply?
It is not the best option. I have always differed that is the best option. It’s just an option. And it’s an option that if it fails, it’s going to be colossal for the country. It is unlike what you have in the power sector where you have powers conveying transmission lines that are huge in size. If you privatise PHCN and it fails, the repercussion would be unbearable for the country.
So, I usually will say that rather than privatise it, let’s run it on a Public-Private Partnership (PPP) basis; that is the private sector basis to keep it alive while allowing the organised private sector access to good funding to build plants and begin to compete with that from generation through transmission to distribution. We should allow the private sector cheap affordable funding that would allow them to build capacity in generation, in transmission and in distribution to compete with power holding company.
Inadequate gas supply has been identified as a major setback to optimising generation from the thermal plants, what is your take on this?
To me, the major problem is to develop the capacity to convert sea water to drinking water. The same applies; we have a lot of gas that is being flared across the Niger Delta and rather than channelling this gas for domestic use, more than 50 per cent of this same gas is exported successfully by the Nigerian Liquefied Natural Gas Company (NLNG) and they are not folding up. The Brass Liquefied Natural Gas is also exporting gas daily. So, we are exporting gas and the country is making money from it, but locally, there’s something wrong and the government knows what is wrong. We need to be very serious about local use.
I remember the government of President Yar’Adua actually said he was going to stop export unless they developed and allowed gas for domestic use first and domestically sufficient before they would export. And I think if that policy had been followed up by subsequent governments, there would have been a transformation by now. The woman roasting plantain on the road would have been using gas rather than kerosene and the problem of kerosene scarcity and not having enough aviation fuel would have been a thing of the past.
Most people living in the rural areas don’t have access to electricity. Do you support that government appropriates more funds for rural electrification?
The rural people certainly deserve to be supplied power. They deserve to be supplied power at a cost and they must pay for it. Power cannot be supplied for nothing. It has to be paid for. They deserve to be supplied power, but the productive sector itself, which is the productive sector of the economy, which is creates jobs for the people in the rural area, who are migrating to the urban areas to get jobs if they are not having power to keep employment, then consider people in the rural area – that is, placing the cat before the horse.
But it is only necessary if the country develops enough capacity to produce power to take care of the industrial areas first, take care of the essential areas where a lot of employment is being generated. Because you will privatise when you supply power; supplying power to those who are wasting it and not converting it to something that is productive and generate money for the country and companies around is a waste of resources.
