Nigeria: Power Crisis and Getting back to basics

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The Nigerian power system has for many years been suffering from deficiency in generation capacity, fragile transmission and distribution networks leading to prolonged outages and in some cases total system collapse.

In order to stabilize the national grid therefore, load shedding has to be embarked upon since the national load demand is always above the available generation capacity. It is expected that the combined installed generation capacity in Nigeria will rise to 14,000MW by the year 2020 in line with the power sector road map and Vision 2020 expectations.

Transmission Company of Nigeria, the operator of the national grid had reported that the national power generation capability is above 7,000MW with the available generation figure hovering between 3,500 and 4,500MW daily.

A study by the African Development Bank on Infrastructure Action Plan for Nigeria revealed that power from self generation could match or even exceed the generation capacity from both public and licensed generating facilities ranging from 4,000 and 8,000MW. Consequently, the cost of doing business in Nigeria is exorbitant with adverse effect on industries and other commercial undertakings which impacts negatively on the standard of living.

Just like the generation sector, distribution sector was also fully privatized and a total of eleven DISCOs were licensed by the Nigerian Electricity Regulatory Commission in the year 2013. However along the line Yola Electricity Disco was retaken by the Government due to its rejection by the preferred bidder as a result of the security challenges in north eastern part of the country. As at 2009,  the total transformer capacity in the distribution network stands at 9,130MVA equivalent to about 7,761MW. The network has 37,137km length of 33kv lines with 29,055km of 11kv and 70,779km of 0.415kv lines.

The fundamental issues affecting the performance of the DISCOs is lack of expansion of their distribution network to cater for the growth of their customers, inability to replace broken down transformers and lines leading to local load shedding.

There is also allegation of load rejection by the DISCOs where electricity available from the national grid is deliberately not transferred to the customers. Apart from the inconveniencies to the customers, the national grid is challenged to the rise in system voltage which had been responsible for failures of transmission facilities.

With regards to commercial aspect of the distribution sector, the issue of metering is still poorly managed by the DISCOs who failed to meet up with the metering figures stipulated in their agreement with BPE. The metering gap could not be met due to the huge financial investment required by the DISCOS. A recent move to address this is the incorporation of Meter Asset Providers (MAP) to work with DISCOs in addressing the shortfall in meters.

Liquidity crisis in the electricity market is also significant factor limiting the optimal performance of the market participants in the power sector value chain. DISCOs are the entities charged with the sale of electricity and collection of revenue for the industry and hence are expected to sustain the market through aggressive marketing techniques in their operations.

NERC is responsible for the regulation of the power sector tariff using the multiyear tariff order (MYTO) to ensure a cost reflective tariff for the industry. At the present level of market development where energy availability vis- a – vis revenue generation is grossly inadequate, the Nigerian Bulk Electricity Trading Company (NBET) was established to ensure that GENCOs are paid for the power they generated.

The Market Operator residing at TCN ensures that the earned revenue is shared equitably among the market participations in line with the market rules. As a result of the fluidity of the electricity market, there is apparent nonperformance of the market participants.

A current estimate of the market indebtedness as at April, 2019 stands at N309.5billion with GENCOs having N39.3billion leaving a balance of N270.2 for the remaining service providers. This is a cause of concern as it negatively affects the entire power value chain. No significant expansion in the power sector infrastructure can be achieved if the participants cannot break even to recover that cost.

The current market performance is less than 30% as a result of the poor revenue generation by the DISCOs. Unless a drastic action is taken by the electricity regulator (NERC), the situation may still be bleak for the industry. Even though generation has relatively improved post privatization, there are still issues and challenges that need to be addressed for Nigeria to bridge the gap between power production and load demand. The available power generation is predominantly from thermal power stations mostly from the legacy power plants and some newly installed units by the GENCOs. The gas powered /steam plants accounts for more than 60% of the generation capacity.

The hydropower plants constitute the remaining percentage which has not considerably grown past privatization period. Other sources of energy such as coal, nuclear and renewable energy have so far not been adequately captured in the national energy mix. In most cases this is partly responsible for the gap in the generation, particularly during seasonal variations in hydro – availability and during schedule maintenance of gas facilities by the Nigerian Gas Company. Presently, the Nigerian Gas company in conjunction with NNPC has developed a framework that ensures consistent and available gas supply to GENCOs.

This had by and large succeeded in stabilizing gas supply but there are still issues of pipeline vandalization and unforeseen maintenance that curtails gas availability. Adequate gas pricing has also been a major challenge to the power generation companies which has not been properly reflected in the electricity tariff.

The national grid being operated by the Transmission company of Nigeria is faced with challenges from both generation and distribution sectors. It is sometimes referred to as the weakest link in the power value chain due to various factors, some of which are not directly within the company’s control. The national transmission grid network is fragile and, in most cases, responsible for total system collapses due to a number of reasons.

Grid instability happens whenever a major power supply line or evacuation route is lost due to line or equipment faults.  Most of the transmission lines linking generating stations and major load centers are radial and not ring fenced to enable flow of power in different directions in the event of faults to protect the national grid. This is partly responsible for prolonged outages and in some cases system collapse in the event of loss of generation unit(s) or fault emanating from transmission and/or distribution networks.

To address the various challenges in the power supply value chain, there is need for a drastic and coordinated action plan to be formulated and implemented by all the industry stakeholders. The myriad of problems confronting electricity industry in Nigeria can be tackled if a committee of experts can be formed with membership from both technical and financial institutions relevant to power industry to analyze all of the identified   issues and come up with implementable ideas/programs for the power sector. 

Based on the terms and agreements BPE entered with the privatized power entities, it is necessary to review the performances of the licensees and if necessary to recapitalize or suspend any licensee found wanting. I also wish to call upon NERC in conjunction with BPE and Ministry of power to organize periodic conferences and forum involving market participants and relevant power sector stakeholders to come together and deliberate the aforementioned challenges with a view to evolving implementable programs in the shortest possible time. This is a clarion call to save the electricity industry from imminent collapse as a result of the extremepoor liquidity of the sector.  

Engr.  Dr.  Abubakar Atiku Tambawal presented this paper at the Fellowship Conferment by the Nigerian Institution of Power Engineers (NIPE).

Authored By: Engr.  Dr.  Abubakar Atiku Tambawal

SOURCE: DAILY TRUST

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