By Oscarline Onwuemenyi

The Director General of the Bureau of Public Enterprises, BPE, Ms. Bolanle Onagoruwa, has explained that due to the structure of the electricity industry, it is not possible for private operators to build their distribution facilities to compete with the extant distribution network of the Power Holding Company of Nigeria, PHCN.

She made the remarks at an in_house workshop on power sector reforms held last week at BPE’s headquarters in Abuja, saying that the technology in power generation allows for many participants unlike the technology for transmission and distribution networks.

“One can set up separate generating plants using any fuel source (hydro, gas, coal, etc) that is economically viable. At any point, you can have many players.

“However, transmission network is such that it is a natural monopoly given that you cannot ask every operator to build its own transmission network. It is uneconomic, not sensible and it has not been done anywhere in the world,” she added.

The Nigeria Union of Electricity Employees, NUEE, had argued that “if the government is really serious about the sector, it should allow the 25 licensed companies to operate alongside PHCN, like the Nigeria Electricity Supply Company NESCO. NESCO has been operating in Nigeria since 1929, generating its own electricity without taking over PHCN.”

But Onagoruwa noted that the design of the Nigerian Electricity Supply Industry, NESI, is such the Transmission Service Provider, TSP, should give equal access to all generators in accordance with laid down rules.  She said that for this reason, the Federal Government retained ownership of the transmission network.

The BPE boss stated that the distribution component of the electricity industry structure also shares the element of monopoly with the transmission component.

She further said, “In Nigeria, the distribution network has been split into 11 companies. So asking all the generators to build different distribution networks as done by NESCO in Jos, Plateau state, is wasteful and will make the Nigerian consumers pay the highest electricity tariff in the world. And that makes it unwise for anybody to experiment with.”

She added that the Electric Power Sector Reform Act of 2005, recognises the monopoly elements in the transmission and distribution chains of the industry structure.

“That is why the law gave the Nigerian Electricity Regulatory Commission, NERC, the power to set tariffs for both services so as to prevent consumers from being exploited. And this is what is done in all electricity markets that are reforming,” Onagoruwa disclosed.

The BPE boss also pointed out that the revenue that drives the entire value chain (generation, distribution, transmission-market operator and system operator) comes from consumers through the distribution companies.