•Urge implementation of NIPP phase two

By Clifford Ndujihe & Sebastine Obasi

EXPERTS and stakeholders in the nation’s power sector said the economy will continue to lose billions of Naira, if the lingering poor power supply situation in the country is not checked immediately.

 

Their assertions came as a result of the dwindling power supply which got to a halt last Thursday, when the nation experienced zero generation for about four hours.

Director General, Lagos Chamber of Commerce and Industry, Muda Yusuf, said that though it would be difficult to put a figure to the loss incurred by the private sector, the nation has continued lose billions of Naira to poor power supply.

“Nigeria has been losing billions of Naira due to poor power supply. This is because energy is the life-wire of any economy. Once there is no energy, the economy will not grow as expected,” he said.

Also, Executive Director, Association of Nigerian Electricity Distributors, Sunday Oduntan, said that though the DISCOs lost millions of Naira as a result of the low power supply and system breakdown, it is difficult to give an exact estimate of the losses incurred.

Recurring pipeline vandalism
According to him, “we have to look at the fundamentals. The DISCOs are at the lower rung of the value chain. They bear the brunt of every mishap in the value chain. We are not out to apportion blames. However, we all know that vandalism of the pipelines should be tackled once and for all. If there is no gas, the turbines will be shut. Vandalism should be curtailed because if there is no generation, there will be no transmission and distribution.”
Head Corporate Communications, Eko Electricity Distribution Company, Godwin Idemudia, told Saturday Vanguard that there is need to strengthen transmission lines nationwide to prevent further system collapse, as his DISCO lost millions of Naira due to the zero allocation occasioned by system collapse. Explaining the sliding power situation, the Transmission Company of Nigeria, TCN, said the System Operator (SO) had done so much between 2013 till now to drastically reduce the frequency of such occurrences.

Past systems collapses
According to TCN, there were up to 22 system collapses in 2013 with some lasting for 24 hours. The incessant collapse then led the former Minister of Power, Prof. Chinedu Nebo to set up a panel to investigate the causes of such collapses. The SO said it reduced the collapses to nine in 2014 and just six in 2015. However this year and in March alone, the national electricity grid may have seen two critical system collapses already.

The first, power experts, said was a partial collapse early March when the less than 2,000mw hydro power generating companies were over-stretched leading the sudden shut down of Shiroro GENCO. It caused a critical loss of power from the grid. The partial collapse then affected the allocations of the Discos. Kano Disco said it got only 50mw instead of the average of 350mw. Abuja Disco then received 132mw instead of 450mw daily allocation.

Last Thursday’s system collapse
Last Thursday’s collapse raised concern about the grid capability. The transmission grid is said to be characteristically susceptible to system collapses when generation is below 3,500mw and the available spinning reserve capacity is low.

Equally, the poor power supply for the month was confirmed by a month-end summary for generation statistics obtained from the Nigerian Electricity Regulatory Commission, NERC. It shows that peak generation stopped at 3,816mw while the average generation was 3,338mw. Over 3,022mw was not generated or lost to constraints.

From this, gas supply shortage occasioned by vandalism stalled the generation of 2,674mw; 21mw was lost to frequency fluctuation; and 327mw was lost to imbalance or limitation in the transmission line. The decline in power supply in March was worse than that of February. The 83,628 megawatt hour (mwh) sent out for distribution last month was 10,920mwh less than that of February, 2016, the report shows.

Weak, obsolete grid
Another concern over the grid was raised by Mr. Kunle Olubiyo, a former member of the National Technical Investigative Panel on Nigeria Power System Collapses. According to him, the panel found that the grid was weak and obsolete.

It recommended the building of a parallel ‘National Grid Backbone’ and that the Baseline of Daily Load allocation to the Discos should not be more than 3,500mw until the infrastructure was strengthened.

Olubiyo also said the panel and even the 2014 panel on Grid Stability recommended that Spinning Reserves must be increased at all cost to prevent system collapse.

Pipeline vandalism, weak transmission network
Pipeline vandalism has also been identified as a major hindrance to power supply. A Chief Executive Officer of one of the electricity distribution companies (Discos) told Saturday Vanguard that during last Thursday’s system disturbance, the 11 distribution companies were only “on station supply” where they could not service their customers.

“When you are on station supply, there is no power to give to your customers. This is because some power plants went down due to non-supply of gas. The only power you get from the national grid when you are on station supply is what you will use to run your base radio. You can’t send it to customers,” the CEO, who opted not to be quoted, said.

He also blamed weak transmission network for the country’s current power woes, saying that only a super grid would solve the country’s transmission challenges.

“Transmission will continue to be a problem until the country has super transmission grid. Super transmission grid is a model transmission line that can take huge power. We need to construct super grid to reduce system collapse,” he added.

Also speaking, a top official of the Nigeria Electricity System Operator told Vanguard that vandalism was responsible for the current drop in power supply.

“Gas pipelines have been vandalised and they are doing it continuously. Some plants went down last week because of lack of gas and it caused system collapse. So, it is really not a transmission problem,” said the official.

Need to implement NIPP Phase two
Meanwhile, as operators in the electricity value chain – generation, transmission and distribution companies trade blames over the current power crisis with the Organised Labour firming up strategies to tackle the Federal Government on the issue, some stakeholders have urged the government to execute the second phase of the National Integrated Power Projects, NIPP being implemented by the Niger Delta Power Holding Company, NDPHC.

Phase two of the NIPP entails construction of 11 hydro dams in Northern Nigeria, which will boost and diversify the country’s power generation, transmission and distribution capacities.

The projects include: Large hydro power – Mambilla, Gurara, Itisi with total capacity to generate 3,450MW; small hydro power at 10 sites in the north to generate 83.25MW; 43 critical transmission projects to resolve transmission bottlenecks; 51 transmission projects to improve wheeling capacity to 12,000MW; and 31 other transmission projects as foundation for increase of capacity to 16,000MW plus communication and national control centre among others.

Reportedly, the NDPHC has received proposals from the State Grid of China, AK-AY and other interested foreign investors for partnership and financing of the NIPP Phase II projects.

Aside foreign partnership, funding for the projects can also come from the three tiers of government via divestment of their equity holdings.
Since 2005 when the NIPP was conceived, it has been implemented jointly by the federal, state and local governments through the NDPHC, a government agency owned by the three tiers of government but which operates on the private sector business model. The NDPHC equity structure is as follows: Federal Government 47 per cent; 36 states, 35 per cent and 774 Local governments, 18 per cent.

Origins of NIPP
The NIPP was initiated in response to the deplorable state of power infrastructure and the inappropriate framework for private sector investment in the Nigerian electricity industry pre-2005 . Its scope covers the entire value chain in the power sector, namely generation, transmission and distribution, including building a national gas infrastructure to power 10 gas-fired power plants across the country.

The NDPHC was incorporated in 2005 as the Special Project Vehicle (SPV) for the NIPP. The Nigerian National Petroleum Corporation, NNPC, the Nigeria Gas Company, NGC and the defunct Power Holding Company of Nigeria, PHCN, among others are an integral part of the NIPP project development.

Domiciled in the presidency, the NDPHC has been funded via the Excess Crude Savings Accounts and its capital funding sum currently is put at $8.46 billion. Disbursement of fund to the NDPHC funds is ratified by the Federal Government and the Houses of Assembly of the 36 states of the Federation.

Power infrastructure before NIPP
Before the birth of NIPP/NDPHC in 2005, Nigeria could barely generate 2,000MW of electricity. The country neither had any gas-fired power station nor even the gas infrastructure to generated electricity. Nigeria had transmission capacity of 4,495 Kilometre (km) on its 330Kv lines. The country’s transformer capacity on the 132/33Kv band was 5,700MVA and on the 330/132Kv Transformer Capacity, Nigeria had 5,300MVA.
In terms of distribution projects, then the country had 33/11KV sub-stations of 8,148MVA and 33KV and 11/0.41KV substation with 32,000MVA capacity.

What NIPP added
With the coming of the NIPP and 10 years after, Nigeria’s transmission capacity on its 330Kv lines increased to 6,932 Km or 46 per cent.

In the same period, the NDPHC increased the country’s transformer capacity on the 132/33Kv band to 11,118MVA or by 42 per cent and today Nigeria’s transformer capacity on the 330/132Kv band is 11,590MVA, an increment of 93 per cent.

According to NDPHC Managing Director, Mr. James Abiodun Olotu, the NIPP/NDPHC also improved the country’s distribution infrastructure, increasing 33/11KV sub-stations of 11,649MVA, up by 43 per cent and 33KV and 11/0.41KV substation with 84,170MVA capacity, a 163 per cent increment. The NDPHC within the period built 10 gas-fired power stations, with a combined installed capacity of 4,528.5MW. These are Alaoji, Benin, Calabar, Egbema, Gbarain, Geregu II, Ogorode, Olorunsogo II, Omoku II and Omotosho II power plants.

Eight of the 10 power plants are fully completed with installed capacity of 3,696 MW and the last two – Egbema and Omoku, 563MW – are expected to completed before the end of the 2016.

Today, the NDPHC-built power plants contribute an average of 900MW to the national grid, with about 820MW idle for reasons of evacuation capacity. According to Olotu, other achievements of the NIPP/NDPHC within the period include: building gas pipelines, gas metering and regulating stations grouped into 7 lots for the delivery of natural gas to these power plants; expanding the country’s power transmission capacity through 25 lots as follows: 5,590MVA of 330/132Kv transformer capacity; 3,313MVA of 132/33Kv transformer capacity; 2,194km of 330Kv lines; 809km of 132kv lines; 10 new 330Kv substations; 7 new 132Kv substations; and expansion of 36 existing 330Kv and 132KV substations; execution of 296 distribution projects in 43 lots across the country, which has given the country 3,540MVA injection substation capacity; 2,600Km of 11Kv lines for HVDS; 25,900 CSP distribution transformers and 1,700km of 33Kv lines among others.

Worsening poor power supply
However, in spite of these achievements, poor supply has remained epileptic, necessitating the need to begin the second phase of the NIPP, which was preconceived via a divestment and reinvestment plan by initiators of the NIPP.

Instead of pulling out completely and leaving the citizenry at the mercy of private sector operators, the three tiers of government have only divested 80 per cent of their equity in one leg of the tripod – the NIPP Generation Assets – to private investors. To also make room for private sector participation and efficiency in the power distribution sector, the three tiers of government sold their distribution assets to private distribution companies (DISCOs), which $1.5 billion cost is recoverable from the DISCOs over a period of 10 years. The three tiers of government still have intact their transmission assets ($2 billion as at December 2015) and gas assets ($500 million as at December 2015), which equities they can divest to the private sector in the future to make more profits from their initial joint $8.46 billion investment in NIPP Phase I. In essence, the three tiers of government have invested $8.46 billion to expand Nigeria’s generation, transmission and distribution capacities and built a gas infrastructure to power 10 new gas-fired power plants. In the process, the NDPHC recouped $7.1 billion of the $8.46 billion investment by selling 80 per cent of government shares in generation only. The proceeds from this divestment in the generation assets – $7.1 billion – is to be reinvested in NIPP Phase II.

Making NIPP Phase II a reality
Selling off government’s 80 per cent equity in the NIPP generation assets recouped $7.1 billion – out of the country’s $8.46 billion investment in NIPP Phase I – into the joint coffers of the federal, state and local governments. Rather than squander the $7.1 billion on other government projects in other sectors, stakeholders want the three tiers of government to honour their agreement under the power sector reforms programme to reinvest these huge sum in expanding the country’s power infrastructure under NIPP Phase II.

Will the governments do this? All hands are needed on deck to address the epileptic power problem.
To get the work done, the three tiers of government and other stakeholders must close ranks to combat a number of challenges such as inadequate gas for full commercial operations; payment over N77 billion for power consumed as at the end of November 2015; litigation in respect of bids for Alaoji, Gbarain and Omoku power plants; and NNPC/NGC plans to divert gas on the western axis and 240mmscf to Omotosho and Geregu.

There are also concerns about capacity for transmission and distribution, increasing acts of vandalism on NIPP/NDPHC facilities, especially bombing of gas pipelines and other power infrastructure in the Niger Delta.

This is where stakeholders in the power sector look up to the Ministry of Power led by Mr. Babatunde Fashola (SAN) for policy guidance and leadership in the sector.

The National Assembly is also expected to play its crucial legislative roles to move the power sector forward.