Economic outlook

December 18, 2018

GENCOs doubt electricity improvement in 2019

GENCOs doubt electricity improvement in 2019

Minister of Power, Works and Housing, Mr Babatunde Fashola

…As Q3 2018 total daily average generation is 78,917 MWh — NBS

By Sebastine Obasi

THERE is palpable fear by electricity generation companies, GENCOs, that output may not improve in 2019. They had expected to see a working template from government for improved activities but which has not been made available.

Minister of Power, Works and Housing, Mr Babatunde Fashola

This is coming at the backdrop the 2018 third quarter, Q3’18, report of the National Bureau of Statistics, NBS, showing a daily average of 78,917 MWh of energy generated by power stations, against  the total average of 81,561MWh in Q2’18. Joy Ogaji, Executive Secretary, Association of Power Generation Companies, expressed the fears of the GENCOs in a statement made available to Vanguard Newspaper. She stated: “If the status quo remains, I do not foresee any improvement in 2019. Things have to be put in place.  On the information from NBS, what we should focus on is, how much of what is generated got to Nigerian homes and businesses.

BEDC and the challenges of power supply

“It’s high time we moved away from these inflation of numbers to focusing on optimisation.”  She explained that there is lack of necessary funding for their operations, such as acquiring spare parts and equipment for the power generation stations.   According to her, “Investors’ confidence  has continued to nose dive gradually with every passing month. This has also reduced the interest of international aids like World Bank, the United States Agency for International Development, USAID etc. She said, “Gencos are unable to pay gas debt; the inability to pay for contracted gas has led to the immediate shutting off gas supply to some power plants. In the long-term, gas producers have reduced or slowed down gas field development plans as they do not want projects to lie fallow after commissioning.”

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Ogaji listed some other challenges of GENCOs to include; Under-utilisation of plant capacity, Idle time, Low productivity; Increase in cost of maintenance (especially when operating below base load);  Inability to meet obligations/commitments;  No returns to the provider of capital;  No provision for asset replacement; and  loss of value (time value of money) due to long outstanding debts. Meanwhile, the NBS, in its Q3’18, report stated that the highest power generated within the period was 90,197 MWH, which was recorded on August 16, while the lowest power generated within the period was 57,357MWH, recorded on July 8. Highest power generated through thermal was 85,948MWH, recorded on July 10, while the least power was 41,864MWH, recorded on September 20. Within the period, highest power generated through hydro was 30,164MWH. It was recorded on August 28, while the least power generated was 11,112MWH, recorded on July 7. According to NBS, Q3 report multi-year tariff order, MYTO, percent load allocation as regards power generation, showed that Ibadan DISCO got the highest   at 13.40 percent, followed by Ikeja DISCO, which got 13.23 percent, while Abuja DISCO came third with 13.04 percent.

DISCOs vs consumers

Eko DISCO got 11.97 percent, followed by Benin which got 9.84 percent. Enugu, Kaduna, Port Harcourt, Kano, Jos and Yola, got 8.26 percent, 7.85 percent, 7.31 percent, 6.92 percent, 4.55 percent and 3.64 percent respectively. As regards actual consumption, the Ibadan DISCO also led the pack with 287,999,480KWh, followed by Ikeja DISCO which had 284,318,920KWh, while Abuja came third with 280,334,510KWh. Eko DISCO had 257,299,270KWh, as Benin DISCO had 211,496,640KWh. Enugu, Kaduna, Port Harcourt, Kano, Jos and Yola DISCOs had 177,516,730KWh, 168,632,980KWh, 157,103,210KWh, 148,722,580KWh, 97,884,780KWh and 78,245,200KWh, respectively.    Daily energy generation attained a peak of 98,573 MWh on April 18 2018. Thermal stations generated a peak of 77,010 MWh on April 18, 2018, while the hydro stations attained a peak of   22,858 MWh on June 28, 2018. However, the lowest daily energy generation of 52,074 MWh was attained on June 9, 2018.