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FIVE YEARS AFTER PRIVATISATION: Nigerians at the mercy of darkness, estimated billings

…Lose 46,405.56MW
…Regulators expose fraud, 57% not metered
…Generation for 2018 averaged 3,867MW

By Ediri Ejoh

THOUGH the narrative may have been twisted and coined to a more technical euphemism to ‘increase in power generation (Megawatts, MW), power station rehabilitation’, among others, to the average man on the streets, such does not amount to anything relevant.

File: Electricity generation Stations

This may quite be worrisome as Nigerians are constantly turning into ‘pseudo mathematician’ at the end of the months when bills are presented and power supply is still nothing to write home about.

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An overview of what this has transcended to and the impact it has on the socio-economic activities on Nigerians was captured by  Saturday Vanguard.

Today, the Nigerian power sector, though a viable one, is replete with inefficiencies and challenges, with attendant negative impacts on economic development in urban and rural areas within the country although the minister, Babatunde Raji Fashola pulls all strings to ensure improvement in the sector.

With more than half of the Nigerian population estimated to be lacking access to electricity, the national grid’s daily generating capacity of four Gigawatts (GW) clearly falls short of the mark in meeting the country’s energy needs.

Also, the current pricing of the electricity tariff is not reflective of the generation, transmission and distribution costs.

The latest report by the Emerging Africa Capital Limited, EAC Group, cited that to most Nigerian entrepreneurs, inconsistent power supply is the most significant obstacle to doing business with average monthly power outage of the average business owner cited as 239 hours.

To this end, the Power Sector Recovery Program, PSRP, estimated an annual economic loss of over $25 billion due to lack of constant supply of power.

These challenges compound the problems of access to food, potable water, lighting, healthcare, education, information and other basic amenities.

2018 generation statistics

According to the Federal Ministry of Power, Works and Housing, the nation’s installed power generation capacity as at 2018 is estimated at 13,000MW, while available generation is said to be 7,500MW. But despite these figures, the country’s still recorded a downturn in generation during the year, amounting to an average of 3,867.13 MW and totally 46.405.56MW during the year 2018.

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A document from the Association of Power Generation Companies, APGC, obtained by  Saturday Vanguard,  revealed that the country generated a total of 46.405.56MW while over 42,160.87MW was lost as stranded power in the year 2018.

According to the report, in January 2018, power generation averaged 3,733.01MW and (3,956.03MW was lost); 4,001.33MW (lost 3,583.13MW) in February; 4,097.62MW (lost 3,208.77) in March; 4,051.99MW (lost 3,432.89MW) in April; 3,848.04MW (lost 4,072.05MW) in May.

Also, in June about 3,653.54MW was generated (lost 3,601.48MW); 3,681.17 was generated (lost 3,601.48MW) in July; 3,701.24MW generated (lost 4,265.63) in August; 3,570.67MW generated, (lost 4,165.86MW) in September; 3,810.74MW generated (lost 3,880.63MW) in October.

However, November generation saw an improved peak to 4,093.76MW (lost 3,144.37) and December which recorded a generation of 4,162.47MW and lost 1,045.10MW.

Meanwhile, these losses and challenges in the power sector are often attributed to gas constraint and transmission challenges (power unavailability).

Our findings

The power sector market is faced with financial, operational, construction, market, macroeconomic, contract and regulatory risks. Given that, decisions about investments in power generating capacity depend on expected returns and costs, the state of the NESI in addition to the fact that all plants are performing below optimum does not encourage the discourse of capacity utilization at all.

Similarly, Saturday Vanguard gathered that the determinant of whether power generation should increase or not is the demand side of it. It will be noted that electricity supply is closely tied to demand and facilitated through a pool where the output from all generators are aggregated and scheduled to meet demand.

This is because the storage mechanism for electricity generated is in view, hence supply must vary dynamically with changing demand. Statistics from the Nigerian system operator on load demand over October and December last year average over 22,000MW.

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However, this means that there is a suppressed demand of over 17,000MW compared to what is being generated today, which could potentially increase when there is stability of supply and high ticket consumers who are self-generating decide to join up. How do we plug this gap?

Currently, Nigeria has installed capacity that is over 13,000MW, an available generation that is over 7,500MW and the average generation that is about 4,000MW.

Meanwhile, this shows low/minimal optimization of generation capacity due to constraints on the transmission and distribution networks. Without these constraints, additional 3,000MW could be made available to customers, and also serve as an incentive for Generation Companies (GENCOs) to recover the unavailable capacity of over 5,000MW.

Needed investment

To optimize the current generation capacity, planning becomes pivotal, taking into cognizance the gestation period for power development. There is a need for massive investment in transmission and distribution networks in the country. Power Generation Companies (GENCOs) have the capacity to increase their output in the near term. However, an increase in power generation without a resultant increase in Transmission Company of Nigeria’s (TCN) wheeling capacity and improved distribution infrastructure will continue to lead to stranded power generation.  Nigeria has about 13,000 (MW) of installed capacity, a transmission capacity of about 5,000MW and distribution that hovers between 3,500 and 4,200MW.

A further challenge is the constant request from the System operator to make the GenCo power plants operate at base load contrary to their design to operate optimally and efficiently at base load. Operations of these turbines far away from their base loads imply a reduction in efficiency or in other words an increase in consumption of gas( for the thermal) by as much as 15-20 percent!, a cost not captured or contemplated by MYTO.

Electricity generating companies are faced with: financial, operational, construction, market, macroeconomic, contract and regulatory risks in the Nigerian Electricity Supply Industry (NESI) today.

GENCOs are caught in the middle of a weak transmission network and a poor commercial market structure. If answers can be given to GENCOs most pressing/pertinent questions such as; can we be fully dispatched? Can we get gas? Who is paying for the power? What is the clear line of sight for collection and remittance? Then, power supply issues of the nation will be a thing of the past.

Metering

Saturday Vanguard  findings gathered that as a result of an inadequate supply of electricity, domestic and commercial consumers spend an estimated N4.9 trillion ($14 billion) annually to power 14 GigaWatts, GW, of small-scale diesel and petrol generating sets.

At the moment, the Nigeria Electricity Regulatory Commission, NERC, had put the metering gap (unmetered Nigerians) to 4.7 million meters.

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Moreso, high penetration of generators demonstrates that businesses and consumers are willing to pay for sustainable electricity. Hence, the refusal by Nigerians to pay for power supply can be best attributed to the insincerity associated with what is been utilized and what is billed them at the end of the month.

Similarly, contrary to claims by the DISCOs to have metered over 50 percent of its customers, the electricity regulator, said the 11 DISCOs in the power market had a collective customer base of 8,292,840, but have only been able to provide meters for just 3,591,168, while about 4,701,672 Nigerians are yet to be metered (about 57 percent).

Some of the challenges Saturday Vanguard gathered were massive unpaid bill at the time of takeover, lack of proper data on the NESI, the significant electricity theft and meter bypass (mostly orchestrated by ad hoc or regular staff of the DISCOs or with their collaboration, lack of required change in orientation of the consumers (a significant number of whom still think the DISCOs are former ‘NEPA’ and one does not have to pay or pay accurately for electricity.

Also, the DISCOs have indicated that the current tariff structure is not cost reflective, the level of the aggregate, technical, commercial and connection loss of each of the distribution companies is high. The DISCOs had also lamented instability in the country’s exchange and inflation rate which is still high.

Possible solutions to meter/power supply

In a positive light, the power sector regulatory agency, NERC, introduced a way out to metering challenges which is Meter Asset Provider, MAP. This was released on 8th March, 2018 made pursuant to NERC’s power to make regulations donated by section 96 (2) of the Electric Power Sector Reform Act, ESPRA, 2005.

This totally takes the cost of the meter away from the DISCOs and placed same on the consumers. This is done through the instrumentality of the MAP, who have been licensed in conjunction with the DISCOs to supply meters to the premises of customers who request for same and then charge fees of the meter asset in addition to the electricity tariff for a period of 10 years.

Also, it is through the meter fees that the MAPs recover their investment and profit in providing the meter.

In another development, recent report from the Association of Power Generation Companies, APGC, calls for accurate date which would, “Enable the determination of the concomitant requirements for distribution, transmission, and generation infrastructure growth, enable efficient regulation, monitoring and evaluation (M&E), guide the development of efficiency and profitability requirements. It will also enable true customer demographics and bankable a necessary factor in tariff disaggregation which is questionable.

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Other way out includes; “Enable the DISCOs and its partners (MAP) be able to meter all the customers given their inability to account for all their customers and lack of financial resources, enable the DISCOs conduct a technical analysis/audit of all infrastructure with a view to determining a bankable technical loss factor, a key input for the determination of ATC&C loss (Aggregate Technical, Commercial, and Collection loss).

Also, it will provide a source to verify, validate the lack of transparency and reliability issues with DISCOs independent data validation.”

The report noted that investments to improve data quality and adequacy in all sub-sectors of the industry, with the priority being the distribution sub-sector for obvious reasons will solve a number of issues inhibiting the growth of the sector, especially the inability of the DISCOs to make capital investments.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.