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Revenue shortfall, biggest challenge in the power sector – NDPHC

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Electricity, TCN, DisCos, NUEEBy Udeme Akpan

Despite efforts of previous administrations, Nigeria’s power sector is still affected by many problems. In this interview with Udeme Akpan, Mr. Chiedu Ugbo, Managing Director, Niger Delta Power Holding Company, spoke on a wide range of issues, including major feats as well as problems and solutions.

Power supply restored after partial grid collapse, TCN

How has your background influenced your current role as the managing director of Niger Delta Power Holding Company?

As you well know, I am a lawyer. I was called to the Nigerian Bar in 1991. I had my first degree in Law from the University of Lagos; the same university from which I also had my master’s degree, also in law. I was in private practice since my call to the bar until 2015 when the administration of His Excellency, President Buhari came in.

By October 2015, I was invited to join the Advisory Power Team in the Office of the Vice-President, which was set up by Mrs. Damilola Ogunbiyi. I was subsequently made a Senior Special Assistant to the President on Power Privatization. I also doubled as Acting Head of the Advisory Power Team, which I did till June 2016 when I was appointed the Acting Managing Director of the Niger-Delta Power Holding Company Limited. By August 25, 2016, I was appointed the substantive Managing Director. In addition, since then, God has been helping us.

Can you comment on your projects and capacity of contractors?

The company has 10 power plants; eight of them already generating power to the grid; two not completed at all. Out of the eight, two are partially complete. The company has also constructed several transmission and distribution projects. So, one cannot rule out the fact that in implementing these projects in the past, certain things might have happened that called for the on-going investigations to truly know what happened then. I was not there at the time.

However, I know judging from what I met on the ground that we have uncompleted projects. There was a contractor who had four power plants to construct for the NIPP, none of which was ever completed. Ordinarily, it should not have taken more than 36 months to complete.

How many projects do you have and are they working?

We have 10 power generation projects. I mentioned to you that eight are already connected to the grid. Those eight will give you somewhere around 4000 MW installed capacity. Associated with the generation projects are gas transportation infrastructure projects ensuring that gas flows to the station; those ones have also been completed. As at today, we do an average of 700MW out of four, 000MW because of transmission limitations.

Unlike other products, electricity generated is not what you can store and keep somewhere. You have to generate at about the same time the distribution companies are ready for them. If not, the transmission system will collapse. Transmission determines whether we should generate or not. When a certain amount of megawatt is generated, it has to be transmitted. The constraint has to do with the transmission lines based on off-take from distribution companies. Transmission controls us to generate or not; it will not call you up in the morning to generate or call every one hour to either come down or go up, it is a whole process. The argument is that there is no demand and by that, I mean bulk demand at the distribution end. In addition, the argument is affecting generation companies. Therefore, you can see why I said about the average of 700MW compared to 4,000MW-installed capacity.

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We have about 2,000 MW in the western axis from Olorunsogo in Ogun State to Omotosho in Ondo State to Benin to Sapele to Geregu. I need about 400 standard cubic feet of gas to run them but only have been able to mobilise 100mmscf, which is barely enough to run 400MW out of two, 000MW in the West. However, in our power plant in the East, we have excess gas. We have full gas for Calabar and Alaoji Power Plants. We have full gas for Gbarain Power Plant. These are the three operational ones in the East.

How has running NDPHC being for you?

The challenges of running NDPHC have been brought to the barest minimum because of having a wonderful, selfless management team of enterprising people, who are brilliant, very reliable and trustworthy. When you have Engr. Ife Oyedele and Babayo Shehu in your team and you are passionate about results, running a company like NDPHC becomes seamless largely. Therefore, I will attribute the achievements so far recorded to the formidable management team we have in place.

So how do you mitigate these constraints?

We just signed a 60-mmscf gas agreement with Chevron Nigeria for Olorunshogo Power Plant. To mitigate evacuation, we are working directly with distribution companies in our areas to see if we can supply directly to distribution companies and end-users. We have signed a few contracts in that regard. However, there is the gas challenge and the evacuation challenge while the biggest challenge in the industry is the revenue shortfall.

Picture it this way: we have 4000MW, we don’t get dispatched; we don’t get more than 700MW daily because there’s no enough evacuation capability due to distribution constraints. Even that 700MW we do, when we put in our invoice, we get paid an average of 25% on a monthly basis because NBET remits exactly the percentage they get from the distribution companies who claim that what NBET charges is way above what they approve for them to collect from customers. That is the tariff shortfall.

In addition to that, there is also, what they call the market shortfall, which is what distribution companies on their own are not able to meet, so these are the challenges.

To get around these challenges again, the former Minister of Power, Babatunde Fashola did what is called ‘Eligible Customer Declaration’ under the Electric Power Sector Reform Act, which allows us to seek high net-worth consumers and supply directly so that we do bilateral contract with them and collect our money.

They are not so many but we are doing that to improve our revenue. We are also working with distribution companies to mitigate that and to do end-to-end…like from our power plant to the end-users. We are looking at the arrangement with our power plant in Ogun State. We hope to work with the Lagos State Government to start with certain areas on how to supply 24/7 electricity end to end where all the issues are cleared; and supply directly, get the payment directly. However, we must carry the distribution companies along.

How do you intend to get to the rural communities?

One of the ways we have tried to overcome this is through massive investment in transmission. We have just commissioned the 2x60MVA transmission sub-station in Ogun State. It is a major transmission sub-station. We expanded the Ota transmission station, and we did a new line from Ota to old Abeokuta sub-station.

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These transmission interventions are done to improve transmission. Once Ibadan Disco starts taking, what that means is that there is more energy and more access for Ibadan Distribution Company to serve. We are doing similar things all over the country.

Vanguard

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