Power investments squeeze as losses reach N240bn annually

Millions of dollars of investments into the Nigerian Electricity Supply Industry are now squeezing, as commercial and technical losses in the sector remain on the rise, following its privatisation about three years ago.

This negative trend, according to Robert Dickerman, the managing director/CEO of Enugu Electricity Distribution Company (Enugu Disco), results in industry losses of about N20 billion per month or N240 billion per annum.

Commercial losses refer to the amount billed by a Distribution Company (Disco) or Generation Company (Genco) for energy consumed but not collected, while technical losses have to do with money lost due to operational deficiencies in the day to day running of energy installations.

One of the specifics, regarding commercial losses, is energy theft or meter compromise, where customers intentionally by-pass meters to reduce or totally evade payment of bills.

“The Nigerian power industry collects less than 50 percent of money owed it by various entities, said Dickerman.

“About 30 percent of consumers within the Enugu Disco network are not captured on the company’s billing system and are not billed, yet the company had to replace one-third of the 1,900 aging transformers it inherited from government at a very huge cost” he further lamented.

Other companies have also continued to put in money in the sector, while facing similar challenges of commensurate capital recovery.

Transcorp Ughelli, a power generation company (Genco), has invested $98.8 million in its power generation projects since November 2013, when the Nigerian power sector was privatised, said Adeoye Fadeyibi, the company’s managing director/CEO.

BusinessDay findings show that the million dollar investments by Transcorp saw the company increase its generation capacity from 150 megawatts in 2013 when it took over the plant, to about 634 megawatts at present, with further projections to reach 850 megawatts capacity before the end of 2015.

Yet, at the moment “Nigerian Gencos are being owed about N68.5 billion, out of which the Nigerian Bulk Electricity Trading (NBET) Plc is responsible for N16.5 billion,” said Fadeyibi.

Also, the Egbin power station, Nigeria’s largest power plant with an installed capacity of 1320 megawatts, has invested $227 million into facility rehabilitation in the past three years, yet it supplies only 620 megawatts to the grid due to evacuation constraints.

The company says its plan to double its current generation capacity in the next two years remains in doubt, if improvements in transmission are not made. One of its critical demands is the provision of a 332kva power line to the plant for smooth energy evacuation.

North South Power, another Genco and owner of the Shiroro Hydro power plant, has spent $120 million since privatisation in November 2013 and has planned to spend $50 million more in the next five years.

Eric Olo, a general manager with the company, says the company plans to further generate 300 megawatts of solar power, in order to augment energy availability in periods of low water volumes.

However, due to transmission bottlenecks, the Transmission Company of Nigeria (TCN) and the various power distribution companies are often forced into load rejection or load shedding, to ensure the safety of their fragile infrastructure within a weak network of electricity distribution facilities. This results in an estimated 1,800 megawatts of electricity lying idle in power plants across Nigeria.

In power sector parlance, load rejection refers to a sudden power trip-off in the distribution system, due to its failure to contain the amount of energy being transmitted into it from power generation stations, resulting in over-frequency or power surge on the generation side. It is a common cause of facility damage in the power sector with attendant economic losses.

YANGE IKYAA