2017- A year of mixed fortunes for Nigeria’s power sector
This year has had its “ups and downs” and the power sector is no exception. The year started with a generally low mood in terms of the quantum of power generation available for distribution from none to a peak of 5,222MW on 18th of December, 2017.
Early on in the year, the Nigerian Bulk Electricity Trading Company (NBET) decried the generally low level of remittances from the distribution companies (DisCos) which has led to the rising spate of on-going debt and general illiquidity in the Nigerian Electricity Supply Industry (NESI).
The average monthly remittances from the DisCos was as low as 30 percent with all the operators trading blames on who is responsible for the situation. This has led to the inability of the generating companies (GenCos) and the Transmission Company of Nigeria (TCN) to pay for services procured in generating and transmitting power to the DisCos.
The illiquidity in the NESI has resulted in a generally low mood for all stakeholders including financial institutions, relevant ministries, departments, agencies, potential investors both local and international.
Throughout the year, consumers were at a loss as to why the much needed electricity generated by the GenCos was rejected month after month by the DisCos. The blame game between the operators made nonsense of privatisation. Yet, accompanying the low levels of electricity supply were outrageously high levels of estimated and fraudulently extorted electricity bills leaving consumers in their regular and continuous state of “low”.
In its lowest ebb of financial distress, the NESI experienced a financial debt profile of over a trillion naira until the Federal Government (FG), through the Central Bank, arranged a N701 billion Payment Assurance Guarantee (PAG) to the NBET to enable them make payment to GenCos who were unable to make prompt payment for gas and other incurred expenses.
GenCos however remained in low spirit for months thereafter as actual payment by instalment did not commence until much later. Even then, DisCos remained in a low spirit especially with the declaration of Eligible Customers by the Minister of Power, Works and Housing during this year of highs & lows. In their low ebb, DisCos have given a notice of Force Majeure to the Bureau of Public Enterprises (BPE), stating that the declaration of Eligible Customer is a threat to their continued survival within the NESI.
On a more positive note, the NESI was on a “general high” when FG, working with the World Bank and other affiliate financial institutions, sets out a power sector recovery program (PSRP) which if implemented will put the power sector reform back on track. However, conditions precedent to the release of over US$5 billion of loan has not been met by the Federal Government whilst industry watchers remained on a “general low”. To access the loan, FG must overcome technical, governance, commercial and operational barriers.
At the end of the year, the annual Future Energy Nigeria conference puts the NESI on high hopes shifting discussion points from the known issues to the proffering and implementation of solutions. One of the most important outcomes from the power conference is the encouragement to focus on embedded generation in a regional grid system alongside off-grid solutions using renewable energy sources.
It was made clear that continuous investment in the transmission network while the distribution network is left in its weak and low state amounts to nought. For the first time, the chairmen of the committees on power in the National Assembly (NASS), Senator Eyinnaya Abaribe and Honorable Daniel Asuquo Effiong, put great efforts to position the power sector on track for development. Among other things, they commissioned a sound appraisal of the legislative interventions required to make the power sector reform a success. Through their dedication, the NASS is embarking on laws to make renewable energy systems more embedded in our portfolio of energy mixes.
The report about 2017 will be incomplete without praising the bold steps of the Federal Government in appointing more Engineers into the board of the Nigerian Electricity Regulatory Commission (NERC) as opposed to the caricature of appointment of lawyers and financial experts in the previously inaugurated boards.
Before this appointment, the power sector was in a low state for over a year during which period the “regulated” power sector had no appointed regulator, being run by temporary administrative arrangements. The lacuna arose due to the lack of appointment of new commissioners following the expiration of the tenure of service of the Sam Amadi led board of commissioners in December 2015.
Up till now, the board of NERC is yet to have a Chairman as efforts to get the chairman-designate, Professor Akintunde Akinwande on board failed three times – a low point. Having said that, the 6-member board inaugurated this year has performed to expectation.
Professor Frank Okafor, Commissioner Engineering, Performance and Monitoring, just as others, worked throughout the year to apply his knowledge of power systems to proffering viable solutions to the many difficult problems facing the NESI. In November 2017, he organised a stakeholder workshop on how to empower Nigerians via the practical implementation of the Nigerian Content Regulation to keep Nigerians in high spirit as the implementation will ensure Nigerians get more opportunities from the power sector unlike what obtained for many years in the oil sector.
In summary, from this year, the NESI will witness a radical shift in focus to sustainable electricity systems with increased penetration of embedded renewable energy generation, mini grids, solar homes, and hybrid solutions involving solar and gas technologies in combating the power problems facing Nigeria.
Oyebanjo is a PhD Student at the Centre for Doctoral Training (CDT) in Power Networks at The University of Manchester, UK