Nigeria's leading finance and market intelligence news report.

National grid limitation leaves NIPPs 3000mw stranded

…operators blame discos for rejecting loads

The national grid limitation has inhibited about 3000 megawatts of electricity from the eight independent power plants (NIPPs) owed by the Federal Government being evacuated so that more Nigerians can have access to electricity supply.

The stranded power could have gone a long way to boost the level of electricity supply which currently hovers has around 4000megawatts.

Without dramatic improvement in transmission capacity or rapid decline in Nigeria’s aging hydro-power generation, supply to risk-laden NIPPs will be squeezed-out in favour of the privately-funded generation with binding PPAs.

The Transmission Company of Nigeria (TCN) has always as claimed that the national grid is able to wheel about 7,000 megawatts of electricity but the electricity distribution companies have always insisted that they would not take electricity that would be paid for by customer while the Nigerian Bulk Electricity Trading (NBET) Plc breath down their throats that they should pay for the volume of electricity sent to them by the generating companies.

A number of high capacity transformers that have been energised at the various transmission stations across the country are just there. The Discos refused to step down the transformers to improve their supply, BusinessDay investigation has revealed.

An engineer with one of the transmission stations told BusinessDay that if the Discos are rejecting loads it is not going to be possible for the TCN to be demanding from the generating companies.  He said there is always enough load for the Discos to pick for their customers but they would not take because they alleged that the customers would not pay.

Fadekunayo Adeniyi of Centre for Development, Environment and Policy [CeDEP] – SOAS, University of London blamed the situation on the Monopsony of the Nigerian Bulk Electricity Trading (NBET) Plc. He said NBET Plc was established to increase generating companies (GenCo) investor confidence in the Nigerian Electricity Supply Industry (NESI) by shielding the GenCos – and by extension, shielding the natural gas producers – from the significant aggregate Technical commercial and collection (ATC and C) losses at the retail end of the NESI.

He said the agency has been unable to shield GenCos and gas producers from the liquidity crisis.

In the first half of 2019, NBET, on its own, met only 21 per cent of its $ 914 million obligations to GenCos.

NBET’s monopsony he said prevents competition and stifles productivity in the wholesale market, stating that the GenCos are unable to supply electricity to willing credit-worthy buyers through the national grid because of the existing regulatory regime does not support it.

“NBET does not have the fiscal capacity to facilitate all wholesale electricity trading because of the unsustainable Aggregate Technical Commercial and Collection (ATC and C) losses a losses and non-cost reflective retail tariff.

He said NBET’s unsustainable fiscal position became clearer when the privately-financed 450 MW Azura-Edo power plant began electricity production and trading with NBET on a take-or-pay contract.

He said when Azura-Edo IPP began ramping up its electricity sale volumes between March and May 2018, there was a simultaneous winding down of electricity sale volumes from the state-owned GenCo,

Niger Delta Power Holding Company (NDPHC). Within three months in 2018, the Azura-Edo IPP’s electricity sales increased by N5.2 billion ( $14.3 million) and NDPHC’s electricity sales reduced by N5.5 billion ($ 15.3 million).

“NBET is evidently incapable of supporting current and new generation investments on the grid. It seems that

the government reduced the productivity of its own power plants to accommodate the Azura-Edo IPP, which is protected by several sovereign guarantees, he said.


Olusola Bello

Whatsapp mobile

Get real time updates directly on you device, subscribe now.

Comments are closed.