Electricity: grid capacity to jump as Buhari plans to privatise TCN

One of the first steps the incoming Buhari government will take to address the nagging problems of the electricity sector, will be to privatise and decentralise the Transmission Company of Nigeria (TCN).

With the power sector reform’s foundation already laid by President Goodluck Jonathan, in what was adjudged the biggest, most transparent and comprehensive power sector privatisation in recent history, the new administration is gearing up to take the reforms one step further.

“Transmission will be deregulated, regionalised and privatised, in order to break down centralised transmission,” said Kayode Fayemi, Director of Policy and Strategy for Buhari’s APC (party) in a breakfast meeting held at the Lagos Business School last week.

Due to a lack of investment in capacity expansion, the power transmission network has constituted a bottleneck in the transfer of generated electricity from the Generating companies (Gencos) to the Distribution companies (Discos), thereby crimping the gains of privatisation in the sector.

The transmission system is also riddled with problems of unreliability and security, and is currently inadequate for the major generation expansion projects that are already in their planning or construction phases.

Thus, it has become the weakest point in the power sector reforms, causing hiccups for the privatisation exercise.

The Transmission Company of Nigeria (TCNs) existing transmission system, which is capable of delivering about 7,000MW of generation to the distribution company (Disco) Trading Points, is inadequate to meet expected growth with NIPP and various IPP generation projects coming online.

“The existing generation and network resources cannot sustain the entire load and hence load rotation schemes have been adopted”, said the Concessionaire to the TCN, Manitoba Hydro International, in an assessment of the Transmission network, made to the Nigerian Electricity Regulatory Commission (NERC) last year.

With the transmission segment suffering from lack of capital spending, amid a government capital budget slash, privatisation of transmission should lead to the initiation of capital spending on the project.

According to the power reforms agenda, the grid by now should have been able to evacuate over 10, 000 megawatts if things had worked according to plan.

A prioritised list of transmission network capital projects, which is currently underway, is proposed to reach a total system capacity of 10 GW by 2017, and 20 GW by 2020, if investments flow in as planned.

“If properly funded, the plan will improve the overall security and quality of supply of electricity, and ensure that the system can efficiently evacuate unrestricted power from the generators to the distribution companies and large industrial and commercial users,” Manitoba Hydro further said in its assessment.

“The proposed system expansions are aimed at serving the existing loads, as well as catering to the potential load growth over the next five years”, Manitoba Hydro said.

TCN made pre-tax losses of N13.7 billion ($88 million) in the 2012/13 with negative operative margin of around 18 percent, based on unaudited financial statements.

The number of staff employed by TCN increased from 3,334 in 2011 to around 4,210 by end 2013.

The increase in staff numbers was far greater than the growth in wheeled energy and as a result, the energy wheeled per staff declined from 8.1GWh in 2011 to 6.9GWh in 2013.

EDOZIE IFEBI