Experts recommend interconnected regional grid model for TCN concession

As the Federal Government displays a commitment to concessioning the Transmission Commission of Nigeria (TCN), experts advise breaking down the institution into regional inter-connected grids, able to operate independent of each other and function as a single transmission network.
Nigeria’s power generation is dispersed across different regional areas and through diversified sources. Northern Nigeria provides a rich source for solar and currently has hydro plants. The Middle belt and Eastern region have potentials to generate power from coal and the South has a preponderance of gas-fired plants. Experts say this mix should justify a review of Nigeria’s transmission grid architecture to allow for a structurally regional grid managed by different regions.
“TCN is made up of the Transmission Service Provider (TSP) and the System Operator (SO) with regional control centres and a National Control Centre (NCC) in Osogbo. It could be broken into regional inter-connected grids, able to operate independent of each other and also to operate as a single transmission network as well,” said Odion Omonfoman, energy consultant and CEO of New Hampshire Capital Ltd.
Sunday Oduntan, executive director, Association of Nigerian Electricity Distributions, (ANED) said in a recent media conference that, “My personal opinion is that government should concession the TCN to a country or company that has the required capacity to expand the network for optimal efficiency.”
But some differ. “I would recommend one transmission company (TCN) and several regional transmission services providers (TSP) in charge of the regional grids under a concession and service arrangement with TCN,” said Odion.
He further said, “The NCC in Osogbo would still be under TCN. Under the concession arrangement, new transmission lines can be built under a Build, Operate and Transfer (BOT) model with investors, where investors can recoup their investment via a wheeling charge over a certain period of time, and hand over the asset to TCN upon full recovery of investment.”
Omonfoman told BusinessDay that the key to a successful concession of TCN is the evaluation and selection process adopted in selecting the regional service providers. “Technical capabilities and more importantly, financial ability of the service providers will rank as top evaluation criteria. Establishing a transparent bid process with clear evaluation criteria is most important. Government must be ready to provide payment guarantees or other forms of sovereign guarantees to the regional service providers to guarantee their investments in the first few years of the concession period,” he said.
Some industry analysts say regardless of what methodologies that may be deployed, an independently owned and operated high voltage transmission grid is a necessity. Independent ownership and management of the grid removes the problem of conflicts of interests which occur when competing generating companies struggle for access.
The Federal Government has not hidden its intention to improve the fortunes of the sector. In an exclusive interview with BusinessDay, Babatunde Fashola, minister for power, works and housing, said government is synchronising the transmission expansion with production.
“So we are planning to expand transmission to 7mw, we need to see also that we can produce 7mw. This is because transmission is a transporter, it carries a willing charge and it will inject a capacity charge. So people must understand that there may be no need to borrow money to build that asset. If you do not need it, do not build it.”
In June this year, Godknows Igali, permanent secretary in the Ministry of Power, stated that a concession arrangement is being discussed and could be implemented.
“Government is not planning to privatise the TCN, at least, not to my knowledge as the permanent secretary in the ministry of power. What we want to do is to have these private managers as participants in the market, what that means is that at the end of the month, he gets paid not from the government but from the market. We want to start and we are still at the level of formulating that policy because it is not going to be privatisation,” Igali said.
Several countries have evolved efficient systems for managing their national grids. Ghana’s GRIDCo was incorporated in 2006 as a private limited liability company for the purpose of operation of the National Interconnected Transmission System by an independent Utility and the separation of the transmission functions of the Volta River Authority (VRA) from its other activities within the framework of the Power Sector Reforms.
The United Kingdom’s National Grid is a private company owned by shareholders. It owns the high voltage grids in England and Wales and claims on its website a 99.99 per cent transmission reliability.