No longer at ease as Nigerians query Buhari’s power vision

With President Muhammadu Buhari seen by many as a leader with strong ideology that government takes charge of key sectors of the economy, Nigerians appears puzzled that the regime is yet to communicate its blue print in the nation’s bedeviled power sector in clear terms.
Having completed the first phase of the privatisation process, the immediate past FG in November, 2013, handed over power sector to private investors-11 Discos and five Generation Companies (Gencos) formerly under the control of the defunct Power Holding Company of Nigeria (PHCN).
The Bureau of Public Enterprises (BPE) put the total sale figures of both the GENCOs and Discos at $2.525 billion (about N404 billion). The GENCOs went for $1.269 billion while the Discos were sold for $1.256billion.
The breakdown of the DISCOs as approved by the National Council of Privatisation (NCP), are as follows: Kann Consortium won Abuja Distribution Company at $164 million; Vigeo Power Consortium for Benin at $129 million; West Power & Gas for Eko at $135 million; Interstate Electrics Limited for Enugu at $126 million; Integrated Energy for Ibadan at $169 million; NEDC/ KEPCO for Ikeja at $131 million; Aura Energy Limited for Jos at $82 million; Sahelian Power SPV Limited for Kano at $137 million; 4Power Consortium for Port Harcourt at $124 million and Integrated Energy Distribution and Marketing for Yola at $59 million.
For the GENCOs, the preferred bidders included Amperion for Geregu Plant at $132 million; Mainstream for Kainji Plant at $50.76 million with commencement fee of $237,870,000; North-South for Shiroro Plant at $23.60 million with commencement fee of $111 million; Transcorp/Woodwork for Ughelli Plant at $300 million and CMEC/Eurafric for Sapele Plant at $201 million.
Aletor Adoghe, energy analyst, noted that Buhari’s government should by now have imprinted in the minds of so many Nigerians its plan for the power sector which he said the survival of the Nigerian economy depends largely on.
“I am particularly concerned about the distribution companies. Due to the inability of the distribution companies to raise cheap funds, and given the pressure to repay loans obtained from financial institutions, the distribution companies have not been able to upgrade decaying basic infrastructure for effective and profitable take-off. I don’t know what the government is doing to help in this regard,” he said.
He explained that most of the DISCOs do not receive sufficient electric power for on-sale to consumers and consequently they are unable to recover any cost expended on upgrading or improving electricity distribution infrastructure or equipment.
“These are factors responsible for the current situation; the inability of the distribution companies to properly meter (also due to paucity of funds) has prevented the successor-companies from performing optimally such that the improvement in the electric power sector has been marginal”, he told BD SUNDAY.
Government is committed
Opuiyo Oforiokuma, Managing Director/CEO, ARM-Harith Infrastructure Investment Limited, said past and recent statements made by government, including that of Babatunde Fashola, Minister of Power, Works & Housing, suggest that it is government’s genuine intention to continue with electricity privatisation of the previous administration.
“The recent implementation of increased electricity tariffs for distribution companies, unpopular as that is with some stakeholders, is a vital step towards ensuring the financial viability of the privatised distribution companies and the entire electricity value chain back through to the privatised generation companies and their fuel suppliers. It is also, I believe, a clear indication that government is serious about wanting electricity privatisation to succeed”, he told BD SUNDAY.
He said with a new Minister now in post, a little more time is required to allow him to get to grips with all the other key issues that need to be resolved (legacy debts, gas availability, transmission bottlenecks, metering, etc), and to determine the definitive policy thrust going forward.
“Recent reports indicate government’s intention to complete legacy government-funded projects such as new power plants in Mambilla, Zungeru, Kaduna, and Katsina, that should collectively add nearly 4,000MW to Nigeria’s generation capacity.
“In addition, government is actively giving support to power generation projects by independent power developers. An example of one such privately-financed project is the US$876M Azura-Edo IPP, in which the Fund my company manages, the ARM-Harith Infrastructure Fund, is an equity investor. The Azura project is a 450MW open cycle gas turbine power plant being developed in Edo State, Nigeria, and is the first of a new wave of project-financed Greenfield IPPs currently being developed in Nigeria”, he said.
He explained that other ongoing initiatives by the current administration include: efforts to broaden the range of fuel sources for power generation beyond the traditional gas and hydro sources, and to include others such as coal and renewable energy (solar, wind, biomass, etc).
“The distribution companies should stay privatized, and they should be held accountable for performance. The reality today, however, is that we have more generation capacity than the national grid can carry, and that excluding the Transmission Company of Nigeria (TCN) from privatisation may not have been the best thing. The TCN Management Contract with Manitoba Hydro did not work either, apparently because of political and other interference. I believe that serious consideration should be given to privatising the entire transmission system”, he said.
He emphasised that the capacity of the national grid needs to be increased, but that trying to take that to the extent of building a super-grid may take a very long time to achieve.
“Mini-grids should be considered, e.g., to serve industrial, commercial and residential clusters, and off-grid solutions like renewable energy generation can be very useful to improve rural electrification. Solar power could be particularly useful in the northern states where solar radiation levels are high, and could form part of the solution for redeveloping those states previously embroiled in the Boko Haram conflict.
“Furthermore, embedded generation solutions that provide power directly into the distribution company networks are another way of bypassing the transmission bottleneck and ensuring that the generation companies can supply power to customers”, he said.
He said the FG should also ensure that government ministries, departments, and agencies, including the military and police, pay their electricity bills too, adding that it was reported last year that around N49 billion was owed to the distribution companies.
“The recent tariff increases are nevertheless a step in the right direction towards providing much needed cost-reflective tariffs to make the distribution companies financially viable, and this should mean that they have the revenue with which to serve customers more effectively,” he said.
Fashola, a former governor of Lagos, who helped to transform Nigeria’s financial capital, will however have to make a decision on the privatisation of government built National Independent Power Plants (NIPPs) with capacity to produce up to 5,000 megawatts that have stalled even as blackouts become the norm across the country.
Nigerians still paying huge for generator and diesel
BD SUNDAY reliably gathered that Nigerians still largely depends on generators of different brands and sizes for the running of their homes and businesses.
The Manufacturers Association of Nigeria (MAN) and the National Association of Small Scale Industries (NASSI) recently estimated that their members spend an average of about N2billion per week on self-power generation.
A series of power sector polls conducted by NOI Polls Limited, over the period Q2, 2013 to Q1, 2015; Nigerians received an average cumulative power supply of 5.4-7.1hours per day. Also, on average between Q2, 2014 and Q1, 2015 Nigerians spent between N3, 302-N3, 613 on actual power supply.
When the proportion of residents who disclosed power had improved in their area was averaged over the period Q1, 2013 through Q1, 2015, the South-West region had the highest average proportion (67 percent) and the South-East region had the lowest average proportion (56 percent) of respondents who saw no improvement in power supply to their households.
Another recent statistics on use of generating sets in the country released by Kabir Usman, Director-General, Centre for Management Development (CMD), revealed that about 60 million Nigerians spent N1.6 trillion on generators annually.
Efforts to reach Lai Mohamed, Information and Culture minister, to have government position did not yield result, as the minister did not pick several calls to his cell phone. As at press time he had yet to reply text message sent to him on the subject.