The last may not have been heard of the much mouthed embedded power generation which it was thought would provide immediate power relief to both corporate and individual consumers.
BusinessDay gathered that regulatory lethargy and the review of terms between the electricity distribution companies(Discos) and those generating companies participating in the embedded power generation concept are constituting stumbling blocks to its take-off.
Under the scheme, buyers and suppliers are to agree on specific payment for the power supplied, which is different from the generally approved tariff for electricity consumption nationwide.
The scheme was a strategy to immediately procure electricity for customers, while waiting for national grid power to improve significantly.
But Anthony Akah, acting chairman of the Nigerian Electricity Regulatory Commission( NERC) said the greatest problem facing the concept is the issue of willing buyer, and that until a company has a willing buyer, it would be difficult for the commission to force buyers on suppliers.
Akah however said that any company experiencing frustration before getting approval for its license should write a letter of protest to the commission and that the matter would be addressed promptly.
The NERC boss said there are no regulatory hurdles being put in the way of those who want to get licenses. “However, we must protect the interest of both buyers and sellers”.
Oladele Amoda, managing director of Eko Electricity Distribution Company, giving an insight into the cause of delays in the take off of the scheme, said some of the companies are renegotiating earlier agreements they entered into with the Discos because of the recent increase in the tariff.
According to Amoda, “Eko Electricity Distribution Companies and its partners involved in the embedded power scheme have commenced renegotiation of the initial agreements entered, hence the inability of both parties to formalise the Power Purchasing Agreement (PPA).
He said the agreements are being renegotiated because of recent happenings in the power sector, especially the increase in tariff which has made the suppliers want to renegotiate the price of power they would supply to Eko Electricity Distribution.
He said the scheme in Eko Disco in particular should have been put behind them but that his company wants to ensure things are done properly and without hiccups and needs to be careful.
He also explained that the suppliers have been sitting on the fence because of the lack of stability in the industry “It is not easy, you know the companies themselves have been waiting on the fence to see that the market stabilises. They are going to charge premium and gas prices have gone up a little bit, so all these things we are trying to renegotiate”.
He pointed out that there are ten companies participating in the scheme. He said: “We have ten companies that we have done their processing over a period of one year. So now we have these ten companies but they still need to meet some conditions before we can sign a PPA.
“The companies are supposed to give performance reports and some other things such as the quality of the machines they want to install. We need to know the type of machines they want to install, “We want an efficient machine, and some of them are still perfecting their land titles, where they will put their plant”.
Meanwhile, the company has signed for bilateral power 60 mw for gas, 100 mw for electricity with Paras and Egbin power plant. He said even though they have not signed the commercial agreement with Egbin, it has started supplying Eko Disco with the 100mw, adding that it is on trial run.
“We were supposed to start trial runs with Paras, we however are shifting that date to May 2016 because the Transmission Company of Nigeria (TCN ) wants to take out the whole of Ajah axis to Alagbon. “We want to convert, we want a 32 KV line to Alagbon to 330, we want to upgrade it and we are going to shut down for three weeks”.
A total of 300 megawatts of electricity was expected from over 40 embedded power generation licences under the Eko Electricity Distribution Company in two to three years’ time. But this number has been pruned to ten companies.
Power investment expert, Dolapo Kukoyi, said the federal, states, and private sector power plant investors have immense benefits to gain from investing in embedded generation.
Kukoyi noted that embedded generation has the prospect of meeting national aspirations within a shorter time; reduce technical losses because of proximity to the network, and deepen the electricity market-capacity, standards, contracts and more bankable deals.
With embedded generation, he said, discos would have access to more power supply and more cash flows, while more customers would be willing to pay.
Olusola Bello
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