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Power: Web of intricacies that may pull down Fashola



In from Ali Smart . . .

If there is one ministry that would serve as the litmus test for the present administration, it is the Ministry of Power. For whatever else this administration may accomplish, it will be gauged by what its achievement in the power sector, because of the role it is believed to play in national development.

Expectedly, the man who is in the saddle in the ministry is former all-time performing governor of Lagos State, Mr. Babatunde Raji Fashola (SAN).

Clearly, he has his job cut out for him. But by far, one of the problems he is going to be confronting is the issue of resolving epileptic power supply.

Curiously, despite being substantially controlled by the private sector, the power sector remains problematic across the value chain of generation, transmission and distribution.
This is because the distribution companies (DISCOs), which feed the entire value chain financially, are facing funding deficit, a challenge that has affected the generation and transmission segments. These two layers coincidentally depend on revenues collected by the DISCOs.

Experts’ viewpoints

In the view of the former minister of power, Prof. Barth Nnaji, whereas Nigeria currently has the capacity to generate 12,000 megawatts of electricity, less than half of it actually gets to the consumers.

Nnaji who made this disclosure on Wednesday at the opening of a two-day public hearing on the crisis in the power sector organised by Senate ad-hoc Committee on Power, blamed the situation on poor transmission caused by inefficiency of the regulatory agency.

According to him, even though the entire megawatts being generated by a nation cannot be distributed to consumers, Nigeria can actually deliver 7,000 megawatts but for the constraints in transmission he said must be eradicated.

He also described the gas being delivered for power generation as a fraction of the installed capacity which would not affect the quantity meant for export through the Liquefied Natural Gas (LNG).

“Out of the amount of power that is distributed to transmission companies, only about 50 per cent of it gets to the consumers. It is an incredible inefficiency in the power system that must be cured,” he said.
Nnaji who commenced the unbundling of the Power Holding Company of Nigeria ((PHCN) in 2012, regretted that the huge financial resources invested in the power sector for almost two decades have not yielded any meaningful result.
While explaining the rationale for the deregulation of the power sector, Nnaji said the volume of staff which constituted PHCN was unproductive as he recalled that 50,000 PHCN workforce at the time could only generate a paltry 3,000 megawatts for the nation.
He also disclosed that before he left office, a whopping N400 billion had been earmarked for the payment of gratuities to PHCN workers adding that the privatisation arrangement did not include any plan to disengage any PHCN staff. But if any staff was disengaged, he added, it was done by their new employers and not the government.
Nnaji emphasised the need for aggressive drive for transmission which he said should include the government as well as effective gas production to enhance power supply.

He also explained the reason Manitoba hydro power company was hired by the federal government during the privatisation process, saying the company’s job was to manage the generation network, empower it and train Nigerians to gain expertise so that they could manage the sector after its exit.
The former minister also challenged the DISCOs to ensure the availability of prepaid metres to consumers, saying metering is a very critical part of service delivery in the sector.

He added that the DISCOs must not overburden consumers by the cost of the metres but should as a matter of necessity ensure that they are free and available.

Points to ponder

In the view of operators in the power sector, the transmission network, is very weak, the weakest link in the chain. The transmission company can at its peak, wheel 5,300 megawatts (mw). Therefore, even if the generation companies can pool 10,000Mw, customers can only get 5100mw because 200Mw may be kept as spinning reserve to balance emergencies.
Ironically, the distribution companies take at best 60 per cent of what they are supposed to get, no thanks to technical and commercial challenges. Power is lost in transit due to poor equipment and facilities as well as the unwillingness of some customers to pay their electricity bills.
At the last count, the DISCOs were being owed N32 billion, the bulk of which was, ironically, in the hands of Federal Government Ministries, Departments and Agencies (MDAs), and the military.
Confirming this development, the Chairman, Egbin Power Generation Plc., Mr. Kola Adesina, said the company is owed N39 billion by the Federal Government, which accumulated between when they took over the asset in November 1, 2013 and October this year.

Read also: FG spent N2.74tn on power generation since 1999

Corruption incorporated

The power sector is synonymous with corruption. From Elumelu Probe Panel which was set up to look at the allegations of corruption but was mired in the corruption crisis which rendered the whole exercise nil is still fresh.
Like an apparition which has refused to go, the Senate ad-hoc committee investigating the funds expended in the power sector since 1999 on Thursday revealed how some officials of the Bureau of Public Enterprises (PBE) allegedly connive with power generation firms to defraud the country.
The ad-hoc committee at its second day public hearing said that BPE staff, who are board members of the power generation and distribution firms, were offered mouth watering privileges that may have been meant to shut their eyes while the power firms shortchanged the country.
The Chairman of the investigative public hearing, Senator Abubakar Kyari, while sharing his perspective, insisted that the truth must be told about why the country’s power reform programme seemed to have failed to work as planned.
The Borno North lawmaker said that independent findings revealed that BPE staff received different forms of gratifications such as exotic cars including Prado and Land Cruiser Jeeps, ostensibly to look the other way.
Another member of the committee, Senate spokesperson, Senator Aliyu Sabi Abdullahi, lamented lack of coordination in the sector.

Abdullahi noted that BPE that is negotiating for the country needed to be technically and morally responsible to the country.
He added that “It seems that the BPE is short changing the country” through its action and inactions.

BPE Director General, Benjamin Dikki, disagreed completely with the allegation that the staff of the agency are being compromised by power firms.
Dikki said, “We are there (in the board) to protect Nigerians. What companies are paying, or have given to their board members as privileges should be referred to the respective companies.
“Whether the privileges are right or not I don’t know. I take exception that we have shortchanged the government. We balanced the interest of government and investors because what we are looking for is investment. We need to create an enabling environment for the business to thrive.”
Dikki warned that the rate at which the country is going, the generation and distribution companies might close shop, a situation he said would force the country to return to zero level.
Asked whether the power generation and distribution companies had been adhering to performance agreements, he answered in the negative.
The BPE DG however said that government on its part had not been fulfilling its own part of the agreement.
The GENCOS and DISCOS, he said, have not been getting agreed subsidy from the Federal Government.
According to him, the government has failed to honour its own obligation in terms of subsidy to the power companies.

You may also like: PHCN retirees seek review of power project, others

Blessed assurance

Meanwhile, Nnaji has expressed confidence in the ability of the new Minister of Power, Mr. Babatunde Fashola, to aid productivity in the sector. He however advised him to promote gas production in collaboration with the Ministry of Petroleum.

“He doesn’t control gas production but he must liaise very well with the Ministry of Petroleum and presidency to ensure that gas is available for all of the power plants and even though he is not supervising the power plant,” he said.

Echoing similar sentiments, the Director, Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Olurotimi Oduntan lauded the appointments of Fashola. Oduntan said: “The appointment of Fashola is a welcome development for the sector. They have integrity and have legacies that speak for them; therefore they will not fail in these new assignments. With Fashola the days of impunity are gone, I assure you. He will make gas available for power generation.

“Fashola should focus attention on the entire power value chain, and ensure that the funding gaps in the sector are bridged. He should ensure that the sector gets cost-reflective tariff to keep it running.

“The transmission is the vehicle of the sector because if the country generates 20,000mw and the transmission can only wheel 5,000mw, the distribution companies will not have power to give to customers. The cost-reflective tariff has become imperative because banks are not lending to distribution companies.

“Also because the gas market and other equipment, which sustain the power sector are dollar dominated, the minister should appeal to the Central Bank of Nigeria (CBN) to give concession to operators in the sector by giving foreign exchange rate that will not hurt the sector.

“Fashola should do everything to improve and expand the transmission network (national grid) by ensuring that the government invests in it.

“The sector is in dire need of funds, investments to prevent the sector from collapse,” Oduntan concluded.

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