Nigeria: As Electricity Discos Throw In The Towel

By Sunday Onyemaechi Eze

Keen observers and genuine opposition to privatisation of the power sector must be giggling with smiles at the recent turn of events. Core investors of Electricity Distribution Companies are beginning to throw in the towel, after five years of privatisation characterised by ineptitude and abysmal performance. This was coming on the heels of government’s determination to wield the big stick and correct the anomaly prevalent in the power sector for ages.

Government’s position has already sent shivers down the spine of stakeholders especially DISCOs known to have persistently violated the rules of engagement. In its bid to blackmail the government to soft-pedal on certain decisions, the Distribution Companies registered the Association of Nigerian Electricity Distributors (ANED).

Electricity: Unending Rip-Off Of Customers By Distribution Companies!

By Godwin Ijediogor

Some may call it cheating, while others may see it as smart billing but it is nothing less than fraud. The system of billing some electricity consumers, otherwise known as estimated billing, adopted by the Electricity Distribution Companies (DisCos) in Nigeria, is a clear case of extortion of consumers without metres, whether prepaid or the old order. Ironically, the DisCos are unconcerned and unrepentant, instead they are passing the buck concerning metering to customers. Imagine living in a compound with four three-bedroom flats and while three metred three flats get billed about N2, 500 each, the remaining one is slammed N10, 000 estimated bill, just for one month, by Ikeja Electricity Distribution Company (IKEDC).

Yet, the DisCos are reluctant to provide prepaid meters or at least minimise the incidence of over billing or crazy bills; just promises and no action.  And the Managing Director and Chief Executive Officer of Eko Electricity Distribution Company (EKEDC), Adeoye Fadeyibi, tried to justify the action of the DisCos while speaking at a town hall with residents of Ibeju-Lekki, Lagos (its customers), saying the ‘crazy bill’ was because distribution companies take the reading of electricity consumption of customers who are not metered directly from the transformer. 

Customer Eligibility: Business Opportunities In The Nigerian Power Sector

By Idowu Oyebanjo

The eligible customer criteria declared by the Minister of Power is a clear business opportunity. Generally speaking, it means qualified customers can get electricity directly from GenCos and other Suppliers. This brings a number of opportunities for investors and fund managers as enumerated below.

Opportunity for Independent Electricity Distribution Network Owners – IEDNOs.

A person or group of individuals can invest in a dedicated electricity network and supply power to housing estates, manufacturers, and heavy electricity consumers throughout Nigeria. This will be according to the Independent Electricity Distribution Network [IEDN] regulations set by the Nigerian Electricity Regulatory Commission (NERC).

2017- A Year Of Power Sector Highs & Lows

By Idowu Oyebanjo, MNSE CEng MIET UK

This year has had its “ups and downs” and the power sector is no exception. The year started with a generally low mood in terms of the quantum of power generation available for distribution from none to a peak of 5,222MW on 18^th of December, 2017. Early on in the year, the Nigerian Bulk Electricity Trading Company (NBET) decried the generally low level of remittances from the distribution companies (DisCos) which has led to the rising spate of on-going debt and general illiquidity in the Nigerian Electricity Supply Industry (NESI).

 The average monthly remittance from the DisCos was as low as 30 percent with all the operators trading blames on who is responsible for the situation. This has led to the inability of the generating companies (GenCos) and the transmission company of Nigeria (TCN) to pay for services procured in generating and transmitting power to the DisCos. The illiquidity in the NESI has resulted in a generally low mood for all stakeholders including Banks, financial institutions, relevant ministries, departments, agencies, potential investors (local & international).

'Dead' President And Dead Men in His Cabinet

By Erasmus Ikhide

The discovery of dead persons names on President Muhammadu Buhari's boards' appointments made last weekend signposted a nation in constant trauma, plagued by inept leadership and a stubbornly disoriented clique that has held Buhari's Presidency hostage, while the people who are at the receiving end languish in abject penury. We are talking about dead; its meaning and those in President Buhari's government. Termination or expiration of existence sounds most profound — a dead government, organisation, organism or a person is dead to reasoning; emotion, recognition and feeling — or when leadership can no longer put a face to its name. 

*Buhari

Literarily speaking, President Buhari has been a dead 'man', as much as his presidency. He fails to put a face to his presidency by ensuring that he fulfils all or some of his electoral promises to the mass of Nigerian people. Buhari is 'dead' for refusing or failing to fulfil his 2015 Presidential manifesto to revive and reactivate our minimally performing refineries to optimum capacity.

Nigeria: FG’s Planned Demand For Transparency From DISCOS

By Idowu Oyebanjo

The Federal Government has announced plans to escrow and beam its searchlight into the revenue accounts of the operations of the DisCos due to poor monthly remittances. Although DisCos have condemned the move, this is a good step in the right direction. To address the problems of NESI, a holistic view of every aspect of the multi-faceted problems plaguing it is required with a view to solving them in a coordinated manner. One of the major problems in the Nigerian Electricity Supply Industry (NESI) today is the potential for illiquidity. In simple terms, this arises when DisCos declare, whether truthfully or otherwise, that they have not collected enough money from consumers of electricity and so are unable to make full payments to the bulk electricity trader, NBET, for electricity received. 

This has the potential to always create illiquidity in NESI because their remittances should have been used to pay all key stake holders in the industry including but not limited to GenCos, TCN, Gas providers, market operator, NERC, NBET etc. The solutions to address this anomaly include a massive investment in customer metering, reduction in network losses, preventing electricity theft and collusion of staff of electricity companies with consumers to defraud the industry, discontinuation of estimated billing, and ensuring that revenues collected by DisCos in behalf of NESI is transparent to all key stakeholders, and not least the Federal Government which still owns 40% of DisCos. The government has chosen to implement the last of the afore-mentioned solutions but the DisCos have frowned at the move. Thus a critical review of the position of DisCos is in order.

Overcoming The Power Sector Challenge

By Robert Obioha

The recent drop in electricity generation from 4,959 to 2,662 megawatts in January this year is an indication that the power sector challenge is seemingly intractable. It also shows that more work should be done to revamp the power sector and give Nigerians stable power supply. The 2,662 megawatts currently being supplied pale into insignificance when compared to our energy need of over 30,000 megawatts. We should emulate South Africa’s power generation capacity. South Africa, with lesser population than Nigeria, generates over 40,000 megawatts of electricity.

The development also shows that the power sector reforms have not been able to meet the aspirations of Nigerians. In fact, the power sector reforms so far have not significantly affected the generation and supply of electricity. It points out that the privatization programme still needs to be fine-tuned and the grey areas revisited.

Perhaps, the current power outage is the worst we have had so far in the last couple of years. The absence of steady power supply in the country is affecting manufacturing of goods and general business. Most business concerns in the country depend on generators for their power needs. This leads to high cost of production and invariably higher prices of finished products.

Poor power supply has also exacerbated the level of the nation’s underdevelopment. This situation is not helping cottage industries and small and medium scale enterprises (SMEs) that depend on power for their effective operations. Companies that depend on their own source of power supply are likely to downsize when the business is not booming as in this period of economic recession.

This can possibly explain why the nation’s unemployment figure has, as at last count, risen to 13.3 percent while inflation is 19 percent. The power outage is so bad that Eko and Ikeja Discos in Lagos now receive about 200 and 206 megawatts of electricity respectively instead of former supply of 1,500 and 2,000 megawatts.  The current power outage, according to the Minister of Power, Works and Housing, Babatunde Fashola, is caused by liquidity problem, gas pipelines vandalism and inadequate transmission infrastructure.

Power: Interrogating The Gaps In Fashola’s Roadmap

By Calixthus Okoruwa  

The minister with responsibility for Nigeria’s pivotal power sector, Mr. Babatunde Fashola has recently released what he calls “a roadmap for change” in the sector. It is commendable that his effort in this arena will be underscored by planning and more so that he has chosen to share this plan with the public. This conveys a sense of mission.

*Fashola 

Fashola’s roadmap is not different in any material way from the August 2010 “Roadmap for Power Sector Reform” the robust roadmap that was developed by the previous government. Incidentally, despite the lofty agenda of that apparently painstakingly-crafted plan, six years later, Nigeria still totters on circa 5000MW of power-generating and -transmission capacity respectively.

While such factors as corruption and insincerity of purpose can be listed among the causes of the failure of that otherwise meticulous plan, there is no doubt that hordes of genuine problems many of which hallmark the famed difficulty of doing business in Nigeria are also contributors. One of the most instructive but least recognised of these problems, in my view, has been citizen disinterest, arising from an inability or unwillingness of government to carry citizens along on its implementation journey. Not unexpectedly, therefore, initial public excitement soon gave way first to apathy and thereafter, sheer derision. If Fashola’s roadmap is not to go the way of its predecessor, it is pertinent that it is ardently confronted and interrogated by the average citizen.

 Even without expressly stating it, Fashola may have tactically reduced Nigeria’s power target over the next five years by half. While the original roadmap set a target of 40000MW by 2020, Fashola has cut this to 20000MW, stating that the Transmission Company of Nigeria, “TCN, has expressed a desire” to increase transmission in a stepwise manner from today’s 5000MW through to 20000MW over the next five years.

Power Generation As The Investors’ Nightmare

By Adeyinka Giwa

The four-unit Gas powered Electricity generating Egbin Power Plant in June 2012 was in a state of disrepair and neglect, and lacking in overhaul maintenance for decades. The plant managed to epileptically produce a paltry 400 Megawatts of its installed capacity of 1,320 Megawatts, at its best performance. Fast forward to May 2016. The units in the new vibrant Egbin Power Plant are overhauled and upgraded producing, when gas is sufficiently available, at its full production capacity of 1,320 Megawatts. The workers appear ready to drive this project to the next level: The investor’s plan to double the plant’s production in the first five years of taking over.

Since November 2013 when Sahara Power, a subsidiary of Sahara Group bought 70 per cent stake in Egbin Thermal power plant, the vast complex has come back to life and the plant, after a comprehensive overhaul which cost the new investors some $388 million, has resumed production, at full capacity barring no disruption to gas supply.

With the 1, 320 MW of electricity, Egbin currently produces one quarter of Nigeria’s total power capacity. Today, new facilities and structures have been put in place by Sahara Power, in collaboration with their technical partners, Korea Electric Power Corporation (KEPCO). Egbin now boasts of skilled manpower, world class professionals and in general, a well-motivated workforce. That is why Kola Adesina, chairman, Egbin Power Plc. can beat his chest and assert that “since we acquired the assets, our passion has been to embark on constant upgrades in technology and investment in human capital to ensure we light up Nigeria.”

But beneath the giant strides so far achieved by the Egbin Power Station, lies a huge challenge. The power station currently suffers shortage of natural gas. The situation is worsened by renewed militancy in the creeks of the Niger Delta region, where oil and gas pipelines are being blown up on regular basis. This is a more compelling reason why the Federal Government must get its acts right in ensuring that peace returns to the region.

The company is at present grappling with economic woes occasioned by difficulties in accessing foreign exchange. At the time of the acquisition of the assets by the new investors, the exchange rate was N198 to the dollar. Having raised capital from banks, the investors are now faced with the harsh reality of paying back in time of economic down turn. Indeed, as a result of the harsh economic situation, liquidity problem has also set in, making it increasingly difficult for the company to finance its capital intensive operations.

Restructure NERC Now!

...Speaking For Power System Engineers In The Nigerian Power Sector

By Idowu Oyebanjo

Power System Engineers have always maintained that the gains of the privatisation process cannot be felt except if conscious effort is made to involve qualified Power Systems experts to lead the course. The most recent addition to this urgent call or advice to a nation in darkness is the one from Engineer Otis Anyaeji, the current president and council chairman of the Nigerian Society of Engineers on why and how the Nigerian Electricity Regulatory Commission (NERC) should be restructured. 

*Fashola, Minister of Power 

Engineer Otis Anyaeji, in his interview with Tajudeen Suleiman in this month's TELL Magazine on why and how the government should restructure NERC has this to say:

"They just have to appoint an Engineer as Chairman, an Engineer each to regulate generation, transmission, system operation, distribution and marketing. That is to say, five of the commissioners must be Engineers while the other two can come from support services"

I cannot express it better!

One should praise the courage and devotion towards the revamping of the electricity industry in Nigeria by Lawyers and Economists who tried their best in the last ten years as Commissioners of NERC. However, they should have known that Law is in no way relevant to the management of electricity business especially one that is in the kind of chaos the NESI is. Advanced economies whose models are copied hook, line and sinker, have had stable electricity for decades before toying with Lawyers and Economists to manage electricity business. When did we lose our collective senses?

Only Power System Engineers who know their onions can save NESI, of course with a few lawyers and economists just for mere guidance. Power System is a unique field. The greatest damage done was to put Lawyers and Economists as Commissioners in numbers greater than Power Engineers, because, try as you may, you will move in circles. There will be no electricity. It is a career that some have spent their years to pursue, how easily can it then be replaced by those who pursued a different career running away from the almighty equations of physics and mathematics back in the days.