Why There Should Be No Tariff Increase In The Power Sector!

...NERC Should Make A Public Statement On Charging Methodology

By Idowu Oyebanjo

One of the main problems with the power sector reform in Nigeria is the absence of technocrats in the right positions. This will always lead to reversals and policy summersaults. When those with lack of knowledge of Power Systems speak, especially when the target audience resides predominantly in a country where there has not been electricity for so long, they tend to get away with it.

The problem is that such people constitute a laughing stock when similar comments are made before an international audience. Hear the Central Bank of Nigeria (CBN) governor: "For you to have good electricity, you need to pay a little more (to have better maybe)...".

I can guarantee that the National Electricity Regulation Commission (NERC) does not know what it means to determine a cost reflective tariff because these are some of the fundamentals of power systems that only those who have studied power systems and have demonstrable experience or practice can handle. Fake consultants employed by NERC can't do it. The DISCOs or GENCOs advocating for these price increases have not done it either. Can we as public request that NERC publish the analysis used to determine the so called "cost reflective tariffs?"

The power sector needs Nigerians who studied Power Systems, and who work in economies where uninterrupted power supply is the norm, to mediate the correct transition to privatised electricity utility. Although I maintained this position 7 years ago, the position is still valid because you cannot apply the Quota System syndrome to the generation, transmission, and distribution of electricity. It will fail! There is need to start again or at best, re-jig the status quo of the reform in a way the losses to the nation can be minimised.

*Amadi, NERC Chairman 

Another example of putting the cart before the horse is the fact that the wheeling capacity of the transmission network is known to be lower or at least equal to the peak generation achieved recently in response to the "Buhari Body language" in August 2015. This simply means there is no improvement to power supply that can take place now even when tariffs are increased because the weakest link has not changed and will not change overnight. More than that, I warned the authorities against establishing the electricity market because the power system is not yet ready for it but they have gone ahead because some believe the laws of economics apply to the physics of electricity. 

Try as you may, you will always recourse to the recommendations made by power systems engineer who know their onions. They aren't many worldwide so not all consultants can be of help.  I think because Nigeria has been in darkness for so long, it is in a mysterious way reflective of the attitude of those in charge of the power sector reform. Can we say for the umpteenth time that the only way, and I mean the only way, to have stable electricity supply is to liaise with power system engineers of Nigerian origin with demonstrable experience of power system leading the course in some way?

All of these amount to one thing - Abusing the sensitivities of the already impoverished consumers is the way to loot more money from the federation especially when the government at the federal level has tightened loop holes using the TSA.

 *Idowu Oyebanjo, MNSE, CEng MIET, a Chartered Power System Engineer in the UK is a regular contributor to SCRUPLES

213 Billion Naira Bailout For Power Sector – Foolishness At Large!

By Idowu Oyebanjo 

Earlier in the year, the Nigerian Power Sector witnessed an unprecedented development wherein Government decided to give a whopping sum of 213 billion Naira as "bailout" to Privatised entities who now own and operate the Nigerian Power utilities in what was seen by many as another means of sharing the wealth of the nation by a few. Last week, after disbursing up to 58 million Naira, the Central Bank of Nigeria (CBN) governor suspended further disbursement to beneficiaries. Some of the pertinent questions include: What becomes of the already disbursed funds? Will disbursed funds still be recouped as intended via the 10 percent interest rate and repayment spread? How will this be tracked?

*Buhari 

The lack of coordination and policy somersault from the Nigerian Power Sector reforms leaves no one in doubt that the lack of planning and deployment of square pegs in round holes in the execution of strategies contribute greatly to the problems of the electricity supply industry in Nigeria. Why do we not have the right kind of people in the right places so that thorough analysis and evaluations are carried out before jumping to execute a strategy only to realise half way that some issues needed to have been looked after before embarking on a journey that technocrats in power sector have warned us against? The answer lies in not involving power system engineers in the decision process plus the lack of knowledge of power systems in Nigeria. The most disturbing thing about the 213 billion Naira been shared is that it came at a time when quality of power supply is low or better put non-existent even as consumers face the ludicrous decision by NERC to start paying higher tariffs for electricity unused. Insult upon Injury!!! Why do we have many reversals of policies in the Nigerian Electricity Supply Industry especially when this does no more than infuse lack of confidence in investors who are the custodian of the much needed investment in the sector?

The Nigerian Electricity Regulatory Commission (NERC) in the very early days ruled out funding of Electricity Distribution Companies (DISCOs) beyond 2012. This was even against calls from Government to continue to fund the companies. Sound as the reasons for calls for continued funding may appear, let us ask ourselves what the rational and motives behind such call is. If you as an individual offer to sell your car as “scrap” – so cheap, will you want to maintain the car or fund the additional repair works required to put it right? In the first instance, if you are prepared to do just that, you may as well keep it and fix the car for keep.

The buyers of the Discos have definitely prepared to milk Nigerians dry. Their intention is to continue to eat fat from Nigeria’s oil wealth using a different disguise. 

The interesting thing is that they have for many years been eating fat from this same source. The main weapon to check mate such would have been a proper technical and commercial evaluation of interested bidders at the appropriate stage of the selection process. Technical and Commercial evaluation criteria should have been set ab-initio in such a manner that will preclude this barbaric idea of funding privatised entities. It is up to the owners of the privatised utilities to ensure they meet their obligations as required by law. I have in the past expressed concern about the quality of the companies that won the different bids as most of them have not been known to have demonstrable experience in this highly technical field. 

More Deaths Due To Electrocution In Nigeria Unless …

(pix:geo.tv)

By Idowu Oyebanjo

Electrocution is basically death caused by an electric shock. While this is not a favoured topic, it is important to expose the facts about the Nigerian Power System and the high potential that it possesses to cause more deaths due to electrocution in the short to medium term if things are done improperly as they are now.

One of the anti-climax of not having stable electricity for over 50 years now in Nigeria is the fact that one did not hear so much of deaths due to electric shock from electrical appliances or devices. This is mainly because there was no "light". With the recent increase in availability of gas to power stations, and the attendant availability of electricity supply, the weakness of the power system will come to the fore and more electrical safety accidents are bound to occur. 

Unfortunately, because electricity is a good servant but a bad master, the fatal results of not following electrical principles in the design, operation, maintenance and control of the power system is death by electrocution! In the last few weeks alone, we have had the death of a staff of one of the electricity companies while he was carrying out his day to day activities on a power line. But more recently, the case of Oluchi Anekwe, a 3rd year student at the University of Lagos has reinforced the calls by experts for a holistic review of the operation of the Nigerian Power System.

Why Nigeria Does Not Need Renewable Energy For Main Power Generation

By Idowu Oyebanjo

Recently, there has been an increase in the agitation for the deployment of alternative sources of energy for the generation of electricity in Nigeria especially when the problem of providing stable electricity seems to be intractable. But to be frank, this is not how to solve the problem. The inclusion of alternative energy sources as part of the total mix of generation portfolio is recommended but this must remain as "back up" to electricity generation from conventional sources of energy.

*President Buhari

There is a general tendency to follow the crowd by copying the trend in developed economies and most times this yields positive results. However, this will only be the case after a careful consideration of local circumstances. The Western world is persuading Nigeria to embrace their much needed market for Renewable Energy System not because they want to help, but because of the trade and economic benefits it will bring them in terms of the gains from the delivery of goods and services that this will bring, huge financial gains from the cost of expatriates they will export to us just like in the oil industry now taken over by their own mostly less educated professionals compared to locals, economy of raw materials in the industry they really need in their own environment, making Nigeria a dumping ground for their products among other reasons. If any country is serious about assisting Nigeria, they should provide funds and expertise to build, operate, maintain and transfer ownership of thermal plants (OCGT and CCGTs) in Nigeria within the shortest time frame possible.

There is no doubt that the capacity credit (I use a technical term here) of most of the renewable electricity systems is low compared to that of conventional generation which in simple terms means they cannot be relied upon for grid operations exactly as electricity generated from conventional energy sources such as oil, gas, coal etc. Power System is difficult to explain to non-power engineers especially those who hear about what takes place in other countries and believe Nigeria should copy them hook line and sinker without looking at local circumstances. 

NERC – Regulating In Whose Interest?

By Idowu Oyebanjo

What exactly is happening in the Nigerian Electricity Supply Industry (NESI)? Whose interests are the leaders serving? Whose interest are the operators of the weak electrical network serving? And most importantly, in whose interest is the The Nigerian Electricity Regulatory Commission (NERC) regulating the industry?

*Sam Amadi, NERC Chairman 

(pix: leadership)

These questions have remained with us for a long time now. Each time one examines these questions, more questions come to the fore. Was Nigeria ready for privatisation? Does Nigeria realise that the management of electricity systems is highly technically intensive and would need individuals who know their onions to mediate the course? Is the regulator aware of its role to protect consumers from the regional monopoly of the operators? Why has it taken so long, after "unending" complaints from poor and already impoverished consumers, before NERC was forced by an order from the 8th Senate to carry out what is supposed to be its main function?

Why should consumers be pushed to the wall before a revolution occurs? Why should government wait until a huge crisis of discontent from millions of individuals - North, South, East or West, united in one voice, unleash mayhem on public utility and public officers because of years of neglect and mismanagement of funds meant to provide electricity for the nation? Why is Nigeria yet to have electricity which was discovered over a century ago?

It is widely accepted that regulation, where it is impossible to have competition, as is the case with the distribution of electricity through wires, is a veritable means of providing quality service at low cost to service users. This is true but so much depends on the regulator. The principal role of a regulator in a privatised electricity system is to cater for the interest of the consumers in such a way that operators can make reasonable profit without exploiting the consumers. In this regard, NERC has failed Nigeria woefully in recent times. Why do we say this?

There is ample evidence that NERC has orchestrated a villainous act against customers in the area of estimated billing and fixed charges. In effect, NERC has raised money for the distribution companies (DISCOs) from the pocket of already impoverished Nigerians. With NERC unable to account or monitor how much money has been "borrowed" from individual consumers, this act of treachery is daylight robbery.

2015 WAEC Results - A Reflection Of The Nigerian Educational System!

By Idowu Oyebanjo 

The West African Examination Council (WAEC) has just released the results of the 2015  May/June West African Senior School Certificate Examination (WASSCE) and the results as expected, "experiencing a free fall under gravity", pointed in the "right" direction - Downward! Why? Quality Education has become history in Nigeria, especially in the Public Institutions of Learning. Despite the myriads of "Private Schools" springing up, the situation is going from bad to worse.

*Buhari 

Yeye, my great Grand-mother, always said to me while growing up as a boy in Ikogosi-Ekiti, "Ti Iwaju O ba se lo, eyin a se pada si", meaning, if it becomes impracticable for you to move in the forward direction, it must be possible to take a reverse". I think this is dependent on the route. There is clearly no alternative route to getting a sum right than doing it right; starting from, and according to, basic principles. Therefore, a mirror reflection on how the system of education was before our "uncommon" era is in order.

Teaching was, and still is, a profession for the erudite in any given society. As such, Teachers must be respected, well remunerated and encouraged. That was the case in the golden era of The Nigerian Educational System. Teachers were paid comparatively higher than most workers and were among the few individuals who had bicycles or cars. To qualify to teach, you must know your subject well enough and must pass requisite examinations unaided by examination mal-practices. Yes, Teachers were the "Alphas" and the" Omegas". They were feared and respected because they represented the needed back-up for Parents when their children proved stubborn at home. Teaching was a profession of well-disciplined individuals. Undertaking Teacher training made you aware of this. Teacher Training was an on-going exercise. From graduation to becoming a Teacher, throughout the School Term, and some good part of the School Holiday, a Teacher was required to undertake a form of training or the other. Every weekend within a School term, a Teacher had to prepare notes of planned lessons for the week ahead. This afforded the opportunity to prepare for the needs of each member of a sizeable class. The notes of lessons would be critically assessed by the Head Teacher or anyone designated. 

Useful comments were made by the reviewing Teacher and where appropriate, re-submission of planned work may be demanded if there was evidence of gross unpreparedness for the Lessons of the Week. This way, it would be easy to spot, not for victimisation, the training needs of individual Teachers to be saddled with the responsibility of shaping the future of the lives of the children, the nation! The Head Teacher would often be a Teacher too and certainly not a money collector nor a Finance Director!

Meeting The Challenge Of Human Capital Development In The New Nigerian Power Industry (2)

Click Here To Read Part One 

By Idowu Oyebanjo

The most worrisome thing is that those who are taking the lead in this matter do not understand how Electric Current flows. If you make use of Knowledgeable Power System Engineers of Nigerian descent, who work in the Electricity Industries in the developed economies, most likely you will achieve better results in less than four years. Ofcourse, these will work with qualified Consultants who know their onions but because they already have a foothold, they are more likely to get better value for money for Nigeria. The truth is that not all foreign Consultants will want electricity in Nigeria because this means Nigerians will leave their shores and return home, Nigerians will go to Universities in Nigeria, world economics will change and the propensity for Investment will shift to Nigeria to mention a few benefits that will result in electrifying the nation in darkness.

(pix:Guardian)

The way to go about this is to set up a summit to attract these Power Systems Engineers of Nigerian descent and bring them together to brainstorm on these ideas and more in support of this reform. They are everywhere and Government machineries could be used to track them down. For example, the Association of Nigerians in Diaspora was formed in the year 2000 by former president Obasanjo towards this end and have no doubt being functioning well since then. This could be one means of achieving this noble objective. The latest approach by SHELL Petroleum Development Company of Nigeria (SPDC), SHELL Nigeria Exploration and Production Company (SNEPCO), Petroleum Technology Association of Nigeria (PETAN), the UK chapter of Nigerian in Diaspora Organization (NIDO) and the department for Trade and Investment in the UK in establishing a knowledge sharing framework and portal to boost Nigerian Content development and employment in the Oil and Gas Industry is required in the Power Sector. It need not have waited this long!

Meeting The Challenge Of Human Capital Development In The New Nigerian Power Industry (1)

By Idowu Oyebanjo

One of the myriads of problems bedevilling the Nigerian Electricity Supply Industry is the dearth of knowledge of Power Systems in Nigeria and unfortunately worldwide. Having an efficient and reliable Power System requires dedication and hard work. To this end, there must be a clear focus on recruiting, training, and keeping the workforce for today and tomorrow. There is also the risk that developed countries will poach our Engineers once they have been trained, attracting them to say the least, with offers of citizenship in "greener pastures". Hence, a well articulated and constructive approach is required to ensure we meet this challenge and keep a sufficient level of expertise adequate for the survival of the Power Industry in Nigeria! How can this be done?

*Buhari

The foremost requirement is a regulation backed by law to ensure that various enablers are in place to support the deliberate development and optimal utilization of Nigerian human resources for the provision of  electricity services in the Power Industry. The emphasis should be on ensuring the active participation and growth of the Nigerian Industry and citizenry in the various services and activities that will be witnessed as Nigeria rebuilds her Power Network and Infrastructure. I say active here because lazy, selfish and myopic investors will partner technical companies from the developed economies who, for many good reasons, will prefer to carry out the actual design, fabrication, manufacturing and testing of equipment from their overseas offices and locations. This will create jobs and opportunities overseas and add little to our subject matter. With foot on the ground, business economics will prevail and within a reasonable period of time, so many companies will shift base to Nigeria to carry out these activities and more. Of course some balance is required here as the intention is not to stifle the development of the Power Industry and this is why those who understand the business of Electricity Generation, Transmission, Distribution and Supply are required to manage the process. In addition, there is need to track, monitor, review and measure the development of this objective at every stage. Statistical methods showing status quo ante and progress in the many areas is a must.

In view of the dearth of Knowledge of Power Systems in-country, the new owners of the Nigerian Power Assets, their technical consultants and Nigerian Professionals home and abroad should be asked to submit a list of the activities that they believe would be carried out in the short and long-term in the Power Industry. They should equally state those activities they would be more likely to provide services for pre-qualification and assessment of their capabilities or otherwise, to acceptable international standards. This should form a database akin to the Joint Qualification System (JQS) in use in the Oil and Gas Industry. The Nigerian Content Division of NNPC could be approached for help in this area.