How Nigerian power sector performed in 2017

Nigeria’s power generation to rise by 20% in 2035 – Austin Avuru, Seplat CEO

…more innovative solutions needed

Nigerians struggled with the barrage of problems in the power sector in 2017 despite  two new peaks  of  5,155mw on December 8,2017  and  5,222mw  power generation on December 23 transmitter to the national grid.

The year started with the challenges of debt owed.

In a statement signed by the GM Public Affairs Ndidi Mbah, TCN said that this milestone achievement is the highest ever recorded in the nation’s power sector to-date. This surpassed the 5,155.9mw achieved on December 8, 2017 and the earlier peak of 5,074.70mw, achieved on February 2, 2016.

The statement noted that the gradual but steady improvement in the nation’s power sector is attributable to the strategy of the administration of President Mohammadu Buhari geared towards growing the Power Sector, in line with its policy on incremental power.

Generation

While Nigeria has installed generation capacity of 11,800mw comprising 1,400mw of hydro and 9,000mw of gas-fired power plants, available capacity ranges between 3000 to 5000mw. Huge generation capacity remains stranded due to gas supply constraints.

Sabotage of petroleum export infrastructure in 2016 has further curtailed supply of associated gas used in power production with the result that average operating capacity in early 2017 was only about 3.5 GW.

The year 2017 started on a good note in terms of power generation which increased  to 3,687 mega watts ( mw) during the first quarter from  a total average of 2,159mw of energy  generated by power stations during the fourth quarter of 2016.

The National Bureau of Statistics (NBS) report showed  that daily energy generation attained a peak of 5,846mw on January 24, 2017, while daily energy sent out on same date was 5,747mw. Afam VI Power Plant contributed about 12.64 per cent  share of the average energy generated.

The nation’s peak record of 5074mw occurred on February 2, 2016  according to the Transmission Company of Nigeria (TCN).

However, data released by NBS indicated that in the three months  of the second quarter ending June 2017, Nigeria’s 25 power plants generated a paltry 2,503mw of electricity.

According to the Minister of Power, Works and Housing Mr Babatunde Fashola, “Nigeria now has a weird power problem.

“Investments in transmission capacity are growing while generation is declining. Therefore the national grid that coordinates eight transmission regions with 183 substations from a control centre in Oshogbo has over 2000mw idle capacity has generation from Nigeria’s 25 power plants slow”.

During the third quarter of 2017, there was improvement in power generation as data from the NBS showed that a total average of 82,266mw/h of energy was generated daily by power stations in the country for the third quarter of 2017.

It also said daily energy generation attained a peak of 3,880mw on the 1st of September, 2017 and daily energy sent out on the same date was 3,825mw.

This represents the highest level of energy generated and sent out in the month of September 2017 and in Q3 2017.

But, the lowest daily energy generation, 2,354mw, in Q3 2017, according to the data, was attained on 14th September, 2017 and daily energy sent out on that date was 2,310mw.

In line with the promise made  to Nigerians by Vice-President Yemi Osinbajo that the Federal Government would raise  generation capacity above 7,000 out of the installed capacity of 11,000mw, the nation achieved generation capacity of 6,800mw in August.

Transmission

At the 22nd Power Sector Stakeholders Meeting, the Minister of Power Works and Housing Mr. Babatunde Fashola had assured that the current synergy among the Presidency, Ministry of Power, Works and Housing and other major power sector stakeholders working through the Power Sector Recovery Program (PSRP) would continue to deliver improved power supply to the people.

Also, Fashola disclosed recently at a recent lecture at the University of Lagos that under the Buhari Administration, the grid has expanded to 6,200 MW because the TCN has  completed transmission stations in places like Ikot Ekepene, Okada, Alagbon, Ajah, Katampe, Sokoto and awarded many more in places like Damboa, Pankshin, Osogbo, Kumbotso, Odogunyan to mention a few.

To properly key into the incremental power policy, TCN stated that it had developed the Transmission Rehabilitation and Expansion programme to enable it prioritize and execute critical transmission projects.

This necessitated the clearing of the company’s stranded containers carrying various transmission equipment.

 

Distribution

Rejection of power supply from the national grid was a major feature of the Distribution companies (DISCOs) this year.

The Discos had challenges on how to collect money for billed electricity. They  were also faced with the refusal of the government and consumers to implement reflective cost tariff needed  to be able to cover cost of electricity.

It is difficult to talk about power supply as the supply of power and access to electricity is often relative to location, hence there is no universal assessment of Nigeria’s power supply that can be 100 per cent accurate. However, we know that we witnessed several national grid failures which crippled power supply for the most parts of January and February.

The unfortunate event of fire outbreak at Afam IV power station and Jebba also contributed to the poor power supply during this period. Recurrent and sometimes incessant grid failures have occurred intermittently since, and power generation has barely reached 5,000 MW since the turn of the year.

TCN has often been blamed by several people in the power sector for the poor power supply. While it’s still somewhat unclear why power supply is so haphazard in the country, it is safe to assume that our power generation output is greatly beneath the expected demand.

It is not in doubt that electricity tariff structure is not cost-reflective. Unfortunately, we hear the argument that customers are willing to pay if electricity supply improves and the discos can only improve their performance if customers are willing to settle their bills and keep the Discos commercially viable.

Hence, Executive  Director Association of Nigerian Electricity Distributors ( ANED) Chief Sunday Oduntan explained that force majeure declared the distribution of electricity in Nigeria today is not a profitable business and that if the government can return the money paid for the Discos, they will be glad to collect them and make investment in other businesses.

We have problems with so many weak links in the power generation and distribution value chain. In particular , the Distribution companies (Discos) also  struggled quite a lot during the year with metering of customers and protest by customers over inadequate distribution of transformers.

Recently, because of the new policy of creating some exclusive customers who can purchase power directly from the Generation Companies (Gencos) known as “eligible customers” in the power sector.

The Discos had to respond by declaring “force majeure” meaning that some occurrences rending them no longer viable had taken place and they should not be held responsible to perform their obligations under their contract.

These are intractable problems that the Minister of Power must use his creative acumen to address. Let me also add the discos have virtually become too insolvent to gain access to sources of finance from the international financial market.

I believe the Nigerian banks consider them too toxic already to attract finance. Things are really bleak along those lines.

On the issue of access to buy power from Gencos, this policy was initiated to break the monopoly of the Discos and also to encourage state governments to make investment in the generation of electricity.

On the part of the consumers, estimation remains a major challenge which electricity consumers believe is a deliberate ploy to exploit them.

 

With or without those problems that bedevil the sector, there is a momentum that is gaining ground all over the world and that is deregulation

 

Renewable energy

…It was the year of preparation- Analyst

A renewable energy expert, Dr. Patrick Tolani of  Community Energy Social Enterprise Limited (CESEL) has said the year was one of preparation for the sector.

Speaking with petrolgasreport, he said, “Power generation and distribution is becoming increasingly deregulated.

“One of the most viable contributions to power sector deregulation is the emergence of renewable energy globally. For instance, in 2015 renewables generated 42 per cent of Scotland’s electricity output—the single highest contributor to electricity generation.

“Nuclear output increased from 33.3 per cent  to 34.7 per cent in 2015. Also, the utility electricity sector in India has one National Grid with an installed capacity of 330,000.86mw as at November 30,2017. Renewable power plants constituted 31.7 per cent of total installed capacity.

“In the United States, figures for the quarter of 2017 revealed that renewable energy sources accounted for 19.35 per cent  of net electricity generation.

“The revolution that it is bringing is truly disruptive and I am glad that Nigeria is not left out in this revolution this year.

“Nigeria made some progress in 2017 with respect to this opportunity.

“ For example, Community Energy Social Enterprise Limited (CESEL) will be ready with at least 25 Bankable projects (solar-powered projects) and at least 15 Rivers for Small Hydro Power (SHP) projects next year. So many other companies are also making strides in their own little way.

“We can tap into the resource that God has freely given to us in form of wind, solar radiation and rivers with the capacity to generate power through small hydro power projects.

“So many financing opportunities also came on board in 2017. Although I would like to describe 2017 as the year of preparation; 2018 should be the year of implementation or reality for most of these funding sources.

“The World Bank announced its package of facility for Nigeria and a whopping $350million was announced in December 2017. The African Development Bank (AfDB) is equally putting its money where its mouth is as well as other institutional impact investors locally in the country such as: All On, United States African Development Foundation (USADF) and a host of other organizations.

 

Rural electrification

“We cannot leave out the extremely important change that has occurred at the Rural Electrification Agency (REA) with its new Managing Director, Damilola Ogunbiyi and her very dynamic team.

“They have taken it upon themselves to take very strategic approach to tackling the problem of energy poverty in the rural communities in Nigeria. Their projects on energizing economies and energy education are commendable.

“I would like to use this opportunity to appeal to the House of Representatives not to constitute themselves as clogs in the wheel of progress for these projects. If they are truly representatives of the people of Nigeria, they will not oppose a project that is aimed at ending darkness in our universities.

“ I don’t know how they expect the students to study without electricity. Please stop politicising the future of our children.

 

Conclusion

Even though the power sector is still faced with myriads of problems, improvement recorded in generation has really helped in the improvement in the number of hours that power is made available for consumers.

The efforts of the Honourable Minister of Power, Babatunde Raji Fasola should be commended for his untiring efforts in that ministry. Although the improvement in the sector does not appear as dramatic as we would have expected; but the incremental improvements should be welcomed by all and sundry.

However, going forward, we need more innovative solutions to light up our dear country. My message to the general public (consumers of electricity) is to be prepared to pay more for regular and reliable power supply.

There is nothing that is good that is cheap. Companies which borrow money for power projects must be given the assurance that they will be able to pay back their loans and still make some returns on their investment.

Nigeria can meet the SDG Goal 7 if all of us can work together to deliver on affordable energy for all. It is a task that we can all achieve. It is happening in other countries – it can happen in our own clime too.

The vice-President said the Federal Government is currently working on nine transmission stations across the country towards achieving that set target of 7,000 megawatts electricity generation for the country.

He however, attributed the crisis in the power sector to the vandalism of the Forcados terminal and four other export terminals is responsible for the reduction in the megawatts to as low as almost 2500mw of power.

The VP added that the work on the critical transmissions areas would be completed by the first quarter of 2018.

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Obineme Ndubuisi Micheal, Technical | Creative and Senior News Writer, covering the entire value chain of the Energy Industry. Our publication covers the entire value chain of Renewable/Energy, Power, Mining, To get in touch, email: oilandgasrepublic@gmail.com