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From Isaac Anumihe, Abuja
In the midst of the confusion surrounding the Nigerian Electricity Supply Industry (NESI) in Nigeria, the German Government, on Monday March 14, declared interest to rescue the fast-decaying sector with over €13 million.
The amount would be used to develop more mini-grid plants and install more renewable energy facilities across the country.
During the launch of the Environmental and Social Management Plan (ESMP) guidelines for solar mini-grid projects in Nigeria, the Country Director of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Nigeria and Economic Community of West African States (ECOWAS), Ms Ina Hommers, said that the German Government would invest 13 million euros in Phase Two of the project which will end in 2022.
The Head of Section, Economic Co-operation and Energy at the European Union (EU) Delegation to Nigeria and ECOWAS, Ms Inga Stefanowicz, reiterated that the EU will continue to strongly support and contribute towards Nigeria’s vision for a clean and sustainable environment.
“The EU’s support towards the development of the ESMP guidelines aims to encourage higher investments into the solar mini-grid sector, which will ultimately increase access to clean and affordable electricity in rural and peri-urban communities across Nigeria,”she noted.
The Germans’ intervention into the messy power sector at this time was timely as it would go a long way to extricate Nigeria from the dark abyss of electricity management.
Right from the days of Electric Corporation of Nigeria (ECN), National Electric Power Authority (NEPA), Power Holding Company of Nigeria (PHCN), the industry has remained Nigeria’s greatest headache.
From March 14, the grid collapsed several times thereby putting a lie to Transmission Company of Nigeria’s (TCN) assurances that it installed spinning reserve to stabilise grid in times of instability.
Before then, the Minister of Power, Abubakar Aliyu, had flew a kite that the blackout was as a result of low water level.
But addressing newsmen on Sunday, March 13, the Executive Secretary of the Association of Power Generation Companies of Nigeria (APGC), Dr Joy Ogaji, countered, and explained that in the Power Purchase Agreement (PPA) the privatisation was structured in such a way that during the low water level, the gas plants were supposed to be in full blast or operations to cover the hydro plants who at that time should be servicing their plants.
Unfortunately, the generation companies (GenCos) are owing the gas companies who by now have refused to sell gas on credit to the GenCos due to huge debts.
On the other hand, the Nigerian Bulk Electricity Trading (NBET)—-a government agency responsible for bulk purchase of all generated energy, is owing the GenCos over
NI.644 trillion for stranded or unutilised capacity.
“Since 2013 when the power sector was partially privatised till date, weak and inadequate infrastructure (transmission and distribution) have continued to render inconsequential, a significant portion of the generation capacities recovered or added by GenCos through huge investments done by them to increase their respective generation capacities.
“ While the owners of the GenCos invested committedly and increased generation capacity up to 13,000MW across the country, no corresponding investment and improvement was made at the transmission and distribution ends.
“ The result was the significant
stranded capacity of GenCos, which ironically, Nigerians are in dire need of but cannot get. Given that capacity utilisation in any market, is often used as a measure of productive efficiency and decisions about investments in power generating capacity depend on expected returns and costs. The persistence of this anomaly over these years, compelled GenCos to begin to question the commercial reasonability of continued investment in recovery or expansion of generation capacity that would end up being stranded and not utilised to transmit and distribute electricity to end users who are yearning for the same” she lamented.
According to Ogaji, the N701 billion the government paid was just to offset 80 per cent energy losses from 2017 to 2018.
“From 2015 to 2016 there is a big chunk of money being owed us. From that amount, the N701 billion was used to cover 80 per cent invoices of 2017 and 2018 and what it covered was energy only.
“ If you understand the difference between energy and capacity, you will be able to understand that when the GenCos came on board their Power Purchase Agreement (PPA) was capacity and energy. NBET contracted all the GenCos’ capacity. And the contract says we should ramp up capacity within five years.
“From 2013 till date, power has been stranded. From 2015 we had 6.616 megawatts available and 3,606 was taken or utilised while 3,010 was stranded or unutilised and the capacity payment loss was N214.93 billion
“For 2016, we generated an average of 7,040 megawatts. Out of the figure, only 3,212 was taken or utilised. The stranded or unutilised capacity amounted to 3,828 and the capacity loss was N273.32 billion.
“In 2017, we made 6,871 megawatts available when the Niger Delta boys tampered with the gas pipeline. That’s why power reduced from 7,040 to 6,871.
“Out of that, only 3,599 megawatts was taken and 3,312 was left stranded. That is, the capacity payment loss came to N236.47 billion.
“For 2018, we made 7,506 megawatts available. Out of that, only 3,808 was taken or utilised while 3,699 was not taken or stranded or unutilised. And the capacity loss from there was N264. 08 billion.
“In 2019, we made generation up to 7,381 megawatts. Out of that, only 3,782 was taken. The stranded capacity was 3, 599 megawatts. The equivalent in terms of capacity loss was N256.97 billion.
“In 2020, generation rose to 7,993 megawatts, (nearly 8,000) and what was utilised was 4,050 megawatts. A difference of 3,742 megawatts was stranded or unutilised. The capacity payment equivalent was N266.10 billion
“In 2021, 6,336.51 megawatts was available and what was utilised was 4,118.98 megawatts. What was stranded was 2,245.50 megawatts. The capacity payment loss was N120.25 billion.
“In January, this year, we had 6,103.99 megawatts. The average utilised capacity was 4,122. 96 megawatts. Stranded was 1,981.03 megawatts. For only January, we recorded N12 billion. Currently, unpaid available capacity we are owed by NBET is N1,644.15 trillion,” she said.
In its reaction, NBET disputed the figures quoted by the GenCos, saying only companies with active gas supply and transportation contracts were paid for unutilised capacity.
Speaking on the state of the power situation in the country, the Chairman of Nigerian Electricity Regulatory Commission (NERC), Sanusi Garba, said that the collapse of the grid caused the loss of 414 megawatts from Ughelli Plant and that can cause a huge generation constraint.
“The cause was the snap of 330 kV line and that caused the loss of 414 megawatts from Ughelli Plant. And when you have such an event where you lost 414 megawatts, we have constraint in generation availability. So, that could cause imbalances in the system that can immediately cascade into total collapse” he said.
Meanwhile, some operators and stakeholders in the industry have called for a review of the privatisation exercise, arguing that it was full of mistrust and mischief.
President, Consumers Protection Network, Kola Olubiyo, said that in the privatisation contract, the operators are expected to operate exclusively for five years after which new operators can enter.
This, he said, is nine years and so the privatisation contract can be reviewed because all the indicators have failed.
“All the indicators of privatisation are not working. We are accumulating more debts. We have not been able to close metering gap. We have not been able to reduce government’s spending. As end-users we are not satisfied. When the contractual agreement was reached a lot of the contracts were loaded with mischief. Because the contract was hurriedly done, Federal Government or the person doing the mischief did not have the ample opportunity to sit down and do a proper job.
“The foreign investors, 152 of them that bidded for six GenCos and 11 DisCos saw the mischief and pulled out. Then some Nigerians who made money in the banking sector and other areas grabbed the opportunity. So, the framework was loaded with mischief. So we need to sit down and do a review” he submitted.
In his opinion, the National Co-ordinator, Human Rights Writers Association (HURIWA), Comrade Emmanuel Onwubiko said that there is a lot of corruption in the electricity system. As a way forward, the president should partner with governors and foreign investors.
“Since 2015 that the APC government has been in power, billions of dollars have been invested in the power sector yet this government still rehashed the same old reasons for the constant collapse of the national grid. It is plain that the APC deceived Nigerians and there is a lot of corruption in the electricity sector.
“It is embarrassing for a country that has 209.5 trillion cubic feet of gas reserves and is the eighth largest producer in the world to suffer power outages on account of lack of gas to power its thermal power plants. The current 1,080MW from solar and 1,936MW from hydro are infinitesimal, given the country’s potential. A mix of energy sources, including wind, solar, hydro, thermal and coal should be explored by the Nigerian Gas Company.
“As usual, the APC government and President Buhari have been making excuses and transferring responsibility to the previous government of the Peoples Democratic Party, but Nigerians know certainly that only failures blame others for personal defeat. Aside, seven years is enough time to fix the power sector challenges.
“Last September, the president, having realised his self-defeat and failure in the power sector, sacked the power minister, Sale Mamman, and later appointed Aliyu, but the current power minister is no different as the sector is going from bad to worse.
“The President must be made accountable, admits his failures and work with the state governors, the private sector and international development partners to proffer lasting solution.” he said, adding that he must fish out the familiar foes inside his political camp because it is clear that these economic collapses are being engineered from inside of the corridors of power in Abuja.
