Tackling the Cyclical Electricity Conondrum

ENERGY ANALYSIS 

Ejiofor Alike reports that there seems to be no end in sight to the chronic power deficit in the country, with the cyclical rise and drop in supply, as well as the recycling of old excuses reminiscent of the defunct Power Holding Company of Nigeria

The federal government and the private investors who acquired the country’s electricity infrastructure have continued to recycle the old excuses prevalent in the days of the defunct National Electric Power Authority (NEPA) and the Power Holding Company of Nigeria (PHCN), to justify the apparent lack of improvement in electricity generation since the private investors took over the power assets.

To rub salt to the injury inflicted on Nigerians, the government has also continued to celebrate electricity generation targets, which were first achieved two years before the 2013 power privatisation programme.

According to the power reform agenda, the reason the government sold the power assets was that private investors are better positioned to access funding to upgrade the assets, which were grossly underfunded and poorly-managed by the federal government for over three decades.

However, over three years after the assets were handed over to private entities, supply has continued to hover within the pre-privatisation levels, if not below, while government and the private investors have continued their blame game, which still hinges on the old excuses of sabotage and chronic underfunding.
Before generation improved slightly at the weekend, Nigeria’s power generation was over 1,000 megawatts below what it was during the same period in 2012.

For instance, while the country’s power supply has been hovering below 3,500 megawatts for the past two months, the country had on Saturday, December 21, 2012, hit an unprecedented peak of 4,502.2 megawatts, according to a statement by the then Assistant General Manager in charge of Public Affairs at the Transmission Company of Nigeria, Mr. Dave Ifabiyi, which was confirmed by Nigerians who enjoyed significant improvement in power supply during the short period that Professor Bart Nnaji was the Minister of Power.

After this new peak, generation had stabilised at 4,356.9 megawatts of electricity on December 29, 2012.
Before these milestones, the country’s power sector had attained a previous peak of 4,454.1 megawatts on December 19, 2012, after an earlier peak of 4,237 megawatts on August 8, 2012, which was then the highest power output ever generated in Nigeria.

Cyclic rise and drop in supply
Though the milestones recorded before power privatisaion were still a far cry from the 6,000 MW target set by the previous administration, the achievement in terms of actual supply to consumers seems to be less than what is being witnessed post-privatisation, considering the huge expectations by investors, government and consumers.

Initially, the present administration had enjoyed what seems like a honey moon as there were no attacks on gas pipelines within the first six months of the administration and this stabilised power generation between 4,000 and 4,500MW for most part of 2015.

In fact, according to the Assistant General Manager in charge of Public Affairs at TCN, Mr. Clement Ezeolisah, the current administration first hit a new peak of 4,883.9MW on Monday, November 23, 2015.
According to Ezeolisa, improvement in generation hit an unprecedented height on Wednesday, February 2, 2016, when Nigeria generated 5,074.7MW of electricity, the first ever in the history of Nigeria’s power sector.

Nigerians attested to the improvement in power supply at the early life of this administration, which was attributed to the ‘body language’ of President Muhammadu Buhari.
The peak lasted for few hours before it dropped to a little above 4,000MW on the same day.
Barely 12 days after the 5,074MW, supply dropped below 3,000MW, which was blamed on the attacks of the Forcadoes subsea pipeline by the Niger Delta Avengers (NDA).
Since February 2016, power generation has remained within the levels experienced before power privation if not largely below.

Power generation is measured daily by the average of daily peak and the lowest for the day.
For instance, from a one-month daily peak of 4,452 megawatts recorded on March 22, 2017 peak generation dropped consistently to 4,072.70MW on March 29.

Also from the daily peak of 4,072.70MW on March 29, generation dropped consistently with daily peak dwindling to 3,737MW on April 5 and 3,903.30MW at the beginning of April 2017.
Also the daily lowest generation, which was 3,638.60 megawatts on April 2, also dropped consistently to 3,200.20MW on April 5 and 3,289.40MW during the weekend.
With the poor generation, electricity supply, which averaged 4,400MW six weeks ago, hovers around 3,400MW since the past three weeks, despite the relative calm in the Niger Delta.

Recycling old excuses
When power supply improves, government will attribute the feat to improved gas supply to the power generation plants and better management of water at the hydro stations but when supply drops, the old excuses of sabotage and liquidity crisis are re-echoed.
For instance, when generation worsened in January 2017, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, blamed the erratic supply in insufficient availability of gas and sabotage by militants who attacked pipelines.

These were the same excuses bandied by the previous administration, which had persistently re-echoed the issue of sabotage to a point that some Nigerians were beginning to think that the then opposition All Progressives Congress (APC) might be sponsoring the attacks on gas pipelines to frustrate the efforts of former President Jonathan’s administration to improve power supply so as to make poor power supply a key plank of the opposition’s campaign in the 2015 elections.

In 2012, when transmission system collapsed twice in less than 24 hours, the then power minister, Prof. Nnaji had almost concluded that PHCN workers, who were opposed to the government’s privatisation programme might have sabotaged the transmission infrastructure.

But the transmission workers made a spirited defence, saying that they did not have grounds to sabotage the transmission infrastructure as TCN was not even slated for privatisation.
At the peak of the worsening power crisis in March 2016, the Minister of Information and Culture, Alhaji Lai Mohammed, had apologised to Nigerians for the hardship and inconveniences power outage had caused them and blamed the crisis on sabotage, gas shortage and vandalism of power infrastructure.

The Blame game
Since the power situation worsened after the privatisation, the investors have blamed the federal government for not abiding by the privatisation agreement and electricity consumers for failure to pay tariffs.
On the other hand, the government has also accused the companies of frustrating the attempts by the government to activate their agreements in the Transitional Electricity Market (TEM), which should bind them to objective service delivery.

As the investors make spirited efforts to absolve themselves of any blame for the apparent collapse of the power sector, Africa’s richest man and President of Dangote Group, Alhaji Aliko Dangote had called on the federal government to cancel the power privatisation, alleging that the private investors “went in without even understanding what they were doing…”

Even within the members of the electricity value chain, it has always been about buck-passing.
While the generation and distribution companies have blamed poor supply on gas shortages and grid instability caused by weak transmission infrastructure; the Transmission Company of Nigeria (TCN) blamed the Discos for rejecting power allocated to them.

TCN has also blamed the Gencos for occasionally collapsing the transmission infrastructure with low generation, stressing that “nobody can guarantee the stability of the transmission network when generation is 3,000MW and below.”
However, gas suppliers have argued that there is enough gas to generate power but that the generation companies cannot pay for gas.

But the Gencos have insisted that they are not able to pay for gas because they are being owed for the power they generated into the National Grid.
On their part, the position of the Gencos is that they are not able to pay for gas because they are being owed by the Nigerian Electricity Bulk Trading Plc (NBET), better known as the Bulk Trader for the power the Gencos generated into the National Grid.

NBET, on its part, has claimed that it has insufficient fund to pay the Gencos because the Discos make under-payment for the power they buy and distribute to their customers.
The excuse by the distribution companies is that the tariffs paid by customers are not cost-reflective for them to recover the actual cost of power and remit to NBET.

They also blame their revenue shortfall on MDA debts and failure of customers to even pay at all.
To address the liquidity challenges, the federal government had approved N701 billion intervention fund to assist the members of the electricity value chain to meet their obligations but the electricity distribution companies under the aegis of the Association of Nigerian Electricity Distributors (ANED) argued that the N701 billion fund has the potential to worsen revenue shortfalls bedeviling the power sector.

ANED’s Executive Director in charge of Research and Advocacy, Mr. Sunday Oduntan, had argued that the intervention funding “holds the potential for exacerbating the revenue shortfalls that the market,” describing it as just a partial solution to the liquidity challenges of the sector.
The government was also said to have threatened to escrow the accounts of the Discos to ensure that money realised from the power sector is paid to all the members of the value chain – gas suppliers, generation companies, distribution companies, Transmission Company of Nigeria and the regulators.

But the Discos opposed the move, saying that it would also send very wrong signals to investors that Nigeria is not fully open for private sector investment, saying also that, “you cannot have a supposedly private sector-owned and managed business in which the government now seizes control of its revenues,” and describing the step as a contradiction in terms and practice.
With these blame game and bulk-passing by the government and other various stakeholders in the power value chain, there is no end in sight to the erratic power supply in the country.