Amid Growing Power Cuts, Gencos Record N27bn Capacity Losses, Post 4,700mw Stranded Supply

•Research firm wants Nigeria to decentralise electricity sources

•Adelabu threatens licence revocation, says declining power situation disheartening

Emmanuel Addeh in Abuja

Power Generation Companies (Gencos) operating in the country recorded as much as N27.14 billion in monthly capacity payment losses and stranded generation of over 4,724mw in January and February this year, data from the generation companies has shown.

Stranded power represents available energy capacity which could not be generated, transmitted and distributed in the value chain due to system failures.

In January, the data showed that available generation was 6,444.05mw, while for February, it was 6,384.36mw, giving an average of 6,414.21mw.

But average generation was 4,293.68mw in January, while in February, it was 3,809.96, to total 4.051.82mw in average.

The data implies that the current power cuts nationwide, which have worsened in the last few weeks, in the short term, is not a generation problem, but more of a transmission and distribution challenge.

To put it in context, the Gencos can generate 6,414.21mw on the average if there are off-takers for the power generated. For instance, on March 5, peak electricity was 4,134.30mw, while off-peak was 3,593.34mw, meaning that if the Distribution Companies (Discos) requested more power, the Gencos have a capacity to ramp up production.

Recently, the Minister of Power, Adebayo Adelabu, stated that the federal government owed gas producers as much $1.3 billion and N3 trillion in gas legacy debts, giving the impression that the Gencos were not generating enough due to inability to get gas supply.

“Today, we are owing a total of N1.3 trillion to the power generating companies, out of which 60 per cent is owed to gas suppliers. Today we have a legacy debt, before 2014, to the gas companies of $1.3 billion; at today’s rate, that is close to N2 trillion.

“Now, if you add N2 trillion legacy debt owed to gas companies and the N1.3 trillion being owed to Gencos, we have an inherited debt of over N3 trillion in this sector. How will the sector move forward?” he queried.

Also, the data from the Gencos showed that N13.04 billion was lost by the Gencos in January this year, while N14.10 billion was recorded as loss in February due to capacity losses, to hit N27.14 billion in the two months under review.

A recent daily load summary of power distribution companies indicated that Distribution Companies (Discos) failed to distribute about 1,769.91mw of electricity between February 1 and 14, 2024, further confirming that it’s not wholly a generation problem.

Data from the Transmission Company of Nigeria (TCN) indicated that though some of the power firms received excess electricity load allocation during the period, most of them failed to utilise all the quantum of energy allocated to them by TCN.

Last Saturday, the minister announced that he had summoned two power firms and TCN to provide reasons for the worsening state of electricity supply in their regions.

Adelabu also pointed out that investigations by the power ministry showed that some power distribution companies were rejecting electricity, despite the scarce supply of the commodity.

Meanwhile, Mordor Intelligence has predicted that cost associated with the increasing infrastructure for power generation facilities in Nigeria is expected to hinder the growth of the power market in the country,

Nevertheless, it noted that Distributed Power Generation (DPG) presents significant opportunities for the Nigerian power market.

Thermal energy generating sources, it said, are one of the major electricity generation sources in the country, with significant gas potential in Nigeria expected to aid in the growth of thermal energy sources during the medium term.

“Nigeria has significant reserves of natural gas, which serves as a primary fuel for thermal power generation. The country’s natural gas reserves are among the largest in the world.

“This abundance of fuel resources makes thermal power generation a reliable and readily available option for meeting the country’s growing electricity demand.

“Moreover, Nigeria already has an established infrastructure for thermal power generation, including power plants, pipelines, and gas supply networks. This infrastructure provides a foundation for the continued dominance of thermal power generation. It enables efficient fuel supply, transmission, and distribution, making operating and expanding thermal power plants cost-effective.

“According to the Nigerian Electricity Regulatory Commission (NERC), the thermal power generation capacity increased by almost 8 per cent between the first and second quarter of 2022, signifying the heavy reliance of the country’s power sector on thermal power sources.

“Moreover, utilising domestic fuel resources, such as natural gas, for thermal power generation enhances energy security for Nigeria. By relying on indigenous fuel sources, the country can reduce its dependence on imported energy and mitigate the risks associated with fluctuating international fuel prices or supply,” it added.

 It stressed that the widespread adoption of renewable energy sources will expand power generation capacity in Nigeria, explaining that by harnessing the country’s abundant renewable resources, the power market can increase its overall capacity in the country.

The report said that this expansion can be achieved by constructing utility-scale solar and wind farms, small hydropower plants, and biomass energy projects.

Additionally, the research firm stated that renewable energy technologies offer an excellent opportunity for rural electrification in Nigeria, noting that many remote and off-grid areas currently underserved by the traditional power grid can benefit from decentralised renewable energy solution    

Also, Adelabu yesterday expressed deep concern over the deteriorating electricity supply across the country.

He said that in response to the pressing issue, he had summoned the chief executives of Abuja Electricity Distribution Company (AEDC) and Ibadan Electricity Distribution Company (IBEDC), as well as the Managing Director of the Transmission Company of Nigeria (TCN), to a crucial meeting.

The purpose of the meeting, he said, is to discuss the worsening power supply in their respective regions and to collectively find lasting solutions.

“It is disheartening to witness the decline in power supply despite the concerted efforts to improve the situation. The ministry has been exerting pressure on the Gencos to enhance their performance, resulting in a recent increase in generation to over 4000mw.

“Despite this progress, certain distribution companies are failing to adequately distribute the power supplied by TCN, while vandalism of power infrastructure exacerbates the problem in regions such as Abuja, Benin, Port Harcourt, and Ibadan.

“Moving forward, I am committed to holding all distribution companies accountable for their performance. Wilful non-performance will not be tolerated, and severe consequences, including licence revocation, may be imposed,” he stated on his Twitter/X handle.

Additionally, Adelabu said he instructed TCN to prioritise repair works on damaged transmission towers and power lines to improve supply in affected regions.

“During recent supervisory visits to power generating plants, I have witnessed first-hand the challenges faced by the sector. Plans are underway to settle outstanding debts owed to power generation and gas supply companies, which will alleviate the financial strain and contribute to improved generation levels nationwide.

“I urge electricity consumers to remain patient as we work tirelessly to address these issues and provide better service to all Nigerians,” he said.