Giving Fillip To The Power Sector

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The Nigerian Electricity System Operation (NESO) recently released graphic but dismal data on the supply of electricity for the preceding month of March and attributed the loss of 2,746 megawatts of electricity to shortage of gas supply and decrease in water levels.
The drop equally resulted in the loss of N34.60m that should have accrued from sales of electricity as distribution companies do not pay for anticipated but only product supplied.

Though an improvement on the February loss which was put at 4, 276 megawatts and the financial loss that stood at N24.04bn, March had the highest cases of system collapse as some generation companies including Egbin, Transcorps Ughelli, Omotosho, Sapele, Odukpani, Alaoji, Okpai, among others were shut down largely due to gas and high frequency constraints as well as mechanical problems.
Regrettably, Nigeria has continued to experience dwindling power generation and supply hinged on several debilitating factors including seasonal drop in water levels, attacks on gas pipelines and other installations which are unpredictable but can be anticipated because of the agitation of Niger Delta militants.

Additionally, not a few generation companies have threatened to close shops on their operations because of non-settlement of N100bn debts owed them by the federal government through the Nigerian Bulk Electricity Traders (NBET) and market operators.
They are piqued by the paucity of gas supply and inefficiency in the operations of regulatory agencies like the Transmission Company of Nigeria (TCN), NBET, among others.

Generation and supply companies claimed the huge debts are hurting their businesses and have averred that unless the huge backlogs owed them by the federal government are paid, it would be herculean to generate electricity and supply the product at optimal capacity.
Liquidity has also been identified as a major issue. Nonetheless, since the Gencos and Discos are privately driven, they ought to have been better prepared to deal with the assets and liabilities they inherited from the Power Holding Company of Nigeria (PHCN) in view of the capital intensive nature of the venture they voluntarily bought into.
Although the federal government last month doled out N702m to offset operational expenses of Gencos, the amount is a drop in the ocean considering the fact that about N1trn is needed to address the incremental demands and stabilise power supply in the country.
The federal government claimed that Discos’ poor revenue collection from customers and subsequent remittance to NBET have had adverse effects on its finances.

A recent stakeholders’ meeting also identified the technical deficiency and incompetence of government-owned NBET, licensed to buy electricity in bulk from the generating companies and sell to the Discos, as a major drawback in the value chain. Averagely, NBET collected as low as 17 per cent of its invoice in recent months.
“We have made massive investments in making the plant readily available to generate electricity sustainably but unfortunately, we can’t break even due to the gross inefficiency in the value chain.
“The government guarantees to pay us for every megawatt we generate and sell to NBET but they have not done that”, the management of Egbin Power Plant that threatened to stop its operation because of huge debts said.

“The Gencos in turn do not pay their gas and equipment suppliers as well as banks and other partners what they are contractually bound to pay. The Discos also do not pay the Transmission Company of Nigeria what is contractually due to it for transmitting the energy the Discos sell to consumers”, the communiqué from the meeting has revealed.
Obvious in these counter-claims is payment shortfalls with the accumulated debts increasingly threatening the electricity supply system and undermining the growth of the economy and the electricity sector.

Blueprint believes it is high time the government took more proactive steps to address the power problems. Firstly, it should as a matter of urgency meet its financial obligations to Gencos and strengthen the technical and professional capacities of both TCN and NBET.
Whereas the employees of the former conduct the company’s business in a fashion reminiscent of the bureaucratic NEPA, the latter has exhibited professional incompetence with its management chasing frivolities instead of committing to the critical role that energy and access to electricity plays in economic growth: sustenance of small-scale enterprises, job creation and poverty reduction.

We advise the federal government to revisit the management and technical structures of the power regulatory agencies and inject technical and professional vibrancy where necessary in order to breathe life into the system.
We share the sentiment of the Association of Electricity Distribution Companies (AEDC) that has consistently said unless the government acts with dispatch and take shrewd and critical steps to weed out impediments in the power sector, its quest to provide stable electricity to Nigerians would remain a mirage. For a nation desiring to be among the world’s economically advanced countries by the year 2020, this current state of affairs is a disturbing augury.

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