Nigeria’s electricity sector which was massively courted by local and international investors on the heels of its privatisation by the federal government in 2013, has finally fallen out of favour in the eyes of the same investors, the Power Sector Recovery Programme (PSRP) of the government has disclosed.
This is just as the Nigerian National Petroleum Corporation (NNPC) Tuesday disclosed that electricity generation companies (Gencos) in Nigeria were now rejecting gas from it because they are not able to send generated power to the country’s transmission network which is reportedly experiencing low load evacuations.
The development also coincided with the Abuja Electricity Distribution Company (AEDC) signing of a fresh $3.7 million financing agreement with ZTE Corporation for the procurement and deployment of 30,000 single and three phase meters to its residential customers, three days after signing a similar pact with indigenous meter manufacturing firm, Mojec, for 60,000 meters worth N2.4 billion.
According to the PSRP which was initiated by the federal government and World Bank, the sector has lost its appeals to both local and international investors so much that sources of funding for its big projects have dried up and left it with just two dependable funding windows – the Central Bank of Nigeria (CBN); and World Bank.
“From being an investment destination sought after in 2013 – both at home and abroad, the NESI (Nigeria Electricity Supply Industry), has fallen out of favour,” said the final document of the PSRP which THISDAY obtained in Abuja.
The document further explained that: “With the recent meetings in Abuja of the DFI/MDBs (Development Finance Institutions and Multilateral Development Banks) over issues concerning the currency redenomination of the Put-Call Option Agreement (PCOA), there now remains only two dependable sources of financing for the NESI: NGN – the Central Bank of Nigeria (CBN); USD – the World Bank Group (WBG).”
It noted that while the power sector has lost the kind of investment appetite it hitherto commanded from financiers, there was an urgent need to revive its fortunes, adding that the PSRP was initiated for this.
“A bold turnaround plan is now required to utilise current assets and resources optimally, and to restore investor confidence in the sector, required to deliver the planned sector reforms,” it explained.
The document noted that it contained several proposals made to get the sector out from the woods, amongst which are the government’s reactivation of the privatisation of some key power plants built under the National Integrated Power Projects (NIPPs), as well as other key policy measures which the government must initiate.
Meanwhile, the Group Managing Director of NNPC, Dr. Maikanti Baru, has disclosed that despite the corporation reported increase of its gas production and supplies to meet up with Nigeria’s domestic gas demands, supplies to power Gencos were now being rejected by them.
Baru, said in a podcast message to mark his one year appointment as the head of the NNPC that from an average of 700 million standard cubic feet (mmscf) of gas supplied to the domestic market in July 2016, NNPC has increased it to an average of 1,220mmscfd now, with about 75 of the volume supplied to the power sector.
He, however noted that: “A lot of generation companies (Gencos) are rejecting gas due to the inability of Transmission Company of Nigeria (TCN), to wheel-out the power generated.”
Also in a related development, the Managing Director of AEDC, Mr. Ernest Mupwaya, has signed an agreement with Chinese firm, ZTE Corporation, to manufacture and install 30,000 meters worth $3.7 million to residential consumers under its distribution network on a vendor-financing basis.
Mupwaya explained at the agreement signing ceremony, that the Disco would have by the new agreement with ZTE, completed its planned procurement of 120,000 consumer meters for its network in its 2017 business year.
He also noted that the Discos would spend N214 million to install the meters, and expect to repay for them with incremental revenue collection from consumers who would no longer have to be billed through estimated methodology.
He stated that while the Disco currently has an Aggregate Technical Commercial and Collection (ATC&C) loss level of 42 per cent, it was still relying on its mass meter deployment programme to cut down its losses and further advance its metering plans.
“It is a common knowledge that there is a liquidity crisis in the industry, and the government has initiated programmes to tackle it, but we cannot wait because our consumers cannot wait to have meters that is why we have initiated a vendor-financing programme to meter our customers.
“We still see meter bypass, and other forms of electricity theft, it will be a pity if meters are still bypassed because it will derail our metering plan. We have committed to fund this programme with incremental revenue that will come from accurate consumption,” Mupwaya said.