Nigeria’s Transmission Network Requires N1.8tr Five-Year Funding

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The Federal Government has said that Nigeria’s power sector required an investment of $5billion (N1.8 trillion) in the next five years to solve transmission challenges.
The government, which made this known in a document titled: “Investment Opportunities in Nigeria’s Power Sector,” obtained by The Guardian on Monday, stated that the national grid, which comprises of 330kV and 132kV networks currently, has a wheeling capability of 5,300 megawatts (MW) against 6,600MW installed capacity under constrained loading conditions.

According to the document, the network lacks adequate redundancy, which creates instability and frequent outages.

The report said due to paucity of funding through the Federal Government Budgetary allocations, the sector is seeking different models of financing such as contractor finance of new transmission projects, Rehabilitate Operate and Transfer (ROT); and Management Contract.

Besides, global electricity investment edged down a little under one per cent to $718 billion, with an increase in spending on networks, partially offsetting a drop in power generation.

Investment in new renewables-based power capacity, at $297 billion, remained the largest area of electricity spending, despite falling back by three per cent.

International Energy Administration (IEA), which made this known in a recent energy investment report, said investment in renewables was three per cent lower than five years ago, but capacity additions were 50 per cent higher and expected output from this capacity about 35 per cent higher.

According to IEA, total energy investment worldwide in 2016 was just over $1.7 trillion, accounting for 2.2 per cent of global Gross Domestic Product (GDP). But investment was 12 per cent lower than IEA’s revised 2015 energy investment estimate of $1.9 trillion.

But spending in energy efficiency rose by nine per cent while electricity networks spend rose six per cent, and were more than offset by a continuing drop in investment in upstream oil and gas, which fell by over a quarter.
Power generation was down five per cent falling unit capital costs, especially in upstream oil and gas, and solar photovoltaics (PV), was a key reason for lower investment, though reduced drilling and less fossil fuel-based power capacity also contributed.

IEA stated: “The downturn in oil prices did not significantly affect the funding of investments by oil and gas companies, though most of them increased leverage significantly. Despite investment cutbacks and better-cost discipline, the oil majors increased debt by over $100 billion between late 2014 and early 2017.

The Executive Director, Association of Nigeria Electricity Distributors (ANED), Sunday Oduntan, who doubles as the spokesperson for all the 11 distribution companies (Discos), said: “We can never fix the economy without fixing the power sector. The situation is very bad. Is there hope in 2017 for improvement in power? If we get it right, yes. But if we continue the way we are going, there is no hope,” he declared.

He added: “I will say yes if we do the right thing like meeting up with investment shortfall, which had risen to N809 billion between November 2013 and November 2016 and the answer will be no if we do not do the right thing.

“All of us – government, operators, and customers, must actually do something about it. We should look back and see what we did right and continue to do it. We should also check what we did wrong and learn from it.”

Source: The Guardian

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