Power Privatization: How States and Local Governments’ Investments in Power Were Underestimated

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States and local governments have adjusted to the reality of power privatization in Nigeria. The reality that emerged after privatization for states and local governments is to limit investment in power sector since 2013.

A lot needs to be done in areas of reinforcing and re-strengthening the existing 33/11KV network. Over 80% of the distribution transformers, ranging from 100KVA to 500KVA are already overloaded and were provided by states and local governments before power privatization. Consequently, the DisCos have to embark on a daily load-shedding of these transformers in order to keep them in service and to meet its customers’ needs.

The undertakers of the privatization exercise as contained in the (EPSR Act 2005), only took cognizance of the legal framework, not minding the role of states and local governments investments in the power sector and the engineering framework. The electricity industry was not ripe for privatization at that particular point in time; it was carried out in a hurry and haphazardly which led to the neglect of states and local governments investments in the power sector.

State and local government used to supply, carry out major rehabilitation work on obsolete equipment such as transformers, feeders, sub-stations and others that need to be replaced with new ones by power distribution companies (DisCos) to adequately supply power to the consumers. Since the operators are not having enough money to play around with, they need to bring in more investors into the industry to provide the fund needed to move the sector forward.

States and local governments used to carry out major rehabilitation work on Injection Substation in a bid to improve power supply to the people. States used to carry out rehabilitation as a result of frequent breakdown occasioned by obsolete equipment at the substation, which most times led to serious load shedding and power outages in Nigeria. State and local government used to carry out major rehabilitation work on the switchgear panels and cables were completely replaced with new ones to ensure stable and quality power from the injection stations.

State and local government used to carry out major rehabilitation work, upgrade 11KV feeders to supply power to all the communities within the coverage areas, unlike in the past when the feeders could not be energised at the same time. State and local government used to carry out major rehabilitation work and invest in key infrastructures such as gas pipelines, equipment used in the distribution, generation and transmission of electricity, and other facilities.

The Minister of Power, Works, and Housing, Mr. Babatunde Fashola, recently laid blame on obsolete equipment as the reason distribution companies (DisCos) rejected over 9,000 megawatts of electricity within one week recently. He said that power generation has grown from 2,690 megawatts in 2015 to 6,800 this August, noting that there is a problem with distribution caused by the inability of DisCos to upgrade their equipment to the level of the generation being made.

According to him, an average of 4,000 megawatts of power is not accepted regularly, due to the weak capacity of the equipment being used by the DisCos. He said that some of the equipment acquired by the DisCos upon privatisation have become antiquated and obsolete and hence, require being upgraded if they would be able to absorb and distribute the existing megawatts of electricity.

The Minister said that the government was committed to guaranteeing stable power supply, pointing out that the power sector reform of the federal government would address that problem. He said, “On the rejection of 9,000 megawatts of power, I have not read the report. As at the beginning of the 10th August this year, the amount of power that was available to be delivered to the grid was 6,800 plus megawatts. So what that means is that from 2,690 in 2015 when this government was inaugurated, we have demonstrated that we can grow.

Failure of DisCos to provide Distribution Substation Operators (DSOs) to man completed substations as well as their failure to take over some completed injection substation and lackadaisical attitude of DisCos to service customers from the Completely Self Protected (CSP) transformers, hence failure to utilise already handed-over High Voltage Distribution System, amongst others highlighted states and local governments investments in power sector that was underestimated by former President Goodluck Jonathan during power privatization.

Several intervention projects in both transmission and distribution chain of the power industry were also completed and added to the network by NDPHC across the nation. The TCN intervention projects include the upgrade and Turn-In-Turn-Out of the Ajah/Lekki/Alagbon from 132kV to 330kV DC Line. This has been completed and energised. “The Turn-in/Turn-out of the 3rd Benin/Onitsha 330kV Single Circuit transmission line at Asaba, completed and energized; the Installation of 75MVAR Shunt Reactor at the Gwagwalada 330/132/33kV substation which has its procurement process initiated as well as completion of the TCN 2x60MVA, 132/33kV Kukwaba substation which is on-going and currently about 85 percent completed.

“The distribution intervention projects include some 544Km of 33kV Lines, 130Km of 11kV Lines, some 199no distribution transformers (100KVA, 200KVA, 300KVA, 500 KVA), 148MVA injection substation capacity added and 108MVA distribution transformers capacity added. The privatisation of the ten generating power plants is still on course. The three power stations of Calabar, Geregu and Omotosho are being concluded as a first phase.
The major components of the Electric Power Sector Reform Act were restructuring of existing utility, liberalisation and privatisation, as well as reinforcement of existing infrastructure through National Integrated Power Projects (NIPPs) and other government interventions.

The privatization of distribution and generation companies has not resulted in any departure from the past. The problem that the country had with NESCO, ECN, NDA, NEPA, and PHCN are not different from the ones Nigerians have been battling since the advent of the privatized Discos and Gencos. We do not need a national grid; what we need are small plants meant to serve specified areas. With that, it would be much easier to manage power generation and transmission. Transmission lines are poorly maintained and frequently vandalised, which resulted in transmission losses of over 25 percent of electricity produced.

Recently, after much debate on the deregulation of electricity in Nigeria, the Nigerian Electricity Regulatory Commission (NERC) has issued regulations enabling investors, communities and local governments to generate and distribute electricity within their areas. The laws enable state governments with investments in infrastructure for power generation and distribution to now begin distributing electricity. Also, local governments with enough financial capability can now take advantage of the regulation to provide adequate power for their constituents.

These regulations present some challenges to the state and local governments. It is not news that most local and state governments don’t have the necessary infrastructure or financial ability to generate electricity supply for their communities. Lagos state made a bold step last year with the launch of the first truly independent 10 Megawatts bi-fuel power generating plant to cater for some consumers on the Lagos Island. Though commendable, it is hard enough to cater for the hundreds of industries and thousands of homes the state boasts of. Street lights in Lagos are still being powered by generating sets which consume an enormous quantity of fuel daily.

The generation companies now in the hands of core investors are Geregu, Ughelli, Olorunsogo and Egbin Power plants, as well as Kainji and Shiroro Hydroelectric plants while the distribution companies involved are Abuja, Benin, Eko, Ibadan, Ikeja, Jos, Kano, Port Harcourt, and Yola. DisCos cannot continue to underestimate states and local government investments in power because when we take a look at 33KV distribution lines across the country, you will observe that almost all the insulators, fibre cross-arms, and poles are either broken, cracked or even shattered. I expect the DisCos to have taken cognizance of states and local governments investments in power.

Source: IWIN

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