Power Sector and the Blame Game

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The power sector is no exception from the ups and downs recorded in 2017. The year started with a generally low mood in terms of the quantum of power generation available for distribution from none to a peak of 5,222MW. Earlier in the year, the Nigerian Bulk Electricity Trading Company (NBET) decried the low level of remittances from the distribution companies (DisCos) which led to the rising spate of on-going debt and general illiquidity in the Nigerian Electricity Supply Industry (NESI). The average monthly remittance from the DisCos was as low as 30 percent with all the operators trading blames among themselves on who is responsible for the situation. This has led to the inability of the generating companies (GenCos) and the transmission company of Nigeria (TCN) to pay for services procured in generating and transmitting power to the DisCos. The illiquidity in the NESI has resulted in a generally low mood for all stakeholders including banks, financial institutions, relevant ministries, departments, agencies, potential investors (local and international).

Throughout the year, consumers were at a loss as to why the much-needed electricity generated by the GenCos was rejected by the DisCos and TCN. The blame game between the operators made nonsense of privatisation. Yet, accompanying the low levels of electricity supply were outrageously high levels of estimated electricity bills leaving consumers at their own mercy.

The NESI was bailed-out from its financial debt profile of over a trillion naira by Federal Government (FG), through the Central Bank. This enables them to make payment to GenCos who were unable to make prompt payment for gas and other incurred expenses. GenCos, however, remained in low spirit for months thereafter as actual payment by installment did not commence until much later. Even then, DisCos remained in a low spirit especially with the declaration of eligible customers (EC) by the Minister of Power during the year in focus highs and lows.

On a more positive note, the NESI was on a “general high” when Federal Government, in collaboration with the World Bank and other affiliated financial institutions, sets out a power sector recovery programme (PSRP) which if implemented will put the power sector reform back on track. However, conditions precedent to the release of over $5 billion of the loan have not been met by the Federal Government whilst industry watchers remain on a “general low”. To access the loan, the government must overcome technical, governance, commercial and operational barriers.

At the end of the year, the annual Future Energy Nigeria conference puts the NESI on high hopes shifting discussion points from the known issues to the proffering and implementation of solutions. To this end, the NESI will, therefore, witness, in the coming years, a radical shift in focus to sustainable electricity systems with increased penetration of renewable energy generation, mini-grids, solar homes and hybrid solutions involving solar and gas technology in combating the power problems facing Nigeria.

Source: The Guardian

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