Featured, Power
–
The power reform in the country has recorded some successes but there is a long way to go with the transmission leg suffering from decaying infrastructure and still being managed by government
| By Anayo Ezugwu | Nov. 10, 2014 @ 01:00 GMT |
AS the challenges confronting the post-privatisation of the power sector continues, Chinedu Nebo, minister of power, is optimistic that tremendous improvement has been recorded since the launch of the Power Sector Reform Roadmap in 2010. His optimism emanates from the ongoing and most far reaching transformation the sector has witnessed so far, culminating in the privatisation of the sector’s legacy assets in 2013, a feat widely acclaimed as unprecedented both in scope and size globally.
Nebo stated this at the 4th WorldStage National Electricity Power Conference, On Thursday, October 23, where he delivered a paper titled: “Nigeria’s Power Sector Transformation Story–Federal Government Commitment to Address Post-Privatisation Challenges. As the sector awaits the declaration of the Transitional Electricity Market, TEM, the minister said, the journey ahead will not be easy but the country will progress. “Looking at the stories of Brazil, India and Indonesia, we recognize that reform of the power sectors is not easy but we are emboldened by the vision of a transformed and developed Nigeria powered by a modern electricity sector, built on sound policies and driven by a vibrant, independent electricity market backed by a stable, reliable and intuitive power system capable of sustaining the country’s drive for socio-economic development.
“The growth, prosperity and national security of any country is critically dependent upon the adequacy of its electricity supply industry. Indeed the link between electricity supply and economic development is such that the health of the industry is a matter of deep and personal concern to all citizens. Nigeria is no exception. Over the past two decades, the stalled expansion of Nigeria’s grid capacity, combined with the high cost of diesel and petrol generation, has crippled the growth of the country’s productive and commercial industries. It has stifled the creation of the jobs which are urgently needed in a country with a large and rapidly growing population; and the erratic and unpredictable nature of electricity supply has engendered a deep and bitter sense of frustration that is felt across the country as a whole and in its urban centres in particular,” he said.
According to Nebo, any keen follower of developments in the power sector will agree that the country has made great strides and recorded major successes in the reform journey. “Let me proudly say that the privatisation of the Nigerian power sector has been internationally acclaimed as one of the most ambitious reform programs ever of any public utility embarked by any nation. I must also admit, however, that it has not always been a bed of roses. The reform has had its challenges along the way and slippages due to the size and scope of the reforms. We are now marching towards the declaration of the Transitional Electricity Market, TEM, when the power sector will fully function as a market with full contractual obligations for all market participants. The protocols for market initiation are being finalised in readiness for the TEM and most conditions-precedent has been met.”
On the Journey so far, the electricity privatisation process has not been an easy task but has been successful and the future looks even brighter for Nigeria at large, Nebo said adding, the generating and distributing companies are now in private hands for the first time in this nations’ history. This, he said was a major milestone for the country and its citizens. “We have indeed made major strides but the sector still faces significant challenges ahead which are not insurmountable.”
One of the major problems hampering the sector is the shortfall in supply of gas, which has hampered the visibility of the impact of the reform efforts to the average Nigerian. Due to the current shortfalls in the supply of gas, many power plants built to provide power to Nigerians is only able to utilise a fraction of their installed capacity of originally six power plants that were privatised, not one is functioning at up to seventy percent of installed capacity. To make matters worse, many of gas infrastructure that supply these power plants have come under attack by vandals with various agendas. Oil thieves are not helping matters by breaking up gas pipelines in hopes to finding oil to steal. Political enemies are also hoping to reduce power supply in one area or the other in an effort to sabotage opponents.
Even when the gas infrastructure is free of sabotage, obtaining the gas needed is a problem because of the historically low price for gas in the domestic market. This low price made investments in the supply of gas the domestic gas market unattractive for gas producers and consequently, for years development in supply of gas to the domestic market in general, and power in particular, has stagnated. “Under my leadership and in partnership with the minister of petroleum resources, we have been able to recently bring the price of domestic gas to $2.50 per million btu, with an additional provision for maximum of $0.80/mmbtu for transport. We expect these changes to incentivize the negotiation and execution of more Gas Supply and Purchase Agreements between gas suppliers and power producers resulting in noticeable improvements in the medium term,” he said.
Another major issue that hampers the current reform is the state of the nation’s transmission network. The transmission network, he said, is the life blood of the entire electricity eco-system and currently it is proving to be a weak link in Nigerian electricity supply industry. Transmission is the only domain in the electricity supply value chain that still remains under the control of the federal government. The government hired a management contractor, Manitoba Hydro of Canada, to manage the day to day affairs of the company. Their services were engaged to fulfill the power sector roadmap goal of organising the Transmission Company of Nigeria, TCN, into a technically, financially and commercially viable and market driven company.
“As many of you know transmission infrastructure in this country is outdated and many of the equipment are in poor shape due to neglect of maintenance during the NEPA/PHCN era. The existing transmission network which is currently consists of 330 KV power lines are weak with high energy losses. Nigeria has one of the highest transmission losses in the world; this is partly because the average age of the transmission infrastructure. One of the jobs MHI has to do is to fix these issues in a timely fashion to allow for energy to be efficiently dispatched through the system to the distribution networks.
The transmission network is also suffering from the same demon of vandals as the oil and gas infrastructure network. Transmission lines are made with copper which can be sold in the standard market at premium price. Vandals risk their lives to climb electrified poles to cut transmission lines down so that they profit from the destruction either by selling the cooper or by the satisfaction of distributing power supply in the country. To help minimize this risk, GIS based security systems are being produced to assist in monitoring transmission lines and poles, gas pipelines, and other critical infrastructure. Unfortunately, the minister said, “our reality is that the spread of the transmission lines does not extend to various parts of the country. Just about fifty per cent of the country does not have access to power. Investment in the transmission network does not come cheap. However, MHI/TCN has agreed on a blueprint to build out the transmission network and is in consultation with encouraging a number of potential investors towards the realization of the project,” he said.
Moving forward, Nebo said government was expected to build on the success recorded thus far in the power sector with a focus on the following areas, gas, market stability, human capacity development and collaboration with all the necessary agencies. According to him, although the privatisation journey has largely been successful, there have been bumps along the way such as labour issues and payment of former PHCN sta. Overall, Nebo said the process that not a few did not give a chance at any success whatsoever at the onset, has recorded significant successes in the transformation journey.”
|
Tags:
