Nigeria Dismisses Fears over Nationwide Power Shutdown

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Nigerian government allays fear of total power shutdown in the country

By Anayo Ezugwu  |  Oct 10, 2016 @ 01:00 GMT  |

THE Nigerian government has dismissed reports that power supply in the country will be shut down due to cash crunch and gas supply difficulties in the sector. Babatunde Fashola, minister of power, works and housing, who faulted such claims, described it as inflammatory and insensitive to Nigeria’s national security.

The minister stated this at the opening ceremony of the Power Nigeria Agenda 2016, on Tuesday, September 27, in Lagos. “The statement is inflammatory and it was insensitive to our national security. If the commentator was not introspective, he would mention that the debts were not incurred by this administration, and that debt and settlement are continuous events in the power value chain, bills are served, claims are made, they are verified and settled.

He added that there has been approval and payment that have been made this year. “It is a continuous verification for claims and settlement of debts. All of the debts that are owed and legitimately contracted, verified will be paid. There is a clear policy decision in that area, but it requires all operators, those who claim and those who have to pay to operate in a transparent manner. We will not pay debt that are not properly verified and accounted for.”

He, however, refuted claims that the grid is very fragile and cannot support 1300MW not to talk of 5000MW. He said the grid currently has the capacity to support 5300MW which is expanding on a daily basis. “We are synchronising with the generating companies, Gencos, and the distribution companies, discos, in order to ensure the service end that connects both, which is the Transmission Company of Nigeria is able to respond adequately on demand. These are some of the serious issues that we take up at our monthly power meeting. Our next meeting will hold in Sokoto,” the Minister said.

It should be recalled that Dallas Peavey, managing director and chief executive officer, Egbin Power Plc, had on September 22, warned that the country’s electricity woes may worsen in the coming weeks as liquidity and gas supply issues continue to threaten operations of Egbin. He noted that owners of the plant might be forced to consider shutting it down if the challenges remain unresolved.

Egbin, which is located in Lagos, was acquired in 2013 by Kepco Energy Resource Limited in collaboration with its technical partner, Korea Electric Power Corporation, during the privatisation of the successor companies carved out of the defunct Power Holding Company of Nigeria.

Asked if the company had any challenge in paying gas suppliers, he said, “We do because we are owed N86 billion and we in turn owe the gas suppliers approximately N30 billion. We are working on payment plans. We think if this is not addressed in the next couple of weeks, we are going to take the hard look at shutting down because we can’t afford running it any longer. That’s a dire prediction.”

Peavey said the company owed banks $325 million as it had to borrow to overhaul the plant after it was acquired to enable it to operate at its installed capacity of 1,320 megawatts. “Right now, because of gas and transmission issues, we only have three of our six units running. Each one of our units can produce 220MW. For a megawatt, that is about 100,000 people that it provides power for,” he said.

Generation from Egbin, as at Wednesday, September 21, is limited to 383MW due to gas constraints, compared to 1,085MW on March 15, according to industry data.  The plant hit a record low of 246MW on last Saturday from 425MW on Friday. Its unit ST1 was said to have tripped on generator CB trouble; ST2, 3 and 5 not on spinning reserve due to Egbin G/S management decision, while the ST4 was out due to gas constraints.

The Egbin chief executive office, who spoke shortly before the nation recorded its latest total system collapse on September 16, said his company was helping to stabilise the national grid. He pointed out that over the last six weeks, there has not been a grid failure or system collapse because of Egbin. “Egbin is the sole reason there has not been a total system collapse in the nation because we regulate everything coming to Lagos all the way to Abuja and farther north,” he said.

Out of the six power stations meant to provide spinning reserves, only one had actual reserve of 9.4MW as at Wednesday, September 21, down from 17.4MW on Sunday and 30.4MW on September 10. The power stations are Egbin, Kainji, Delta, Olorunsogo II, Geregu II and Omotosho II, with a combined reserve capacity of 235MW.

The reserve capacities and actual reserve of Egbin and Kainji stood at zero as of Wednesday, while those of Delta were 80MW and zero, respectively. This year, the nation’s power grid has so far recorded 22 collapses – 16 totals and five partial – up from 13 and 10 in the whole of 2014 and 2015, respectively.

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