Back Go back
More News

Nigeria’s power generation falls behind transmis...

Nigeria’s power generation falls behind transmission capacity

Nigeria’s power generation falls behind transmission capacity

Nigeria now has a weird power problem. Investments in transmission capacity are growing, while generation is declining. Therefore, the national grid which coordinates eight transmission regions with 183 substations from a control centre in Oshogbo, has over 2,000MW idle capacity, as generation from the country’s 25 power plants slows.

“Under the Buhari administration, the grid has expanded to 6,200 MW because we have completed transmission stations in places like Ikot Ekepene, Okada, Alagbon, Ajah, Katampe, Sokoto and awarded many more, in places like Damboa, Pankshin, Osogbo, Kumbotso and Odogunyan, to mention a few,” said Babatunde Fashola minister of Power, Works and Housing, at a recent lecture delivered at the University of Lagos.

The National Bureau of Statistics (NBS) recently released data indicating that in the three months ending June 2017, Nigeria’s 25 power plants generated a paltry 2,503MW of electricity. Current generation capacity hovers around 4,000MW.

“The taste of the pudding is in the eating,” says Chuks Nwani, energy lawyer and vice president of PowerHouse International, energy advisory. “It is easy for the government to claim they have raised transmission capacity when there is no gas to test the veracity of the claims.”

However, Kareem Jubril, who handles power sector research at Ecobank, sees it differently, “it is ideal that transmission capacity is higher than power generated. Therefore, there is nothing unusual about the fact that both figures don’t match.”

Analysts say the challenge is that there seems not to be commensurate efforts at ramping up generation, even as transmission improves. “Some of the power plants in the country now lie idle because the operators shut them down, rather than incur further losses from gas suppliers whose debts are not settled,” said Nwani.

Another challenge, experts say, is the high system frequency constraints, which is mostly due to inability of Discos to take power from the Transmission Company of Nigeria (TCN). There is also no investment in faulty or out-of-service turbines, which are often shut down for repairs or maintenance.

“The only strange thing is the seeming inability to address the high system frequency issues arising from loss of Disco feeders,” said Odion Omonfoman, an energy consultant and the CEO of New Hampshire Capital Ltd.

However, investment in transmission capacity expansion is not coming cheap. According to a project information document obtained from the World Bank website, the cost of the 22 priority projects identified in the Power Sector Recovery Implementation Programme (PSRIP) to upgrade existing transmission capacity from 5,500MW to 7,000 MW by 2021 is $490 million.

While Nigeria has installed generation capacity of 11,800MW comprising 1,400MW of hydro and 9,000MW of gas-fired power plants, available capacity ranges between 3,000 to 5,000MW. Huge generation capacity remains stranded due to gas supply constraints. Sabotage of petroleum export infrastructure in 2016 has further curtailed supply of associated gas used in power production, with the result that average operating capacity in early 2017 was only about 3.5 GW.

The transmission segment of the power sector value chain is often cited as the weakest link in the power sector but evidence indicates that this reasoning is weak. “The DisCos have proven to be the weakest link in the entire value chain and the underlying cause of the crisis in the sector,” said Omonfoman.

This is fuelling calls for the Federal Government to dilute the shares of the core investors in the eleven electricity distribution companies, using the funding clause in their performance agreement to resolve current shortfalls in the electricity market, valued at over N1trillion.

“The FG should rely on the funding clause in the Shareholders Agreement, which allows the BPE as a 40 percent shareholder in the Disco, to inject capital into the DisCos in the event that there is a requirement for further funding which the core investor is unable to provide. The clause allows the BPE to dilute Core Investors equity in the DisCo by such funding,” Omonfoman said.

Omonfoman further said, “Where DisCos fail to meet their payment obligations to NBET and the CBN, NBET should call the BPE guarantee. The BPE should then convert the called portion of the guarantee to shareholders funding for DisCos and dilute the core investors.”

Recently, the government committed N701billion guarantee for the gas producers but without strong intervention in the downstream segment, where the DisCos play and this has not led to improved capacity.


Tags: BPE,TCN,DisCos,& NBS


Leave a comment