Amid the recurring power challenge facing Nigeria which appears to have become intractable, experts have said the country’s power sector, particularly the transmission subsector, requires about N9trillion investment to address weak network infrastructure.
The experts who spoke to LEADERSHIP in separate interviews called for the repositioning of the sector to attract the much needed investments.
In an implicit response to the suggestions of the experts, the federal government recently gave a hint that it was about to sell off over 216 non-core assets of the defunct Power Holding Company of Nigeria (PHCN) and reinvest the proceeds in the sector.
The industry experts who also supported the plan by the Nigerian Electricity Regulatory Commission to unbundle the Transmission Company of Nigeria(TCN), said the company requires as much as N9 trillion to be able to evacuate 20,000 megawatts of electricity being projected by the federal government.
LEADERSHIP reports that the Nigerian Electricity Regulatory Commission (NERC) had said it was committed to the unbundling of the TCN into two entities so as to achieve greater efficiency in the electricity sector.
In the document titled, “Towards greater independence for the electricity System Operator,” NERC explained that the move to unbundle TCN was in line with the Electric Power Sector Reform Act which provided for the licensing of the successor transmission company.
According to a registered member of Council for the Regulation of Engineering in Nigeria (COREN) and UK chartered power system engineer, Engineer Idowu Oyebanjo, the reported plan to unbundle TCN into Transmission Service Provider (TSP) and Independent Service Operator (ISO) could be a good development if the authorities know exactly why it is doing it.
Recalling that since the privatisation exercise was done in 2013, the system was still struggling, he said, “It is whether or not the conditions have been met to carry out the unbundling and whether the timing is right.
“It is not enough to copy other privatised electricity markets in what they have done or what they want to do, but to ask ourselves whether we are actually ready for it or not. Whether we unbundle TCN or not, we will not have power until consumers are metered. The illiquidity in the power sector is mind boggling.”
Oyebanjo noted that if unbundling of TCN will make the Independent System Operator to carry out its functions as enshrined in the Electricity Power Sector Reform (EPSRA) Act, it will be a welcome development.”
He observed that the current transmission network was radial and needed to become a mesh network.
On funding, he said there is need for huge financial and technical intervention as the investment should not be carried out without proper power systems studies.
He further suggested that decentralisation of the power system was the fastest and most economical way to develop the Nigeria Electricity Supply Industry (NESI) and is also the most technical.
Oyebanjo continued: “We can have regional grids with all parts of the country connected to the grid electrified via distributed generation from renewables such as solar, wind, landfill gas, hydro at Mambilla, Shiroro, Gurara, Jebba, in the North; Gas, Coal, Waste to power, oil, solar, etc in the South.
“The existing grid can act as inter tie that will be used to move power around the country where there is excess supply/demand from one area to another.”
He expressed concern over lack of coordination in on-going projects, loans and external interventions which may definitely lead to white elephant projects, duplicity of roles, financial mismanagement, waste of resources etc.
According to him, there is absence of Research & Development (R&D) and inflexible system operation due to lack of supervisory control, data acquisition (SCADA) and Communication Systems, coupled with an avalanche of uncompleted legacy projects as well as absence of coordination at transmission interfaces with GenCos and DisCos.
On his part, the executive director of PowerUp Nigeria, Adetayo Adegbenle, observed that over the years, the Transmission grid is a power subsector that also suffers from lack of investment like all other subsectors.
He stated that while generation and distribution were getting privatised, the government was holding on to the Transmission. “Lack of funds therefore remains a major challenge to upgrading Transmission facilities” he said.
On government’s plan to unbundle the sector, Adegbenle said, “Absolutely, it is on record that our organisation, PowerUp Nigeria, has identified this and asked that if the Transmission be broken down into more manageable units, with small focused investments, it would improve subunits of the Grid.
“We will also be following the parts of countries like USA (11 ISOs), Mexico and Brazil (3 ISOs). These are countries with similar geographic spreads and population compared to Nigeria.”
He further said that the argument put forward while the privatisation model was being designed was that the government should hold on to Transmission for security reasons, adding however that he did not subscribe to this fears.
He stated: “We should be focused on the Power Sector Reform. Basically, what this means is that when we try a policy and it’s not working, we try another.
“Our Transmission is still suffering from inefficiency and lack of investment. Let’s break it down to manageable units. This is also expected to affect and improve performance,” he submitted.
Since inception, the TCN has been charged with the responsibility for building and maintaining the physical national transmission network and the system operations function.
The NERC however noted that it was envisioned in the Electric Power Sector Reform Act that a time would come when the mandate of TCN would be uncoupled and the system operation function be transferred to an Independent System Operator.
The regulator notes that there had been a gradual transition to a contract-based electricity market where participants were expected to be held accountable for their obligations under the industry contracts.
NERC said based on the recent tariff orders issued by the commission and performance standards contained therein, it was therefore imperative to consider granting greater independence for the system’s operator.
It stated that it has already invited stakeholder inputs to inform the commission on the readiness of the electricity industry for the unbundling of the SO function to an independent system operator. This would be done by taking into consideration the stage of market development and the key technical prerequisites for an efficient ISO.
ERC has also requested stakeholders to recommend the degree of independence that could be granted to the system’s operator without causing disruptions in market stability.