Nigeria’s power sector suffers more setbacks

Gas Supply, distribution and transmission facilities continue to plague the availability of electricity to many households in the country, leading to about N86 billion loss of revenue to the power sector in the first two months of 2019. Available statistic reveals that financial, operational, construction, market, macroeconomic, contract and regulatory risks, also add to the challenges faced by the sector, even with the intervention funds from both the federal government, World Bank, African Development Bank, amongst others.

A report obtained by Vanguard from the office of Vice President Yemi Osinbajo, indicated that Nigeria, has in the past two months (January – February, 2019) gave a breakdown of this figure with N41.4 billion lost in the first month of 2019, while N44.4billion was lost in February.To further indicate the worsening state of the power sector, the report also stated: “On March 11, 2019, average energy sent out was 4,114 MWH/Hour (down by 92.47 MWH/Hour from the previous day), 2,793.58 MW was not generated due to unavailability of gas. “176 MW was not generated due to unavailability of transmission infrastructure, while 168.6 MW was not generated due to high frequency resulting from the unavailability of distribution infrastructure.

“The power sector lost an estimated N1.51 billion on March 11, 2019, due to insufficient gas supply, distribution infrastructure and transmission infrastructure,” the report added. Reacting to this development, the Executive Secretary, of the Generating Companies, GENCOs, Mrs. Joy Ogayi, said: “This shows low/minimal optimization of generation capacity due to constraints on the transmission and distribution networks. Without these constraints, additional 3,000MW could be made available to customers, and also serve as an incentive for Generation Companies (GenCos) to recover the unavailable capacity of over 5,000MW.

“In pursuing the current administration’s agenda of incremental power, there is need for optimal utilization of what is available and the need to recover the installed capacities, leading to a decrease in stranded or unutilized load/power. This calls for phased and well planned utilization.”

Speaking further, Ogayi said: “For the short term, Nigeria needs to optimize what is available and what can be recovered, while in the medium to long term with effective planning, she can procure new capacities by embracing renewables and suspend thermals, but only after collective utilization is at its peak. Sequencing is key.

This approach will be a cheaper, more effective, and bench-markable in meeting the power requirement in Nigeria. “The emphasis/solution here is phased planning of the generation capacities in view of the fact that even what is available plus installed, is not enough to meet demand forecast which stands at over 22,000MW.’’

“The third determinant is the need for effectiveness of contracts. One of the notable functions of a contract is to facilitate forward planning and to make provision for future contingencies. The current market situation gives room for conjectures, no contract is binding, and all are on best endeavour. “The impact is more on the GenCos, who due to lack of [effective] contracts to backstop the gas supply agreements [in terms of bankability]; are in a tight corner. Instances abound where GenCos have had to resort to other means other than the electricity market to support the gas and other services just to put power on the national grid.”

 

Source: Vanguard

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