There are fears that the Economic and Recovery Growth Plan (ERGP) of the Federal Government set for 2017-2020 may not be realised due to inadequate and unstable power supply in the country.
The ERGP, a medium-term structural reform to diversify Nigeria’s economy, including expanding power sector infrastructure was drawn based on the assumption that electricity supply would continue to grow and hit 10,000 megawatts by 2020.
But the latest report from the Presidency and made available to Vanguard showed that Nigeria has consistently generated below 4,000 MW for a greater part of 2016 and 2017, barely three years to set target, at the same time the nation’s power sector was bogged by such problems as poor and limited facilities, inadequate gas, vandalism, theft and inadequate funds.
It further showed that even if these challenges, especially lack of funds were solved immediately, it would still require between three to five years to design, construct, import and install new power plants and other infrastructure needed to increase power generation, transmission and distribution in the nation.
Meanwhile, the presidency report also stated that: ‘’On September 14, 2017, average power sent out was 2,310 MWh/hour (down by 1,170 MWh/h). The reported gas constraint was 410MW. The reported line constraint was 0MW. The reported frequency management constraint due to loss of DisCos feeders was 1,390 MW.
‘’The water management constraint was 0MW. The power sector lost an estimated N816, 000,000 on September 14, 2017 due to constraints.
Partial collapse on September 14, 2017 – system frequency sharply dropped from 50.36Hz to 48.50Hz. Lagos, Osogbo, Kainji, Jebba & Shiroro lost supply while others survived. Total load loss was 2,058.8MW. Egbin ST6 is out of service. Sapele I is out of service.’’
Commenting on the poor state of the sector, Mr. Sunday Oduntan, Executive Director of the Association of Nigerian Electricity Distributors, ANED, disclosed in an interview that: ‘’There are some challenges that need to be tackled by many stakeholders, especially the Federal Government, the DisCos and gas suppliers. These include: lack of liquidity and energy theft which culminate in leakages and losses.
‘’The vandalism of facilities that occur too often is also a serious problem that leads to huge deficit. No bank would lend you money unless your business is bankable.
‘’Let me re-state for emphasis that this liquidity crisis is a major threat to the power sector. The revenue shortfalls adversely affect the ability of the DisCos to make capital investments in metering, network expansion, equipment rehabilitation and replacement that are critical for service delivery.’’
A copy of ERGP obtained by our reporter stated that the Power Sector Recovery Program (PSRP) – a series of policy actions, operational, governance and financial interventions to be implemented by government over the next five years to restore the financial viability of Nigeria’s power sector, improve transparency and service delivery, and reset the Nigerian Electricity Supply Industry (NESI) for future growth – was designed to enhance the ERGP.
‘’In addition, FGN, as documented in the ERGP, aims to improve Nigerian Bulk Electricity Trading Plc (NBET) financial capacity to support the electricity market, strengthen the governance and capacity of sector agencies, and improve the commercial viability of GenCos and DisCos.
‘’Nigeria has 13,400MW of installed power generation capacity of which 8,000 MW is mechanically available. Less than 4,000MW was dispatched on average over the last two years due to constraints in gas supply, electricity transmission, and, distribution. As a result, the lack of constant electricity supply has discouraged consumers’ willingness to pay, driven industries to pursue off-grid alternatives and contributed to an inherent shortfall in the tariff and the accrued sector cash deficit.
‘’The basis of DisCos’ privatization is the incentive regulation regime whereby a cost reflective end-user tariff trajectory and methodology for adjustment is agreed and benefits of efficiency gains during the first regulatory period accrue to DisCos, with efficiency gains being shared with end customers over subsequent periods.
‘’However, the end user tariff has only been cost reflective for short periods since the Multi Year Tariff Order (MYTO) was reviewed in June 2012. As a result, in addition to contributing to huge sector cash deficit, it has also eliminated the incentives for the private sector owners of the DisCos to invest such that efficiency can be improved.’’
