A Review of the Nigerian Energy Industry

NCP approves Canadian firm for Transmission Company of Nigeria

Oscarline Onwuemenyi

26 March 2012, Sweetcrude, ABUJA –
The National Council on Privatisation (NCP) yesterday approved a Canadian firm, Manitoba Hydro International for simultaneous opening of their financial proposal and commencement of contract negotiations as the management contractor for the Transmission Company of Nigeria (TCN).

Following NCP’s approval at a meeting presided over by Vice President Namadi Sambo, should the financial bid sail through, Manitoba will take over management TCN for three years.

Three firms- Manitoba, Power Grid Corporation of India Limited and ESB International of Ireland were invited to place bids by the NCP.

It would be recalled that the NCP, at its third meeting for 2010 which was held at the Presidential Villa, Abuja, had invited Power Grid of India, ESB International of Ireland and Manitoba Hydro of Canada to re-submit technical and financial proposals in line with current system and industry information for the management contract for Transmission Company of Nigeria (TCN.)

TCN is one of the eighteen successor companies carved out of Power Holding Company of Nigeria (PHCN.) It combines the functions of a transmission services provider, a system operator and a market operator, all of which are central to the sustainability and development of the electricity sector.

Following unbundling, TCN emerged as one of the successor companies of PHCN and was scheduled for a Management Contract in order to transit the company into a financially sustainable, stable, self-sufficient and market-driven company.

For the purpose of procuring a management contractor for TCN, the BPE retained the services of British Power International (BPI) who were initially engaged by Power Holding Company of Nigeria (PHCN) to provide advice on the engagement of an Operation & Maintenance (OM) contractor and other issues like the development of Management Information Services and Corporate Governance procedures.

The technical proposals were evaluated based on their transmission-loss-reduction, network improvement and capacity transfer strategy. The intent is to have a transmission company that will be capable of containing the anticipated changes in the Nigerian Electricity Supply Industry and Market.

According to a statement from the Head of Media Relations in the BPE, Mr. Chukwuma Nwokoh, the management contract is designed to achieve the reduction of electricity losses during transmission, and provide for the achievement of certain predetermined targets that would improve grid security and general performance.

He added, “The contract also has reward and penalty clauses as incentives for success while providing efficient management of government investments. It ensures adequate and equitable generation dispatch according to a fair merit order based on sound regulatory principles, ensure fair market settlements between electricity traders; and provide for skills and expertise transfer to Nigerian counterparts who will serve in deputy and other positions on the management staff of the Management Contractor.”

Manitoba Hydro is the electric power and natural gas utility in the province of Manitoba, Canada. Founded in 1961, it is a provincial Crown Corporation, governed by the Manitoba Hydro-Electric Board and the Manitoba Hydro Act. The company presently operates 15 interconnected generating stations. It has more than 527,000 electric power customers and more than 263,000 natural gas customers. Since most of the electrical energy is provided by hydroelectric power, the utility has low electricity rates.

At the deadline for submission of the technical bid and financial proposals on Feb 29, 2012, two bids were opened. The result of the evaluation of the technical proposals showed that only Manitoba Hydro International of Canada met the benchmark “which led to its being appointed as the management contractor for TCN”, Mr Atedo Peterside who briefed newsmen alongside the DG, BPE, Ms Bolanle Onagoruwa said.

NCP also approved the constitution of a six-member team to negotiate with Manitoba Hydro International, which is the electric power and natural gas utility in the province of Manitoba, Canada.

Founded in 1961, it has considerable experience in managing transmission systems via management contract in many parts of the world including African countries.

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  • Many Nigerians are well aware of what needs to be done about Nigeria’s power supply rpoblems — and that starts with frankly with no more difficult a task than simply implementing the statutory mandates of the EXISTING sectoral law, the Electricity Sector Reform Act of 2005.The ESRA is an excellent blueprint that provides for the unbundling and privatization of generation and distribution, the entry of more private parties and (crucially) the deregulation of electricity tariffs to be cost-reflective, without which banks and other financiers would NEVER finance private sector independent power projects in Nigeria. Unfortunately, the political will seems to be lacking, as the usual chattering classes (and the latter-day theortical Marxists — there are probably more “comrades” in Nigeria today than in the old Soviet countries) would start raising the same sorts of ruckus that has attended attempts to deregulate the present inefficient fuel pricing system (another corrupt pubic sector sinkhole).Unfortunately, it appears that many Nigerians would rather pay little or nothing for nominal “cheap” goods and services, rather than pay economic or market prices –ignoring of course that the REAL price of compensating for the unavailability and unreliability of such nominally “cheap” goods and services often amounts to a price GREATER than economic or market pricing. This is perhaps the result of a cross between an ‘awoof’ culture and a culture of entitlement that seems prevalent in Nigeria. But of course, we often end up getting exactly what we pay for — NOTHING!