A Review of the Nigerian Energy Industry

Nigeria’s Electricity Crisis: From bad to worse

Geometric-power09 July 2013, Lagos – Despite the unprecedented level of investment in the power sector and increase in electricity tariffs, power supply situation in Nigeria is getting worse day by day, with the gap between demand and supply widening sharply in the urban areas, write Chika Amanze-Nwachuku and Ejiofor Alike.

On assumption of office, in May, 2010, President Goodluck Jonathan made a solemn promise that his priority would be to tackle Nigeria’s decade long electricity problem and ensure that Nigerians enjoyed steady power supply.

The president reasoned that the erratic nature of Nigeria’s power supply cannot guarantee any meaningful industrial development and can also not lead the country to her vision of becoming one of the top 20 industrialised nations of the world by the year 2020.

To make good his pledge, Jonathan on August 26, same year (2010), unveiled a detailed power sector roadmap as part of the implementation of the reform process, which legislative groundwork was laid by the Electric Power Sector Reform, EPSR, Act of 2005.

President Jonathan, no doubt, set about the new task with vigour as the power sector, under his administration, witnessed unparalleled level of investment and unprecedented enthusiasm from local and international investors to invest in the Nigerian economy.

Also, some projects initiated by his predecessors, Olusegun Obasanjo and the late President Umaru Musa Yar’Adua have been completed, while other new ones are ongoing. Government’s efforts to increase power supply paid off initially, especially in 2011 and 2012 as power supply first hit an unprecedented peak of 4,321.3megawatts at about 9.15am on August 31, 2012.

Power generation also continued to hover around this figure throughout the remaining part of 2012, hitting an all-time peak of 4,517mw on December 21, 2013; thus setting a new record in the country.

However, since the beginning of this year, the power situation has been characterised by a cyclic hope and despair, a development, which has been blamed on frequent system collapse and several man-made factors.

A sharp drop in power supply was first noticed in January 2013 when Nigerian Agip Oil Company, NAOC, shut down the Okpai Power Plant in Delta State for repairs, reducing generation by 460mw before it rose again to 4,286mw peak for the month. Although it hit 4,350mw peak in February, by March 26, 2013, the figure had dropped to 3,670.3megawatts.

Generation was also poor in April as it decreased further to 2,987.6mw on April 6 due to inadequate gas supply to the thermal stations, before it ramped up to 3,443mw on April 9.

After a slight improvement, the situation worsened further to 2,866.4mw in the same month as a result of general system failure, which was very rampant during the first half of 2013. Today, power outages have metamorphosed into complete darkness in most parts of Nigeria, while many urban cities and towns across the country hardly enjoy three to four hours of uninterrupted power supply.

The Blame Game
Ironically, power technocrats are never short of excuses for the unending power crisis, which has become a major threat to Nigeria’s quest to become one of the top industrialised nations of the world by 2020.

Inadequate gas supply, shortage of water in the dams, vandalism or theft of power equipment, poor funding and presence of “demons” or “mafia” as claimed by the Minister of Power, Prof. Chinedu Nebo, have been identified as major causes of the power woes.

Only last month, the power minister said he has discovered that the cause of the current blackouts being experienced across the country were due to increased rainfall, excessive growth of vegetation along transmission highways and challenges of weak electricity transmission assets.

He specifically noted that the increasing frequency of collapse of the power transmission network, which had officially reached over 15 times since the beginning of this year, was “caused by rainfall and vegetation”.

The minister claimed that the research he conducted showed that power supply situation was usually at the worst between the period of April and July due to rainfall, which causes outages and system failures.

“It is important to mention that such disturbances to the national supply systems usually peak at the commencement of the rainy season across the country. This is usually a natural phenomenon owing to our geographical peculiarities. The ministry is fully aware of the constraints and limitations of the nation’s transmission network but wishes to assure Nigerians that the Transmission Company of Nigeria is repositioned and being funded to meet with the expectations and requirements”, Nebo said.

He added: “Like the system failure in Bayelsa, which knocked off the entire Bayelsa State for over two weeks and we had to put in everything to restore that, was caused by very huge tree falling and destroying to the very foundation, one of the transmission towers. The one that happened in Birni Kebbi affecting three different states was also caused by a big storm that occurred and knocked out three transmission towers. So, this is the time that this thing occurs and we are doing our best not only to take care of these things at this time but also to make sure that the occurrences don’t repeat next year”.

A recent statement issued by head of media to the Chairman of Presidential Task Force on Power (PTFP), Mr. Beks Dagogo-Jack, noted that the trend of blackouts was due to the fact that Nigeria’s current available peak power cannot satisfy the demands of its population of 160 million people.

The PTFP’s Awele Okigbo, who sighed the statement had argued that “current generation, transmission and distribution capacity of the country were simply not enough for its population, hence the blackouts”.

Dagogo-Jack had also recently blamed repair jobs on key installations for failure of Nigeria to attain the 5,000MW electricity generation target by the end of December 2012.

He said: “There were projects behind these projections and if we don’t have those projects in place, we cannot have power and so if you were supposed do a particular line that was overloaded, you would have to deliver it in time and some of those projects slipped and didn’t come when we wanted them, they didn’t vanish but are behind schedule and so we will not have them now but later”.

While weak transmission network had also been identified as a major cause of frequent drop in electricity supply, the Transmission Company of Nigeria, (TCN) claimed that the massive load shedding experienced nationwide recently had been caused by vandalism of two major gas pipelines supplying gas to eight power generation stations in the country.

The power generation stations, which include the Egbin/AES Thermal Stations; Olorunsogo, Omotoso, Geregu NIPP, Afam IV and VI Thermal Power Stations as well as Rivers State Independent Power Station, had been affected, resulting in drastic reduction of power supply by 1,598  megawatts.

A statement by the company’s General Manager (Public Affairs), Mr. Dave Ifabiyi, TCN explained that one of the vandalised gas pipelines took supply from Okoloma gas plant, while the other took supplies from Escravos. Ifabiyi said with the disruption of gas supply through the lines, the Nigerian Gas Company (NGC), was unable to move gas to Afam IV, Afam VI as well as the Independent Power Plant in Rivers State, resulting in generation loss of 593MW.

He said the second vandalised gas pipeline from Escravos to Warri caused a cutback of 1,005MW in power generation from Egbin/AES power generating station, Olorunsogo, Omotosho and Geregu NIPP power generating plants. According to him, with the total generation loss of 1,598MW, the total power generation as at that day was 2,290MW.

Inadequate Gas Supply
The issue of inadequate gas supply ranges from shortage of gas supply from the gas producers, to abrupt disruption of supply due to shutting down of gas plants for maintenance. Abrupt disruption in gas supply to the thermal stations had on several occasions resulted to the tripping of transmission lines during the period under review.

On several other instances, there were cases of closure of gas plants by the International Oil Companies (IOCs) for routine maintenance. Also most of the newly-completed power plants built under the National Integrated Power Project (NIPP) did not have gas supply.
Oil companies, which produce the gas that are piped to the power stations, are reluctant to invest in domestic supply because the current pricing template does not guarantee adequate return on investment.

NNPC Debunks Claim
But contrary to repeated pronouncements by the Ministry of Power that inadequate gas supply was hampering electricity supply across the country, the Nigerian National Petroleum Corporation, NNPC. has stated that it had exceeded its target for Gas-to-Power aspirations.

The Group Managing Director, GMD, Mr. Andrew Yakubu, said at the 42nd Annual General Meeting, Conference and Exhibition of the Nigerian Society of Chemical Engineers, NSChE, last November in Abuja that the strategic focus of the Corporation was to ensure that between 70 to 80 per cent of gas produced in the country was channeled to power generation in line with government’s bid to achieve steady electricity supply in the country.

“One of the strategic focus we had when we came on board was to ensure that gas availability to power was met and I am glad to tell you that as at today, we are in surplus of gas availability to power in line with the Federal Government’s power initiative,” said Yakubu.

Confirming the claim of availability of adequate gas, Group Executive Director in charge of Gas and Power at the NNPC, Dr. David Ige, insisted that gas supply has grown significantly over the last three years.

In a recent interview in Houston, Texas, Ige disclosed that “there is no power plant on the western axis that does not have gas pipeline currently.”
He said: “Our overall gas supply right now is meeting the demand. If you look at the demand on the ground, we can meet them, as we are speaking today, gas is not the restraint of power. We are basically shutting in our gas supply as we speak today. Once the power transmission problem is fixed, we can evacuate all the gas”.

He however admitted that gas availability might not be adequate for all the new power generating plants brought on stream would require, but noted that additional programmes of supply are coming on towards the end of the year and next year to catch up with that.

“Right now, for the average Nigerian on the street, if you are not seeing power, as of this afternoon, it is a gas problem, because there is gas as we speak. But there is more generating capacity than there is gas supply, but our overriding constraint is power transmission as we speak today. If we have enough generating capacity, there is no reason we cannot generate and transmit close to about 4.6 – 4.7 gigawatts right now”, the GED said.

He explained: “There is no power plant on the western axis that does not have gas pipeline currently. Olorunsogo’s pipeline was completed last year, about six months ago. So there is a pipeline to Olorunsogo, there is a pipeline to Ihovbor power plant, there is a pipeline to Geregu, Geregu has a brand new 136 inch kilometre pipeline. Like I said earlier, the new NIPP Geregu power plants are the ones that will have to meet their supply overtime.

“So Geregu PHCN was always supplying power; in fact, it was one of our most efficient power plants. We have made our most significant progress with pipeline infrastructure. So what we are working on right now, is expanding the back bone, which is the Escravos-Lagos pipeline system to make sure that all the feeders can be repaired”.

He said expectation was that by the end of that year, the Escravos-Lagos pipeline would be brought to 2mcf/d capacity to meet the long term power requirements.

PHCN’s Indebtedness
The failure of PHCN to settle its multi-billion naira debts to gas and power suppliers also contributed to the poor power station during the period under review.

The power utility company owes Agip billions of naira for its power plant at Okpai in Delta State which sells 470mw to PHCN. It also owes Shell for its power plant which generates 561mw at Afam in Rivers State.

The Nigerian Gas Company, NGC, a subsidiary of NNPC, is also being owed for gas supplied to the power stations.

The NIPP is being owed for power supplied from its stations in Sapele in Delta State and Olorunsogo in Ogun State, while the Ibom Power is being owed for the 90mw generated from its plant at Ikot Abasi in Akwa Ibom State.

Labour Crisis
The labour unions in the power sector have had a frosty relationship with the federal government since President Goodluck Jonathan renewed the implementation of the 2005 Electric Power Reform Act, which will see the private sector become the main driver of the sector.

Despite repeated assurances by the government that the reform would open enormous employment and business opportunities like in telecommunications following its liberalisation, trade unionists have insisted that it would lead to job losses in the power sector.

Due to stiff opposition of the unions against the planned privatisation of PHCN assets, certain milestones slated under the power reform could not be attained during the period under review.

In fact, at a point, the relationship between the government and the unions became so frosty that the government started looking in the direction of a section of electricity workers as the cause of the suspected sabotage in the sector.

Suspected Sabotage
Despite the huge investments made by the present administration to improve electricity supply in the country, the power situation worsened during the first half of 2013, to the extent that the federal government strongly suspected that it was the handiwork of saboteurs working against the ongoing power sector reform.

Nebo alluded to this fact late June, when he identified sabotage as one of the causes of the frequent system collapse witnessed during the period under review.

Speaking, while receiving a report of the panel set up to investigate the causes of frequent system collapse, Nebo also acknowledged that the country was facing very difficult times in the power sector, stressing that some of the problems were man-made.

Ridiculous Projections
It is disgusting that rather than finding lasting solution to the long running problems bedeviling the Nigerian Electricity sector, those charged with the responsibility of supervising the sector have chosen to be setting unrealistic targets.

The situation is getting messier as hardly any month passes without officials making conflicting projections of electricity targets. The worst culprits are the Minister of State for Power, Hajia Zainab Kuchi, and the PTFP Chair, Dagogo-Jack.

Addressing the Senate Committee on Power on May 23, the junior minister had projected that power generation would increase to 6,000MW in July (this month) and rise further to 10,000MW by December this year. Kuchi also stated that N347billion would be required to boost the transmission network to cope with the expected new generation capacity.

But exactly one month after the junior minister made her projections before the committee of the upper legislative chamber, power generation has in fact dropped to below 3,000mw. Briefing the Peoples Democratic Party, PDP, National Working Committee, NWC, on its scorecard last week, Kuchi, again announced that the 10,000MW target, which she mentioned a month earlier, would be attained by the end of December 2014 and not the 2013 she announced in May.

The minister, who was led by her boss, Nebo, added that with the increase in power generation, Nigerians would experience 17 to 18 hours of daily power supply in the country.

She said: “With all the other NIPPs coming up and to be commissioned by December 2013, we look forward to 10,000 megawatts come December 2014”.

She continued: “This is what we are working towards. If we succeed in making it more than that we will be very happy. But we are focused on actually delivering 10,000 MW by 2014. And this by our calculations and data we have on ground we will give at least between 17 and 18 hours of power supply to Nigerians. The 24 hours power supply will happen but we are working steadily towards that.”

Kuchi’s projection came less than two weeks after Vice President Namadi Sambo forecasted that power generation would rise to 20,000MW before the end of 2014.

Also, Dagogo-Jack had last November, two months after he assumed office as PTFP Chair, announced that electricity generation, which stood at 4,000MW, would rise to 10,253MW this year, to hit an all-time high of 16,000mw by 2015. He made the disclosure at the West African Power Industry Convention, WAPIC, which held in Lagos.

The power task force chairman had also disclosed that government had spent about $3.8 billion on the rehabilitation of some power plants, while “$175 million had been expended on gas infrastructure upgrade.

At another forum, a month after, Dagogo-Jack had announced that electricity generation had hit a new peak of 4,349.7MW and pledged that the authorities in the power sector were working hard to surpass it. He added that the authorities hoped to generate 6,873MW of electricity by the end of 2013.

“This is very exciting and cheering news. To be clear, we are not surprised as we are fully focused as a team to prove to Nigerians that this government is serious about power and in spite of all the challenges on the way, power will grow from level to level as we progress. I assure you that the best is yet to come”, Dagogo-Jack said authoritatively.

Similarly, Nebo recently announced to electricity-starved Nigerians that by the end of 2013, the country’s power generation would rise to between 7,000MW and 10,000MW.

The power minister also disclosed that Chinese investors were planning to build power plants in Nigeria to the tune of 20,000MW, but that the government was still studying the model.

Nebo also hinted that his ministry was collaborating with the NNPC to ensure a good plan to utilise the gas flaring that was causing problems to the environment for power generation.

Setting unrealistic targets has been the practice in the power sector in recent years. The government had, in 2007 and 2009, failed to deliver on its target to generate 10,000mw, 6,000mw and 10,000 respectively. Also, timelines for completion of various power projects, some of which had been under construction for almost a decade, had never been met.

Chairman of the Nigeria Electricity Regulatory Commission, NERC, Dr. Sam Amadi, had also corroborated the ‘targeted 7,000MW’ by December this year. He also added that the government was determined to ensure that by 2014, the country would be able to provide 14,000MW of electricity.

Sanctions Recommended
In April, President of Nigerian Association for Energy Economics, NAEE, Prof. Adeola Adenikinju, had suggested that sanctions be imposed on government officials who fail to meet timelines for electricity projects.

The erudite professor expressed regret that Nigeria has become a global laughing stock as a country of over 160 million people still generates only about 4,000mw of electricity. For him, the only way to get these officials in the power sector committed to their duties was to penalise those who set timelines for projects and do not deliver.

He said: “If you have a minister that said I will deliver this, give him the backing and if he does not deliver, he has to be sanctioned. How many people have been sanctioned? People who set up timelines, give them what they need to work with, and if they don’t perform, then they have to be sanctioned”.

According to him, “because nobody has sanctioned them, the timelines have continued to be bungled. We have become a laughing stock; we are generating 4000mw in a country of over 160 million people”.

Also, experts in the sector who commented on the development at the weekend noted that the setting unrealistic targets have become the practice in Nigeria, particularly in the energy sector. They noted that government failed to deliver on its target to generate 10,000mw, 6,000mw and 10,000 in 2007 and 2009 respectively and also did not make timelines for completion of various power projects, some of which had been under construction for almost a decade, and had never been met.

They expressed regret that by making these false projections, these government officials are making Nigeria a laughing stock before the international community, and urged that the authorities who hired them should call them to order.

Hike in Tariffs
But despite the poor supply of electricity in the first half of 2013, the federal government secretly increased tariffs in March 2013, less than one year after the June 1, 2012 hike in tariffs.

The government had also in 2011 increased electricity tariff silently from N4.20k to N7.00, but there was relatively significant improvement in power generation and distribution then.

On June 1, 2012, Nigerians commenced payment of a new tariff regime under the Multi-Year Tariff Order (MYTO) following a fresh increment by the Nigerian Electricity Regulatory Commission despite public outcry.

Apparently due to the public outcry that greeted the June 1, 2012 hike in tariffs, the government decided to make the March 2013 increase a secret by not making any public pronouncement or carrying out public enlightenment campaign as was the case in 2012.

Under the latest increase, electricity consumers, especially those using pre-paid meters were subjected to 50 per cent increase in fixed charges/maintenance charges with effect from March, 2013. The Residential 1 (R1) customers that were paying N500 as maintenance charges were asked to be paying N750 under the new tariff regime.

– This Day

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