A Review of the Nigerian Energy Industry

Electricity problems beyond our control – DISCOs

power-transmitting-station22 April 2014, Lagos – Resolution of the country’s epileptic power situation appears to be far-fetched at the moment, as the power distribution companies have disclosed that most of the factors responsible for the problems bedeviling the Nigerian power sector are beyond their control.

Vanguard investigation further revealed that despite the epileptic power situation, small scale businesses are still compelled to pay outrageous fixed charge of between N50,000 and N100,000.

Meanwhile, Dr. Sam Amadi, Chairman, Nigeria Electricity Regulatory Commission, NERC, has said electricity generation nationwide would hit 12,000 mega watts before the end of 2016.

He disclosed this, yesterday, in Minna at a town hall meeting.

Members of the Organised Private Sector, OPS, who spoke to Vanguard, called for a review of the fixed charge, especially as the power situation had deteriorated in recent months, worse than the experience under the defunct Power Holding Company of Nigeria, PHCN.

They noted that the worsening power situation is not a good development for the Nigerian business environment, especially for business concerns that have to deal with high cost of production induced by alternative source of energy.

The business owners were of the view that the power situation continues to pose severe challenges to their business operations, saying that the high energy costs, especially high expenditure on diesel, is taking its toll on the bottom line of investors in the economy.

Chamber of Commerce react

Piqued by the deteriorating power situation in Nigeria, Mr. Muda Yusuf, Director General, Lagos Chamber of Commerce and Industry, LCCI, called on the National Electricity Regulatory Commission, NERC, to urgently address growing concerns over the outrageous bills to consumers, particularly the Small and Medium Scale Enterprises, SMEs, noting that most time, these firms never received the power supply they are compelled to pay for.

According to him, the problems stem from the fact that there was apparently an underestimation of the challenges of reforming the power sector — labour issues, gas availability, transmission capacity, generation capacity, quality of assets, security of assets, manpower among others.

– Michael Eboh, Vanguard

He said: “To make progress in the power sector reform, labour issues should be comprehensively addressed; risk mitigation provisions in the reform process must be reinforced and reaffirmed to inspire investors’ confidence.

“Gas sector reform must be put firmly on course to ensure the sustainability of the gas to power programme; security in the Niger Delta that would ensure regular access to gas supply.

“Government should realise that the power sector is not just a business issue, but also a development issue. It has implications for job creation, welfare of citizens, growth of small business, poverty alleviation, agricultural development, sectoral linkages among others.

“Government still needs to provide support to investors in the sector because of its strategic importance for development. Government should support the investors to further mitigate the risk of the various investments in the sector.”

‘The factors ‘re beyond our control’

Mr. Godwin Idemudia, Assistant General Manager, Public Affairs, Eko Distribution Company Limited, confirmed to Vanguard that the state of power supply in recent time has fallen short of the expectations of Nigerians.

He said: “The fact remains that most of the factors responsible for this are just beyond the control of our company and other Discos.”

Ademola Adegoke, another spokesperson for Eko Disco, who was responding on behalf of Idemudia, however, expressed confidence in the company’s capacity to bring about an increase in power supply in the near future.

According to him, since the takeover by new investors, a lot has been done to beef up both the human and material resources of the company for the actualisation of the company’s corporate goal of provision of improved, safe, affordable and stable electricity energy to customers.

He said: “We have in the past months been engaging our customers in constant communication to explain the challenges we met on ground and the steps being taken both in the long and short terms to tackle them.

“We are already exploring alternative sources of energy that will substantially supplement what we are presently receiving from the grid, which is everything but adequate.”

Idemudia further explained that Eko Disco is evolving a robust metering plan that will make acquisition of meters not only easy and hitch-free for customers, but will equally eliminate estimated billing and its attendant customers’ complaints.

He said: “We are upgrading our customer care centres to enhance quick response and treatment of customers’ complaints. As we do these, we plead for understanding and patience from our customers.

“We believe that soon the present challenges will be surmounted and the seeming pervasive disaffection will give way for brighter hope and optimism that the new investors have good intentions and are capable of ushering in a new era of quality and reliable electricity power supply.”

Decrease in gas supply

Mr. Patrick Okigbo, Principal Partner, Nextier Capital Limited, blamed the epileptic power situation on the decrease in gas supply to generating companies and the continued delay in migrating to a fully-contracted gas market regime to give incentive to upstream investments and maintenance of existing assets.

He further identified continued vandalisation of gas supply infrastructure and slippage in the project completion dates for a number of gas projects for the prolonged erratic power situation.

He, however, exonerated the new owners of the assets of the defunct PHCN from blame, declaring that the power sector is an ecosystem where interplay of factors result in the eventual outcome.

He said challenges in the power sector can be grouped broadly into technical and engineering issues, contracting and commercial issues, and policy and regulatory issues.

Blame on PIB’s non-passage

On the issue of gas supply, he said: “The non-passage of the Petroleum Industry Bill, PIB, has negatively impacted investments in gas delivery infrastructure.

“There is not yet much clarity on the fiscal provisions that will be contained in the approved PIB. As a result, international oil companies are withholding their investments in the sector.

“It is important to reiterate that what we see at this stage are teething problems with an industry that is going through a major transformation.

“What is required at this stage is the same level of focus and commitment that saw the government navigates the various obstacles to achieve the privatisation of the industry.

“There is a risk of declaring premature success just because the companies have been sold. The sale is one of the early steps in the privatisation process.”

Amadi, the NERC boss, said the sector had suffered decades of neglect and appealed for understanding.

He said that the commi-ssion had directed consumers not to pay any service charge to the distribution companies any time power was not supplied for two weeks.


– Vanguard

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