A Review of the Nigerian Energy Industry

Electricity Council proposes N160bn annual funding benchmark for TCN

Prof Chinedu Nebo
Prof Chinedu Nebo, Minister of Power

18 August 2014, Abuja –  The recently constituted National Council on Power (NCOP) has recommended that a minimum of N160 billion be made available to the Transmission Company of Nigeria (TCN) to take care of its annual expenditure on operations.

NCOP however stated that about 75 per cent of such fund, depending on its source should be expended on meeting the capital expenditure (Capex) of TCN in ramping up its electricity wheeling capacity in Nigeria’s Electricity Supply Industry (NESI).

The recommendations came as THISDAY investigation at the weekend revealed that a resolution was not in sight on the lingering dispute between Geometric Power Limited and Interstate Electrics Limited over the exclusive right to distribute power to the rind-fenced residential and commercial consumers at Aba, Abia State, as the Nigerian Electricity Regulatory Commission (NERC) following the cancellation of the proposed public hearing, aimed at finding lasting solutions to the dispute.

Rising from its inaugural meetings in Abuja, NCOP  made the recommendation among others, which it hopes will be adopted by the federal government in advancing its reform of Nigeria’s electricity industry.

In copy of the recommendations obtained by THISDAY weekend, NACOP equally asked the TCN to liaise with state governments in the country to sort out the extant issues of Right of Way (RoW) in the construction of transmission projects across the country.

While also advocating for the independence of the Market and System Operations Departments of the TCN, NCOP equally requested that employees’ salaries, benefits and critical business infrastructure needs of the TCN should be funded from appropriations on a pro-rata basis and based on percentage shortage earnings from previous year’s market revenue earnings.

“Until such a time that a cost reflective tariff is established and 90 per cent or greater of annual earned market is received, it should be ensured that the sum total of annual funding provided to TCN from the market, loan, and appropriations sources is not less than N160 billion annually, with 75 per cent earmarked for CAPEX,” the recommendations stated.

It further said: “Council further recommends that TCN liaises with states ministries of power and departments of power to effectively establish Rights of way corridors. Council also recommends that TCN signs MoU with states that recognise provision of land by states as their contribution towards the success of the transmission projects.”

On the generation aspect of NESI, NCOP advocated for stakeholders to set up short term targets to wheel about 9,000 megawatts (MW) and evacuate 6,500MW in 2014. It also wants the set up of a medium term target for 12,000MW and 10,000MW respectively by 2016

Also on efficiency, the NCOP wants TCN to monitor at least 90 per cent of the installed grid system; perform transmission network fault location determination within 30 minutes of occurrence and comply with regulations on financial reporting.

Meanwhile, on the dispute between Geometric Power Limited and Interstate Electrics Limited, NERC, it was learnt, seeks to consult with the office of the Attorney-General of the Federation (AGF) and Minister of Justice for legal advice and further actions on the matter.

Geometric, owned by a former Minister of Power, Professor Bart Nnaji and Interstate, promoted by Mr. Emeka Offor are on a collision course over the lease agreement signed by the federal government and Nnaji’s firm on April 28, 2005, which gave the power firm the exclusive right to distribute electricity to Aba area.

THISDAY gathered that President Goodluck Jonathan had personally mandated NERC to find amicable solutions to the matter, a directive, which prompted the regulatory agency to schedule a public hearing to enable all the parties in the dispute present their positions.

It was learnt that the president’s directive followed a position presented by NERC that the disagreement between Geometric and Interstate, the new owners of Enugu Electricity Distribution Company over the 141megawatt-capacity Aba Power Project was a regulatory issue that falls within the mandate of the regulatory body.

NERC had also maintained that the failure of the federal government to abide by the lease agreement during the privatisation of Enugu Disco resulted from the apparent failure of Geometric to remind all the stakeholders involved in the privatisation of the subsisting agreement.

Sources at both Geometric and the Bureau of Public Enterprises (BPE), who spoke to THISDAY, have however, faulted NERC’s position, saying that all the information about the lease agreement was made available for the bidders at the Data Room of Enugu Disco during the privatisation exercise.

The Chairman of NERC, Dr. Sam Amadi, confirmed to THISDAY at the weekend that the public hearing had been postponed indefinitely because the lawyers to the parties in the dispute had challenged the jurisdiction of NERC.

Amadi also stated that the Minister of Power, Professor Chinedu Nebo, also asked the regulatory agency not to proceed with the public hearing.

“The lawyers challenged our jurisdiction since the matter is in court. And the Minister of Power also asked us not to go ahead and we decided to postpone until after consultation with AGF,” Amadi said.

Amadi further said NERC took the decision not to go ahead with the public hearing so as not to be exposed to any violation of the law.

The lease agreement consummated in 2005 provides that in the event of privatisation of the power sector, Geometric shall be given right of first refusal for the acquisition of Aba as a separate power entity from Enugu Disco.

Geometric was however accused of not exercising its right during the privatisation by failing to present the agreement.

But a source close to Geometric had told THISDAY that the power firm wrote six letters to the BPE between 2006 and 2013, and a caveat emptor published in some national dailies, calling the attention of the bidders and other appropriate authorities to the agreement.

A BPE source also said the lease agreement was made available at the Data Room for inspection by the bidders while some of the letters were given to each of the prospective bidders by the BPE itself under the leadership of Bolanle Onagoruwa in October 2010 when Expressions of Interest (EoI) were called.

Following the success he recorded in 2001 in the implementation of a 22megawatt-capacity emergency power plant servicing some areas of the Federal Capital Territory (FCT), Nnaji commenced the Aba Integrated Power Project, consisting of distribution and generation infrastructures.

The Geometric Power Limited, operators of the Aba power project signed a Memorandum of Understanding (MoU) with the federal government to build the 141megawatt-capacity power plant in Aba in 2004.

Geometric in 2005 also signed the Aba concession agreement, with the defunct National Electric Power Authority (NEPA), which gives Geometric the right to lease NEPA’s distribution facilities in the area to distribute electricity in the ring-fenced Ogbor Hill, Osisoma, Factory Road, Port Harcourt Road and Owerrinta, all in Aba.

Before the emergence of Interstate as the new owners of Enugu Disco, Geometric had completed the 141mw capacity power plant; built four new substations, new distribution lines, and also rehabilitated another three old substations built by the defunct PHCN.


– This Day

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