A Review of the Nigerian Energy Industry

Discos resort to bilateral power supply to augment on-grid shortfall

14 April 2015, Lagos – At least four out of the 11 electricity distribution companies (Discos) across the country have indicated their willingness to sign on to a bilateral power supply framework and consequently, would be purchasing power from embedded generation sources to augment shortfalls from on-grid supplies.

Power distribution transformer.
Power distribution transformer.

The distribution companies, Eko, Ikeja, Ibadan and Jos have initiated concrete steps to procure additional power from embedded sources to cover up for the shortfall in the amount of electricity supplied to them from the national grid.

Owing to significant drop in electricity generation, most of the distribution companies are said to be currently getting only about one third of their electricity needs from the national grid.  THISDAY however learnt from Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi that the distribution companies have opted to explore such off-grid sources.

Amadi told journalists shortly after NERC’s meeting with heads of operators in the country’s electricity sector in Abuja that such embedded sources will remain as stop-gap measures pending when there is considerable growth in the country’s on-grid generation supply.

He also stated that such alternative plan will perhaps serve as stabilising sources in the future when Nigeria’s power generation profile grows to planned huge levels.

“Some of them have supplies they want to procure quickly. The one from Egbin is available to be sold to two Discos,” Amadi said.

Also speaking on the development, the Managing Director of Ikeja Electricity Distribution Company (IKEDC), Mr. Abiodun Ajifowobaje said that the Discos that have signified interests on embedded generation were taking advantage of the shortage in on-grid supply to develop alternative supply sources that will always serve as fall back measures at situations of unexpected generation drop in the future.

He noted that the initiative would also meet and satisfy the demands of consumers, which is heavily above available supply.

“Most of us want to see opportunities in what is happening with low generation and that is why we are embarking on embedded generation and we are all working to get power from other sources apart from the nation grid.

Pending the time we get to that, the little power we are getting is been distributed equitably to our customers,” Ajifowobaje said.

On the likely form of tenure that the bilateral supply agreement will take considering the expected Return on Investment (RoI), Ajifowobaje said: “I don’t expect any embedded generator to sign any agreement that is less than five years with a Disco because that is just about the time you can recover your investment but we also pray that we get more power from the national grid.”

“One area that is causing a lot problem for the embedded generation is the cost of gas, they are asking if they will pay for gas at the current government rate or at a market rate and that is where we expect an intervention from the regulator to try as much as possible to see that price of gas for embedded generators is actually cheap,” he added on the fuel supply challenges that may affect the generators.”

– This Day

Join the Conversation