Govt retraces step with TCN structural reversals

13 December 2015, Lagos – Industry experts have described the decision of the federal government last week to reverse the structural splitting of the Transmission Company of Nigeria (TCN) which was done in the last days of former President Goodluck Jonathan’s administration, as well as the subsequent recruitment of personnel into the successor departments as a good act of ‘face-saving’.

*High voltage direct current, HVDC, transmission line.

*High voltage direct current, HVDC, transmission line.

They also said in Abuja that by retracing its steps on the structural changes at the TCN which by the way was not recognised by the industry regulator, the Nigerian Electricity Regulatory Commission (NERC), the government has in effect indicated its willingness to yield to standard regulatory benchmarks which the NERC is charged to protect.

In addition, these experts believe that the reversal will re-establish the plans of the government for the TCN and the country’s weak transmission network which Canadian firm, Manitoba Hydro International (MHI) was contracted in a lucrative multi year deal to help achieve but has yet to really make serious inroads into because of reported internal structural instabilities.

Before the controversial split of TCN into two-Transmission Service Provider (TSP) and Independent Service Operation (ISO), MHI had gone through all sorts of unhealthy challenges right from 2012 when it was first appointed through a competitive bid to reposition TCN and its activities.

It initially waited for too long for the government to issue a Schedule of Delegated Authority (SODA) to it as it took the immediate intervention of former minister of power, Prof. Chinedu Nebo to get the SODA approved and given to it within few weeks after he was appointed minister. His successor that had the charge to undertake this responsibility after him had reportedly got involved in the quagmire at the TCN.

Additional challenges that had to do with frequent board disunity at the TCN; scramble for positions and influence; as well as reported refusal of Nigerian counterparts to work with MHI as specified in their terms of engagement, ensured that the transmission company remained embattled to the detriment of the power sector. The Market Operations department had reportedly remained the battle ground due to its status as the settlement and clearing house of the sector.

Following the split, the then deputy managing director at TCN, Abubakar Atiku was appointed Managing Director of the TSP while Mrs. Ngozi Osuhor, a former Director Market Operator department was appointed to oversee the ISO. Both were by the terms of MHI engagement expected to act as deputies to MHI officials, under-studying them to take over after their management contract expires.

However, the former government even though it renewed the contract of MHI for another one year, approved the split which NERC disapproved of in a letter to the ministry. NERC had reportedly failed to recognise the new structures on the basis that they did not follow due processes and also failed to pass its fit-and-proper test, yet it stayed until the new government  decided to reverse it.

The government had in its decision directed both Atiku and Osuhor to revert to their former posts. Reports indicate that a letter from the office of the Vice President to relevant parties contained the reversal order.

About 30 other persons were promoted to posts of executive directors and directors within the restructuring process. These executive directors and directors were employed by the ministry during the split, they have now been sacked while the old staffs who were elevated were returned to their old positions.

The reversal it is learnt, haven’t gone down well with some of the affected officials including Osuhor who has reportedly resigned from the company instead of reverting to her former position.

She allegedly sent in her resignation notice last week, intimating the government of her intention to quit the service on December 23. She had reportedly stated that she would not be able to function under the original terms which the government had asked that they revert to, which is chiefly their deputising of MHI personnel in various positions.

Notwithstanding the reactions of the affected persons, a highly placed industry source told THISDAY that the decisions would restore sanity to the operations of the TCN which other operators have consistently described as the weakest link in the entire power value chain.

The source explained that when in May this year, the government issued a circular splitting the TCN, NERC had raised the alarm that the move was illegal and disruptive of the power sector operations. The regulator subsequently directed that the action be reversed and refused to recognise the new officials.

He similarly hinted that the government may have acted on NERC’s position in the reversal, adding that, “for NERC, it really has no direct dog in the fight other than insisting that the right things must be done all the time.”

“I think for NERC, it has always been that the ministry erred in that restructuring. The Commission had written to them to say that this did not pas through its fit and proper test and that it has no recognition for the ISO.

“However, the government has by this reversal, stated where it is headed, what it wants to do with TCN and I think it is only right that the TCN is given some stability for the job that the MHI team is contracted to do to be realised,” the source added.

Already, the Managing Director of TCN Mark Karst, on Tuesday told the Senate that the company would in its target to wheel up to 20,000 megawatts (MW) of electricity by the year 2020 need $1 billion annually for infrastructure upgrade and deployment.

Karst who noted that the money required is a huge sum, said: “We have a long term expansion plan that is detailed to build 20,000MW evacuation capacity by 2020, and the funding would be by external institutions.”

But while the TCN is having difficulty attracting funding, irrespective of its consideration of Public Private Partnership (PPP) alternatives, Karst explained that: “It will need $1billion annually over that period of time. It is a substantial amount of money. But this is a generation on the move, so the only choice we have would be to see how we raise the money.”

He equally disclosed that the tariff application of TCN with NERC has been pending since the middle of 2014, adding that: “Transitional electricity market declared in February 2015 has not been effective,” while the power sector remains a difficult field to navigate for all other players involved.

Experts however expect that the latest developments at the TCN would restore sanity to the operations of MHI which had also recently froze the financial accounts of the ISO on conditions of illegality, prompting the ISO to open another unilateral account which the NERC also frowned against and intervened.
These expert also posit that with the new reversals and subsequent complete handover of the operations at TCN, the MHI team can now be fairly assessed and made to account for their management of the network in line with terms of their contract, and without excuses as it perhaps were when they operated with instability.


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