Resolving Electricity Sector Logjam
The inability of the Transmission Company of Nigeria, the generation companies as well as the distribution companies to deliver stable power supply and provide satisfactory customer services to electricity consumers in the country is as a result of inappropriate pricing of electricity, writes Obinna Chima
The defunct PHCN was then broken into 11 distribution companies and nine generation companies as well as one transmission company. Owing to these challenges in the sector, especially in the area of illiquidity, the federal government since the handover has been forced to intervene to keep the successor companies afloat and prevent a total collapse of the sector.
But states, such as Adamawa, Bauchi, Benue, Borno, Ebonyi, Jigawa, Taraba, Yobe, and Zamfara, ranked low, with about 30 per cent electrification rate. On the other hand, on-grid generation capacity for hydro was said to be 1, 936MW, Thermal – 11,154MW; Average Actual Transmission Wheeled – 4,117.5; Average Unutilised Transmission Capacity – 2,883; Average Total Operational Capacity for Hydro – 1258.18, and Thermal – 4,201.97.
In terms of energy access, he said the government had taken steps to scale up its energy access models, develop additional energy access models as well as promotion of investment into off-grid projects.In order to address the challenges in the sector, the Managing Director and Chief Executive Officer of the Transmission Company of Nigeria , Mr. Usman Mohammed, has called on Nigerians to be prepared for the payment of cost-reflective tariffs on electricity.
“We have to be prepared to remove government from the middle. This issue of government guarantees has not worked and will not work. Look at a place like Burkina Faso that is sitting on one of the poorest part of West Africa is having a collection efficiency of 98 per cent. “Nigeria has done the power sector reform and handed over the distribution sector to the private sector six years ago. Within these years, the federal government has sunk N1.5 trillion in the power sector because contracts were not effective and the revenue flow is not there. So the government was guaranteeing the generation companies to continue to do business.
Those assertions were contained in a recent report, titled, “Nigerian Electricity Supply Industry Reform: Processes, Challenges and the Way Forward,” which the BPE presented to the National Economic Council Ad-hoc Committee on the Power Sector, a copy of which was obtained recently. It listed other major challenges facing the sector to include withdrawal of the transitional subsidy support and dumping of the Central Bank of Nigeria -backed Nigeria Electricity Market Stabilisation Facility on the balance sheet of the Discos.
“The first step in resolving the power logjam is the need to create a robust institutional framework that is ad-hoc in nature and made up of critical actors. The committee is to be chaired by the vice president and made up of heads of relevant ministries and agencies.” The bureau said, “All hands must be on deck working in the same direction to implement the power sector recovery plan approved by the FEC. Nigeria can solve the power deficit challenges under the current leadership. For that to happen, political leadership at the highest level must make the required bold and ambitious moves.
Omontuemhen had told THISDAY that: “The challenges of the power sector in Nigeria are many, but one of the challenges is financing. Technology is a challenge, recovery of debts is a challenge, infrastructure is a challenge, but sometimes you do need money to solve some of these challenges that we have.
He said: “When you are talking about efficiency, efficiency is also linked to pricing. You cannot be efficient in any business, even in bakery if there is no appropriate pricing.”He said: “I think we need to be more sensitive to the need of our customers. I think we are not there yet, but the Discos that I represent and everybody, all stakeholders in the value chain are not efficient enough. “Efficiency is very important as I have spoken about the link between efficiency and pricing.
He added that it would take until 2021 before the differences in the reviewed tariff could be fully passed to consumers. According to the association, the NERC has been empowered by EPSRA to carry out minor reviews of power tariffs under the Multi-Year Tariff Order 2015 framework twice a year.
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