• Olorunsogo, Alaoji, Geregu, Sapele, Omotosho, Ugheli factories affected
• Nigeria to reduce metering gap by 50% and cut tariffs, Presidency says
• Examination of privatization, liquidity crisis, canvassing of experts
As President Muhammadu Buhari and stakeholders in the country’s electricity sector deliberate what will happen to electricity with the end of the current administration, attacks on gas pipelines are becoming a new normal leading to the shutdown of power plants.
Although the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Limited, Mele Kyari, and other stakeholders find it difficult to link the intent of the pipeline vandals as he has no pecuniary benefit immediate for vandals, prevailing realities led to the shutdown of more than seven power plants in less than two months.
A breach in the Trans-Forcardos Pipeline (TFP) last month impacted key power plants including Olorunsogo, Omotosho, Sapele, Ihovbor, Geregu and Ughelli East Plant, just as vandals last week struck the TotalEnergies pipeline, crippling the 504 megawatt Alaoji power station. .
Last month, Nigeria Gas Company (NGC) issued a gas reduction notice resulting from the abyssal pressure levels in the system which must be managed to avoid the collapse of the gas network.
It comes as transmission and distribution bottlenecks have pushed average locked-in power generation to an average of 2,248.50 megawatts in 2021 amid erratic supply to homes and industries.
With the electricity sector operating mainly with gas-fired power plants, the country may have more worries to contend with on top of the existing challenges that have kept electricity at an average of 4,000 megawatts over the past few years.
TotalEnergies EP Nigeria Limited earlier this week declared force majeure resulting from the vandalism of its NOPL line at KP41. Niger Delta Power Holding Company Limited (NDPHC) head of communication and public relations, Emmanuel Ojor, had said that the line block valve at KP38 of the pipeline had been closed to isolate the point of sabotage and depressurize the line. which affected the gas supply of Alaoji (Power Plant).
Vandalism remains a huge burden on the country, particularly through loss of crude oil, economic loss and environmental degradation, and now the country’s energy sector.
Recall that in the first 11 months of 2021, vandalism led Nigeria to lose nearly 200 million barrels of crude oil, or $3.5 billion and around 10% of the country’s foreign exchange reserves.
The concerns of most stakeholders were that with generation capacity under threat, a monthly average of 2,500 megawatts of generated electricity cannot reach end users, as bottlenecks in the transmission and distribution infrastructure remain weak to supply homes and industries.
The Executive Secretary of the Association of Power Generation Companies, Dr. Joy Ogaji, noted that power generation would be at risk across the country if the situation continued.
According to her, about 80% of the electricity production in the country comes from gas-fired power plants. “The current impact on production is not yet very significant. It didn’t affect the production capacity much. If vandalism continues, it becomes a hazard as 80% comes from gas. We have to optimize,” Ogaji said.
Despite the challenges, President Buhari’s Special Adviser for Infrastructure, Ahmad Zakari, who said an investment of $41 billion was needed to boost electricity supply in the country, noted that the sector is expected to experience a boom. monumental growth in 2022.
Buhari’s aide noted that the federal government’s nationwide mass metering would move to phase one where four million meters would be provided to reduce the country’s metering gap by 50% by 2023.
As unions clash with the government over rising utility bills and petroleum product prices, Zakari told the Guardian that a reduction in tariffs is possible within the year.
“On the infrastructure side, we expect to make significant progress on interventions funded by the Central Bank of Nigeria at the transmission and distribution levels. These are expected to unlock additional last mile delivery capacity to Nigerians.
“Other government-backed interventions, including the Transmission System Rehabilitation and Expansion Plan (with the World Bank and the African Development Bank), the Presidential Electricity Initiative (Siemens) are also expected to significant progress over the next few months, thereby boosting the supply of electricity to Nigerians.
“With the increase in electricity supply, we are confident that we can reduce end-user tariffs in line with the government’s commitments to unions,” he noted.
Despite the government’s pledge, some stakeholders are pessimistic about the power sector this year except that drastic action is being taken by the government to address the fundamental issues plaguing the sector.
Former Nigerian Electricity Regulatory Commission (NERC) Chairman Sam Amadi is one such expert, insisting that the quality of leadership and funding in the sector will not bring about the changes. required.
“I don’t have much expectation of improvement for the power sector in 2022. Based on the quality of leadership since 2015, it’s just sentimental to think that we will see significant improvement in 2022.
“Based on the quality of leadership, the prospects for funding and the availability of good policies for system managers, there is little hope for significant improvement in 2022. It’s hard to say but the truth “, Amadi said.
Energy professor at the University of Lagos, Yemi Oke said there must be conscious optimism about the power sector in 2022, noting that although the president had acknowledged earlier in the month the failing nature of the sector, only a drastic political will could reverse the trend. sector.
Oke demanded a radical change in the sector that would lead to the reacquisition of underperforming entities in the power sector, stressing the need to reinject capital and human capacity into the sector.
He expressed concern about the burden the electricity sector is adding to the financial viability of commercial banks, noting that some banks have collapsed due to the financial crisis in the electricity sector.
“I want to see radical initiatives and policy reform in the electricity sector. We have to review the privatization arrangement this year. We need to change the laws.
“The president had admitted that power entities were being sold out of political patronage. We should undo what has been done. We may not need to revoke but to review,” Oke said.
Some investors had noted that the worsening exchange rate crisis in the country would significantly hamper the sector, as Mainstream Energy Solution Limited Managing Director Lamu Audu previously told the Guardian that the financial crisis in the countries, especially the stock market, remained a major obstacle to growth.
Like Audu, whose company had signed an agreement with the government to recover power generation capacity at Jebba and Kainji dams, with payments and Power Purchase Agreement (PPA) calculations being made in naira while reimbursement to the government is in dollars meant more vulnerability for the sector. .
For the elusive state of the sector to change, especially in the areas of power generation, the evaluation of the privatization exercise has remained sacrosanct as well as synergy through the market.
In addition, solutions focused on optimizing the use of installed and available generation capacity, a renewed focus on closing the gap between installed capacity and available capacity, capacity benchmarking as well as performance monitoring and tariff design, development of multi-year models/frameworks, focusing on tariff security, market stability, contract efficiency could significantly improve the power supply.
Some stakeholders have also requested monthly indexation to adequately reflect cost movements, using simple and transparent formulas; key performance indicators (KPIs) and reports should be widely published. Continuous and fair review should also be adopted.
Former Managing Director of Nigerian Bulk Electricity Trading Company Limited, Rumundaka Wonodi, said that although the sector was able to perform better in terms of revenue, development must translate into improved supply, which, according to him, goes to the worst.
“What we want to see is the Presidential Power Initiative kick off. We want to see investment in expanding distribution and transmission infrastructure. We need to improve power before we talk about what users end users have to pay. These are things the government needs to do instead of supporting consumption,” he noted.
With the term of the NERC commissioners coming to an end, Wonodi noted there was a need for performance, noting that some key commissioners who have played may be asked to stay.