FIVE YEARS AFTER PRIVATISATION: NIGERIANS AT THE MERCY OF DARKNESS, ESTIMATED BILLINGS
THOUGH the narrative may have been twisted and coined to a more technical euphemism to ‘increase in power generation (Megawatts, MW), power station rehabilitation’, among others, to the average man on the streets, such does not amount to anything relevant.
This may quite be worrisome as Nigerians are constantly turning into ‘pseudo mathematician’ at the end of the months when bills are presented and power supply is still nothing to write home about. “AOP is an important mainstay on Africa’s energy calendar” An overview of what this has transcended to and the impact it has on the socio-economic activities on Nigerians was captured by Saturday Vanguard.
Today, the Nigerian power sector, though a viable one, is replete with inefficiencies and challenges, with attendant negative impacts on economic development in urban and rural areas within the country although the minister, Babatunde Raji Fashola pulls all strings to ensure improvement in the sector. With more than half of the Nigerian population estimated to be lacking access to electricity, the national grid’s daily generating capacity of four Gigawatts (GW) clearly falls short of the mark in meeting the country’s energy needs.
Also, the current pricing of the electricity tariff is not reflective of the generation, transmission and distribution costs. The latest report by the Emerging Africa Capital Limited, EAC Group, cited that to most Nigerian entrepreneurs, inconsistent power supply is the most significant obstacle to doing business with average monthly power outage of the average business owner cited as 239 hours.
To this end, the Power Sector Recovery Program, PSRP, estimated an annual economic loss of over $25 billion due to lack of constant supply of power. These challenges compound the problems of access to food, potable water, lighting, healthcare, education, information and other basic amenities. 2018 generation statistics According to the Federal Ministry of Power, Works and Housing, the nation’s installed power generation capacity as at 2018 is estimated at 13,000MW, while available generation is said to be 7,500MW.
But despite these figures, the country’s still recorded a downturn in generation during the year, amounting to an average of 3,867.13 MW and totally 46.405.56MW during the year 2018. War against energy crazy bills A document from the Association of Power Generation Companies, APGC, obtained by Saturday Vanguard, revealed that the country generated a total of 46.405.56MW while over 42,160.87MW was lost as stranded power in the year 2018.
According to the report, in January 2018, power generation averaged 3,733.01MW and (3,956.03MW was lost); 4,001.33MW (lost 3,583.13MW) in February; 4,097.62MW (lost 3,208.77) in March; 4,051.99MW (lost 3,432.89MW) in April; 3,848.04MW (lost 4,072.05MW) in May. Also, in June about 3,653.54MW was generated (lost 3,601.48MW); 3,681.17 was generated (lost 3,601.48MW) in July; 3,701.24MW generated (lost 4,265.63) in August; 3,570.67MW generated, (lost 4,165.86MW) in September; 3,810.74MW generated (lost 3,880.63MW) in October.
However, November generation saw an improved peak to 4,093.76MW (lost 3,144.37) and December which recorded a generation of 4,162.47MW and lost 1,045.10MW. Meanwhile, these losses and challenges in the power sector are often attributed to gas constraint and transmission challenges (power unavailability).
Our findings The power sector market is faced with financial, operational, construction, market, macroeconomic, contract and regulatory risks. Given that, decisions about investments in power generating capacity depend on expected returns and costs, the state of the NESI in addition to the fact that all plants are performing below optimum does not encourage the discourse of capacity utilization at all.
Similarly, Saturday Vanguard gathered that the determinant of whether power generation should increase or not is the demand side of it. It will be noted that electricity supply is closely tied to demand and facilitated through a pool where the output from all generators are aggregated and scheduled to meet demand. This is because the storage mechanism for electricity generated is in view, hence supply must vary dynamically with changing demand. Statistics from the Nigerian system operator on load demand over October and December last year average over 22,000MW.
Powergas, ETEFA gas flare monetisation projects to save Nigeria over $2.5 bn yearly However, this means that there is a suppressed demand of over 17,000MW compared to what is being generated today, which could potentially increase when there is stability of supply and high ticket consumers who are self-generating decide to join up. How do we plug this gap?
Currently, Nigeria has installed capacity that is over 13,000MW, an available generation that is over 7,500MW and the average generation that is about 4,000MW. Meanwhile, this shows low/minimal optimization of generation capacity due to constraints on the transmission and distribution networks. Without these constraints, additional 3,000MW could be made available to customers, and also serve as an incentive for Generation Companies (GENCOs) to recover the unavailable capacity of over 5,000MW. Needed investment To optimize the current generation capacity, planning becomes pivotal, taking into cognizance the gestation period for power development.
There is a need for massive investment in transmission and distribution networks in the country. Power Generation Companies (GENCOs) have the capacity to increase their output in the near term. However, an increase in power generation without a resultant increase in Transmission Company of Nigeria’s (TCN) wheeling capacity and improved distribution infrastructure will continue to lead to stranded power generation.