Will the current talk about in creasing gas supply to the electricity plants translate to improved power supply? The answer is a definite no, and is the certainty surrounding all the discussion on power supply. The real point is that it does not matter.
Senior officials have been hyping expectations with the talk of finding ways around the gas supply challenges for months, as it has become obvious that working out and agreeing fundamental strategic approach required to at least begin to solve the electricity sector numerous glitches could not be accomplished while wrangling over the headline issues in the talk, such as the question of an appropriate legal framework for the sector. But the fact that the issue of improved gas supply will not translate to improved electricity situation is a relatively minor problem, which does not detract from gas supply situation.

Clearly, government officials, particularly those responsible for the electricity sector have not been able to identify the quick wins on the four substantive inter-related aspect of power which are[b] generation, transmission, distribution and of course, gas availability to the power plants. These aspects must be decided if the country is to have sustainable level of productivity.[/b]

Each of these aspects has had long standing challenges that has often been openly acknowledged by government officials. For over a decade the sector went without funding. All talks revolved around generation, not enough on transmission and distribution or even gas. The cost benefits also have never been a deep issue. Consequently, revenue has remained low resulting in low level maintenance as well. The big draw back is the quality of transmission grid. The transmission grid can only evacuate and support 4,000 megawatts capacity. So the talk of 6000 mega watts or more is a graceless and vile lie about electricity. There are no known set out measures over the years to develop an integrated planning between gas and electricity nor has there ever been an appropriate commercial enabler such as bankable gas sales agreements for gas producers to invest in gas production and supply infrastructure. On top of that, the distribution networks are old and dilapidated and there has never been a co-ordinated system planning for the sector.

In recent past, BusinessDay undertook a critical on-the-spot assessment of the sectors facilities. What was revealed was shocking. It underlines what is known within the government circles about the sorry state of the sector but ironically could not understand why strategies for managing the decay and for meeting the great expectation of turning the challenges around has not long been drawn up and implemented, even in phases.

The reality in all the power generating stations showed that contrary to government's claims, works on the power plants are mostly on the drawing board. The significant investment which they have always talked about is lacking. This investment is required not just across the electricity sector but the entire energy spectrum, including gas production and supply.

Again, the intentions expressed over the past months have never been moved forward. Officials have talked about a short term plan to focus on stabilizing supply and optimizing the current resources and infrastructure at their disposal. They have also talked about the reduction of technical and commercial losses, estimated at between 40 percent and 50 percent of electricity generated, the development of a medium to long term integrated system expansion plan based on real electricity requirement - alongside a realistic financing plan, the institutionalisation of effective industry and organisational governance systems and the introduction of competition and choice to enhance efficiency by deepening the on-going reform programme. All of these have come to naught.

In 2009, N18.1 billion was voted for the development of gas infrastructures around the country. The domestic focus targeted the completion of the Calabar-Umuahia-Ajaokuta gas pipeline. N6.7 billion was voted for this project. Another N10.3 billion was intended for the Ajaokuta-Abuja-Kano pipeline and N1.1 billion for the gas supply pipeline to PHCN Delta 1V. All of that money disappeared before works began on the projects.

The repeated delays to confront head on the faulty governance framework that has characterized the power sector has repeatedly delayed foreign interests and investment to the extent that those that had shown interest in the past now pay lip service, waiting to see how serious the government is in putting down necessary legal guidelines. Again, it shows the extent to which reform in the sector remain unfinished. But, Nigeria could reap billions in potential benefits each year if federal governments finished reforming the national electricity market. The progress toward a national market could help transform Nigeria's economy, generating economic benefits in billions annually.

The need for investment in new production, transmission and distribution infrastructure over the next five to six years is estimated at $5 billion. Furthermore, more than half of energy production investments will be needed to replace existing and future capacity.

Mobilizing the very large amounts of capital required to ensure Nigeria's electricity future will require policy coherence, regulatory co-ordination and efficiency, and an attractive fiscal regime. Nigeria's ability to draw an appropriate share of the continents electricity investment rests in the conditions perceived by investors that differentiate it from opportunities in other parts of the continent as well. So the stakes are high when we look at moving ahead with a plan to fix the electricity system in this country and create an attractive investment climate to overcome our supply/demand imbalance.

Fundamentally, the overall policy framework for the energy industry needs to be clear, stable, and sensitive to the competition for investor capital: Nigeria needs an energy framework that reconfirms its commitment to a rules-based, competitive approach to energy investment and supply. If our policy and regulatory processes are clear, efficient and effective, these and many other attractive features will ensure we are a destination of choice for energy investment.

All investors in generation (private and public) recognize that their investments are for the long term. A stable electricity framework is necessary in order that plant capital costs and financing can be spread over a long period. Uncertainty makes it difficult to predict industry structure or market models, and this deters long term, large-scale capital investment.

Given the long lead times required to bring new capacity on-line, we need to stabilise our electricity policy in order to provide a more certain foundation for the sector over the long-term, and to attract new investment into the country. A period of regulatory and legislative stability will demonstrate that Nigeria is a solid jurisdiction in which to invest.

Investors need to see a stable political dynamic, with no undue political interference; a stable independent regulatory environment with a commitment to regulation that aims to coordinate and, where possible, harmonise regulatory requirements without undue regulatory or economic burden. At the moment it appears that there is no certainty in energy policy. That must be put in place. Furthermore, the government needs to factor in all costs and savings when evaluating various options. It needs to ensure a level playing field between transmission, generation and other options.

Again, investors would come under a predictable pricing regime over a long term. There is need to continue to work to resolve the problems of the so-called the damaged generating plants, Egbin, Shiroro, Jebba, Sapele-both the thermal and hydro generating stations that have not received proper attention in the past 30 years. Fixing this will show that the government is committed to the maintenance of a stable investment climate. Indeed, it is important that government commit to a process of developing regulations in an open and transparent manner which will allow for meaningful input and debate and in which all of the stakeholders are able to see the commitment of all and of the other stakeholders.

Generally, it is believed that competitive electricity markets are achievable in the country. The potential social benefit is enormous and so future policies must create incentives to ensure that the market has an adequate capacity incentive for foreign interests, and that consumers will quickly come to terms with paying their bills when they are called upon to do so.

But what would it take to make this a successful revolution?[size=16pt] It would make sense to revisit both the telecom and oil and gas sector to take the steps. If the country was courageous enough to hand its oil to foreigners-the likes of Shell and Chevron way back in the 1950s, then it has no excuses not to do same for the electricity sector. If MTN, Zain and others can today run the most successful economic impacting business in the country, then government officials are foolish not hands off our electricity.

In any case, these foreigners have the expertise. They have the people who have the special knowledge of electricity utility management. [/size]

http://www.businessdayonline.com/index.php?option=com_content&view=article&id=9623:all-that-graceless-and-vile-lies-about-electricity&catid=44:business-intelligence&Itemid=318

For avoidance of doubt, i subscribe to the article above. . . .especially the final paragraph

However the corrupt ones in Nigeria,who benefit from the status quo,will always want to keep us in the dark