Finally, a step in the right direction. Beyond all the geek-speak , the crux of the matter is that State that can generate enough power for its own use will not be compelled to distribute power generated within its border to the national grid to then recieve less power back from the grid. Now, State can distribute power to first satisfy domestic need and then concede any excess to the grid.




http://tribune.com.ng/index.php/front-page-news/36862-nigerians-to-enjoy-regular-power-soon-as-fg-directs-states-to-provide-electricity

Nigerians to enjoy regular power soon •As FG directs states to provide electricity


Written by Gbola Subair, Abuja Thursday, 01 March 2012
Share

TO ensure regular and adequate supply of electricity to their citizens, state governments have been given the nod to collaborate with relevant distribution companies with a view to providing electricity.

In doing this, the governors, however, have to seek permission from relevant authorities.

The  National Council on Privatisation (NCP), which gave this directive, said that they should be ready to make capital contribution which would be secured and  on terms agreed with the distribution company.

The NCP said the  assets thus acquired would become the property of the distribution company but would be wholly utilised within and for the benefit of the citizens of the relevant state.

The NCP said  the state would receive compensation within the ambit of the extant tariff methodology. “Excess capital costs, if any, will be borne by the state government. Any investment by the state will not attract any interest payments by the distribution companies,” NCP said.

At the NCP  first meeting for 2012, held on February 27, at the Presidential Villa, the council endorsed that the percentage of equity that state governments hold in a distribution company will be determined through independent valuation of actual investments by the respective states in the distribution network.

The council said the  valuation would be determined by an independent agency jointly appointed by the state governments and the Nigerian Electricity Regulatory Commission (NERC.)

The NCP, given the economic un-viability of re-delineating the distribution companies along state boundaries, also approved that the present privatisation framework of 11 distribution companies created from the unbundling of the Power Holding Company of Nigeria (PHCN) should be maintained.

The NCP approved that 60 per cent  of the shares of a distribution company be sold to core investors to allow state governments to participate in the bidding consortia but limit the overall federal and state government shares to 49 per cent.

Though the NCP approved that the federal and state governments would not play any role in the management of the privatised successor companies, it, however,  endorsed that the workers’ allotment would not exceed a maximum of two per cent of the overall shares or 10 per cent  of the Federal Government shares in each distribution company, whichever is lower. 

It will be recalled that the  NCP had at its meeting of October 31, 2011 deferred decisions on post-privatisation shareholding structure of distribution companies, pending when an agreement is reached with the state governments. NCP had also directed BPE and NERC to make presentations to the meeting of the National Economic Council (NEC) that followed the NCP meeting.

On the basis of the presentations and the attendant discussions, the Vice-President, Namadi Sambo, and chairman of NEC had constituted an ad hoc committee on power sector reform to further deliberate on the issues raised and make necessary recommendations to NEC.

Subsequently, the ad hoc committee chaired by the governor of Cross River State had met on January 25 and agreed on the issues in dispute which were eventually approved by NEC on January 26.

from other thread:

ekt_bear:

"The NCP said  the state would receive compensation within the ambit of the extant tariff methodology. “Excess capital costs, if any, will be borne by the state government. Any investment by the state will not attract any interest payments by the distribution companies,” NCP said."


The same "extant tarriff methodology" that causes electricity to be sold for less than it costs to produce?

So in essence, state distribution companies are required by law to lose money?

A step in the right direction, but not quite enough.

Let states be able to set their own prices for electricity.

Or if they must sell at a loss, allow them much broader powers over taxation.

Well, the latter should be done regardless

ekt_bear:

from other thread:

My brother, States like Lagos will quickly show the FG the folly of provisions that are inadequate in how they actually serve as a disincentive to the attraction of required investments that can substantially boost generation and distribution. This is why many States have casually ignored even the most minimal effort at independent power generation.

Most States will not be interested in bearing the cost of generation only to see all new output invested in the national grid. The FG will have to sit with States and thrash out what works for all to produce an attractive environment that, first and foremost, will appeal to the badly needed investment being sought from the private sector. I hope to god the FG does not make this one long and drawn out bullish effort to make States bear unreasonable costs when it has being spending billions for years, and to date, in the power sector with no improvement.

There must be a genuine effort to make the privatision target as purist as possible with no hidden agenda.

Electricity is too important. Even if the states must sell at a loss, they must find a way to make it happen.

If this requires adding "installation surcharges", "annual electricity fees", etc, whatever tax they can make up to at least make it revenue neutral, they must do it.

Electricity is the gateway from our current status as impoverished third-world country to something more. . .

Still, the governors must collectively come together and demand the ability for their states to set their fees independently.

Those of us who had some form of confidence in this regime's commitment to solving the power problem are not in anyway surprised by the move. If anything, I would say, perhaps they took little more time than necessary articulating the policy. Maybe, it could be that the regulatory framework was being tweaked to address issue of financial commitment by parties concerned - state and private partners.

That said, I wonder what excuse state governors and opposition parties will now use as excuse for their inability to deliver stable power to their constituency.


Let there be light!

Hell.

Just ask for the ability to charge up to 15% more per kWh than is charged say in the US.

That way nobody can say you are trying to gouge anyone or arbitrarily inflate prices outside of what the "true" cost should be.

And even paying 15% more for electricity in Nigeria, you'd then have a massive, massive advantage price-wise when it comes to any sort of light manufacturing.

Textile plants, shoe-making shops, food processing, then eventually move up the value chain from that.

Massive job creation and the creation of a true middle class. All of this possible if electricity is solved.

I don't think this can happen just by pronouncement of the Privatization council. The NAtional assembly will have to amend certain laws to back this otherwise I trust Naija FG to wait for states to generate power and order them to submit to the National grid.

ekt_bear:

Let states be able to set their own prices for electricity.

Or if they must sell at a loss, allow them much broader powers over taxation.

Well, the latter should be done regardless

To be honest, this is so glaringly obvious as a solution. The FG , even as it naturally wants to retain pecuniary control, will , in the end, have no choice but to get on board because they will see that , in practice, doing this is the only modality that will work beyond theory. Otherwise current situations will endure with an obscure and prohibitive "privatised" environment scaring investment away.

PointB:

That said, I wonder what excuse state governors and opposition parties will now use as excuse for their inability to deliver stable power to their constituency.

Let there be light!

Please read and comprehend before posting. This is not the solution. . . unless states have the ability to set their own prices, then the FG has effectively just shifted its own money-losing operation onto someone else (the states.)

There is still more regulatory work that needs to be done.

ekt_bear:

Please read and comprehend before posting. This is not the solution. . . unless states have the ability to set their own prices, then the FG has effectively just shifted its own money-losing operation onto someone else (the states.)

There is still more regulatory work that needs to be done.

Indeed. As usual you have a factual grasp of issues beyond mere rosy pronouncements. What you state is what I inferred to when I wrote:

I hope to god the FG does not make this one long and drawn out bullish effort to make States bear unreasonable costs when it has being spending billions for years, and to date, in the power sector with no improvement.

No doubt a step in the right direction but genuinely giving States advantaged [/b]autonomy must be the intention here - and nothing else. Distribution companies who partner with States [b]will have to spend massively.

We will be back to square one if States are not allowed to independently negotiate an overall package that will be attractive to investors . It is not pessimism. We are just being realistic given how Nigerian leaders are the masters at appearing to do good without the people seeing commensurate results.

Anyway, it will be interesting to hear from the likes of Fashola and Ameachi.

ekt_bear:

Please read and comprehend before posting. This is not the solution. . . unless states have the ability to set their own prices, then the FG has effectively just shifted its own money-losing operation onto someone else (the states.)

There is still more regulatory work that needs to be done.

State having the ability or not to fix their price is not the issue here, and it will not prevent states like Lagos, P/H, Anambra  from attracting investors. At times we seem to ask for too much, and look for excuses why result cannot be achieved.

States having the go ahead to generate power was the crux of the matter, now that that has been resolved, the greed for excessive profit seems now the stumbling block. In any case, electricity tariff is being reviewed almost quarterly, that should suffice. Power generation and distribution is a gold mine, it is not a money losing operations. In any case, let see how states government respond to this.

PointB:

State having the ability or not to fix their price is not the issue here

Err. Let me not call you a bad name.

Use the brain that God gave you and figure out why the above sentence is not correct.

PointB:

States having the go ahead to generate power was the crux of the matter, now that that has been resolved, the greed for excessive profit seems now the stumbling block. In any case, electricity tariff is being reviewed almost quarterly, that should suffice. Power generation and distribution is a gold mine, it is not a money losing operations. In any case, let see how states government respond to this.

WTF?!?!

Are you fvcking high? Gold mine?

Is it a gold mine to sell something for 5 cents when it costs you 10 or 15 to make?

Stop posting if you don't understand the issues!

It isn't by force to comment on everything.

So, Federal Government retains generation power but states only need to partner with distribution companies, with permission,, and this will ensure that Nigerians enjoy regular power supply even with ~4000MW the country still generates? WOW . . . so we are going to light up a nation with ~4000MW of electricity still produced today? This magic/miracle I would like to see. 

ekt_bear:

WTF?!?!

Are you fvcking high? Gold mine?

Is it a gold mine to sell something for 5 cents when it costs you 10 or 15 to make?

Stop posting if you don't understand the issues!

It isn't by force to comment on everything.

How exactly did you arrive at the conclusion that the current tariff is not a fair price for power generated across the country?

"The establishment of an appropriate pricing regime.

For the sector to be financially viable throughout the value chain, the end-user tariff must at least be at a cost-reflective level. However, the tariff as it now stands is significantly below what is necessary for the sector. As a result, not only is PHCN continuously unable to meet recurrent expenditure requirements, it must continually beg government for additional monies for short term and long term capital expenditure. Further, and more importantly, without a pricing regime that supports financial viability in the sector, it simply makes no sense for a private sector operator to come into the market.

The Nigerian Electricity Regulatory Commission will, therefore, be undertaking a major review of the tariff regime which will be completed before the end of the first quarter of 2011 with a view to replacing the national uniform tariff with a new genuinely cost- reflective ceiling on end-user tariffs"

I copied this from Governments published Roadmap. Except they've instituted new prices. No point arguing.

They admitted that their current price regime is nonsense and unworkable.

Ekt_bear, Gbawe, PointB, do you guys know what the new tariffs are? Please post if you know. They said 1st quater 2011, this is 1st Q 2012. Any info on the new prices.

. . . . .


If you don't already fvcking know this, why are you commenting on this thread and opening your fat mouth?

Seriously, like I said. Shut the fvck up if you don't know anything about this topic.

Or if you are curious in learning WHY electricity doesn't work in this country, then that is a different matter, and I or someone else will educate you.

Kilode?!:


I copied this from Governments published Roadmap. Except they've instituted new prices. No point arguing.

They admitted that their current price regime is nonsense and unworkable.

Ekt_bear, Gbawe, PointB, do you guys know what the new tariffs are? Please post if you know. They said 1st quater 2011, this is 1st Q 2012. Any info on the new prices.

Kilode they actually have this information on their site. Take a look here:

http://www.nercng.org/index.php?option=com_docman&task=cat_view&gid=29&Itemid=56

is ds suppose to b anewsi bet u we hear d same come 2015 during dia campaign

If i hear say nigeria get steady power supply.it wil nt happen in dis generation .maybe in d nxt world.

let's wait n c

Na Wash!!

Kobojunkie:

So, Federal Government retains generation power but states only need to partner with distribution companies, with permission,, and this will ensure that Nigerians enjoy regular power supply even with ~4000MW the country still generates? WOW . . . so we are going to light up a nation with ~4000MW of electricity still produced today? This magic/miracle I would like to see. 

Kobojunkie nice observation.
Why does the FG abhor a free market economy? We should not be setting the prices of some certain things.
I dont trust any level of government in Nigeria so giving states the power is just opening up a new method of looting.

rehash of the ibb days
siddon look attitude till proven otherwise
time has taught me that

look up what kobojunkie said! the fact is that the massive amount of cash that is required to generate enough power for 180million people in nigeria is not tenable in a corrupt society like nigeria.

180million nigerians share 4000MW of electricity while 7.5million Ontarians in Canada share 19,000MW and have budgeted 70 Billion Dollars to upgrade the system in the next several years to come!

stable electricity when? 2075 if they start today in a none corrupt environment!  lets stop the abuses and the lets pretend we r all experts on power surpply and all the hair splitting! a bunch of highschool kids given the goal and the problems with the nigerian power supply situation can come up with a very viable solutions in a single afternoon class, aiight!

implementing the known solutions is the problem.

spending allocated cash in a non-corrupt environment to build and build up the amount of generating capacity is the issue we need to split hair over, k people! its sad that sometimes, nigerians by and large r not aware of the problems facing them as a nation and this can be seen from the fact that there is always a lot of talk but not much moving forward!

ekt_bear:

Kilode they actually have this information on their site. Take a look here:

http://www.nercng.org/index.php?option=com_docman&task=cat_view&gid=29&Itemid=56

Thanks!

So what is R2 and R3? I was not able to find the definition on the site.

I'm assumng those are like medium use single family homes, say 4-5 bedroom, is that correct?

So from that document, it appears they fixed prices for R2 designated residences at  about N10/Kwh or 6 cents/kwh

R3 = N27.00 or  17Cents/kwh

I guess we'll need to get the estimated cost of producing 1/kwh in an economy like ours to really see what price or cost burden both sides can carry?


seems you've studied this a lot Ekt_bear  what do you think?

Finally some good news I hope it works right.

ROFLMAO @ Ekt_Bear's angry replies.

Best posts? Ekt_Bear and Kobojunkie.

My final analysis? GEJ is still a dolt!

A-ZeD:

Kobojunkie nice observation.
Why does the FG abhor a free market economy? We should not be setting the prices of some certain things.
I dont trust any level of government in Nigeria so giving states the power is just opening up a new method of looting.

Kobojunkie gets it wrong and so do you. There is no issue with States generating electricity. The FG currently does not have a monopoly regarding generation. States are allowed to generate power and this has been so for a while. We simply need to understand the dynamics that will makes it clear issues are not so much about generation but also of distribution and transmission.

Our exploitative FG, always keen to retain cash for itself that should be spent on developing Nigeria, naturally found it convenient to concede generation rights to States while cleverly preventing them from gaining tiered distribution powers.

If States can join a tiered distribution network , designed first to assign power exponentially according to generational local output, then, expectedly, we will see States investing heavily in generation because they know what they spent on generation will be used locally before any excess is sent to the national grid .

The FG's previous opportunistic thinking is that power produced via IPPs will be added to the grid with the central Government free to adopt a distribution formula that robs contributing States at the expense of indifferent States.

A state can produce 500 MW independently yet get back only an additional 30 MW, to its existing quota , from the national grid. That is not fair to States. Indeed a clever plan by the FG to make States boost generation and thus foot the huge bill in one of the most expensive stages reagrding getting power to the end user.

Many States , naturally, shunned generation for this reason. If States will now be allowed to set tariffs, attractive to investors, and enter into aggreement with distribution Companies, that will see them retaining majority of what they generate for domestic use, then we will see a massive improvement in the power situation of Nigeria because investment is not especially difficult to attract if restrictive [b]executive [/b]interference is not an issue.