[size=14pt]Fast Tracking Nigeria's electricity needs for industrialization [/size]
MONDAY, 26 MARCH 2012 00:00 ALEXANDER CHIEJINA



Over the year, the nation’s power sector has been bedeviled by managerial inefficiencies and leakages, lack of transmission, efficient investment in generation, distribution, and continued increase in load demand. With Nigeria on the quest to become one of the 20 leading economies by 2020, fast tracking the nation’s electricity needs is critical for industrialisation, writes ALEXANDER CHIEJINA.

The growth of any nation is critically dependent on the sufficiency of its electricity supply industry. However, the development of the various sectors of the economy, such as industry, agriculture, health, education, tourism, etc, depends heavily on reliable, adequate and economically priced power.

Sadly, over the last two decades, Nigeria’s power sector has suffered neglect as power plants that were functional in the 1970s and 80s are no longer capable of meeting the nation’s electricity demand. Within this period, no single power plant was built, meanwhile power supply continued to deteriorate to a point where generation level dropped by as low as 1,500 megawatts in 2000.

Meanwhile, capacity utilization of hydro-power plants in Kainji, Jebba and Shiroro, have occasionally dropped in terms of generation due to age. The gas turbine power plant suffered from old age, obsolete equipment, lack of gas supply owing to government’s failure to make fund available to joint ventures companies that produce gas, and its neglect of the plants.

Sadly, the epileptic power supply has limited income-generating opportunities of the informal sector and led to increase in the cost of doing business. In spite of the abundant hydro resources and natural gas reserves in the country which has assumed prominence as a fuel for electricity generation globally, the state of electricity supply continued to pose major policy challenge to successive governments.

While other countries have improved electricity supply, the nation’s electricity consumption per capita is put an all-time high of 144 Kilowatt-Hour (KWh) in 2006 and 122 Kilowatt-Hour as at 2008 and estimated gas reserve at 184.2 trillion cubic feet (tcf) of recoverable reserve. Only recently, Bart Nnaji, Minister of Power hinted that the current status of power supply has experienced high energy losses (technical and non-technical losses), and inadequate expertise.

Up until President Jonathan’s launch of the roadmap for power sector reform in 2010, the minister noted that there exist significant managerial inefficiencies and leakages, lack of transmission, efficient investment in generation, distribution, and continued increase in load demand versus virtual static generation level, and high suppressed demand.

Following government’s move to restructure the sector by dismantling the industry into functional autonomous components of generation, transmission and distribution, ensure market development through cost reflective tariff and presence of a strong regulator as well as ensure active participation of the private sector in the business of the sector, experts have tasked government to fast-track electricity availability to Nigerian homes and businesses if the nation is to become one of the twenty leading economies in the world by 2020.Commenting on the issue, George Adebiyi, a University don with research interests on mathematical modelling of advanced energy systems, etc. hinted that Nigeria has continued to experience persistent power failure because supply is way below demand. He pointed out that human factors like vandalism of power installations, illegal power connections has led to shortfall in revenue that could have been ploughed to improve electricity supply in the country.

Adebiyi noted that South Africa with a population of a little over 44 million has electric generating capacity of 30,000 Megawatts which translates to an annual per capita consumption of electricity of 4500 kWh. He hinted that for Nigeria, the annual per capita consumption of electricity is estimated at between about 100 kWh and 135 kWh.

“In the United States of America, the Tennessee Valley Authority (TVA) provides electric power to about 8 million people. TVA’s generating capacity is currently 33,000 Megawatts, and the average daily electrical energy sold per household in 2006 in Mississippi alone was 44 kWh per household per day. A daily average TVA sale to commercial and industrial customers for the same period was 220 kWh per customer,” Adebiyi hinted.

Echoing the sentiment of Adebiyi, Otis Anyaeji, chairman/CEO, Otis Engineering, revealed that shortage or lack of gas supply to power stations and inappropriate commercial pricing is deterring gas producers from investing in the sector.

Anyaeji explained that the 500MW Olorunsogo phase two, 450MW Sapele and 561MW Calabar projects are ready, but had no gas to run them, while some that were at an advanced stage of commissioning, faced gas supply challenge.

“The government should be forthcoming in the parley with gas producers to forge ahead on how to realise the nation’s gas master plan agenda. Another hurdle to the realisation of stable power supply is the non-readiness of some transmission and distribution systems to receive available power supply. The Ministry of Power should step into that; they should get them ready in project locations to receive power generated,” Anjaeji stated.

On implications of the planned privatisation of the power sector, Anyaeji noted that the bottlenecks experienced in the sector would be a thing of the past. He opined that the privitasation process will lead to efficiency in the management of the power sector and rapid transformation while the country achieves reliable power supply.

Lending his view, Joseph Inyang, an international energy research officer stated that there is need for public-private partnership to encourage investment in power sector as more strategies could also be adopted for a steady and affordable power supply in Nigeria.

“While Nigeria has been sourcing for affordable and efficient diversifying means of energy generation for years now, more attention must be accorded to other less demanding means of electricity generation abandon in the country such as wind, coal, solar and gas,” Inyang concluded.

The rule of thumb for any developed industrial nation is that at least one gigawatt (i.e. 1,000 megawatts) of electricity generation and consumption is required for every one million head of population. At the moment, Nigeria’s per capita electricity consumption is amongst the lowest in the world; per capita electricity consumption is just 7 percent of Brazil’s and just 3 percent of South Africa’s.

Brazil has 100,000 megawatts (MW) of grid-based generating capacity for a population of 201 million people. Furthermore, South Africa has 40,000 MW of grid-based generating capacity for a population of 50 million people.

In Nigeria, government-owned and privately-owned power stations had been generating about 3,200MW of electricity last week Monday as against over 4,000MW it had generated. The drop by 900MW was due to gas supply challenges. The power sector had in January achieved a peak generation of 4,420MW and had also generated 4,189MW in December 2011.

Sector reforms
Erstwhile President Olusegun Obasanjo took several steps to overhaul the power sector with a view to achieving at least 10,000 megawatts of electricity by the target date of December 2007. His administration engaged in a tortuous process of unbundling and restructuring of the National Electric Power Authority (NEPA) as well as privatizing and deregulating the energy sector.

The process led to the setting up of the Electric Power Implementation Committee (EPIC), formulation of the National Electric Power Policy (2001), drafting and enactment of the Electric Power Sector Reform Act (2005), transformation of NEPA into Power Holding Company of Nigeria (PHCN) and unbundling of PHCN into 18 units comprising six power generation companies, an independent transmission company and 11 distribution companies.

The Nigeria Electricity Regulatory Commission (NERC) was inaugurated to serve as power sector regulator and the Rural Electrification Agency established to cater for the energy needs of the rural majority.

Conscious attempt to mainstream the private sector in the drive for energy security, efficiency and sufficiency saw the advent of Emergency Power Producers (EPPs), Independent Power Producers (IPPs), Private Power Producers (PPPs), and Build Operate and Transfer (BOTs) initiatives. As part of a National Integrated Power Project (NIPP), the Federal Government initiated 7 new projects located in various states in the Niger Delta.

At the initial stage in 2005, the seven power plants were designed to be built in some of the oil-producing communities that were to use gas produced from the oil fields closer to them. By the time the government was to commence work on these, about $2.5 billion was budgeted. This amount was to be funded from the excess crude oil account which is owned by the three tiers of government.

A commitment made to electrify host communities within the vicinity of the power stations and major substations. This however led to a distribution component of the project. By 2007 when some of these projects should have been completed and commissioned, the issue of how to fund the projects arose. Some states questioned the rationale why they should contribute towards the development of the power sector. Already, the project was expanded to include additional four new power plants.

Late 2008, after an intensive debate on options on the way forward, a decision was taken by the Federal and the state governments to set aside an additional US$5.375 from the Excess Crude Oil Account as a Power Emergency Fund to complete NIPP subject to approvals of their respective legislative houses.

It is unfortunate that the power generation was put at below 4000MW in spite of promise made by the presidential task force aimed at fast tracking improvement in power through the power roadmap which was launched by President Jonathan on 26th August, 2010. . . . continued