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Stakeholders Differ On Power Sector Challenges As Debt Hits N1trn



Stakeholders have disagreed on what constitutes as challenges in the power sector. This comes as NBET Accuses Discos Of Grossly Over Billing Consumers. CHIKA IZUORA writes..

There were sharp disagreements among key stakeholders in the power sector as to what constitutes the major challenges in the sector despite a lingering debt of N 1 trillion which threatens to ground the operations of the major players in the energy sector. Investigation by LEADERSHIP Sunday show that electricity situation in the country continues to oscillate around distribution and transmission inefficiencies causing capacity underutilisation among businesses and rising cost of goods and services.

At a round table power sector discussion hosted by Sahara Group in Lagos yesterday, different issues around the sector presented significant and honest discourse which left stakeholders divided on who takes the blame for non-performance of the sector since its partial deregulation in 2013.

In his opening remarks, the chief executive of Sahara Group, Kola Adesina, blamed the situation on present tariff structure which he said is grossly not cost effective.

Adesina, disclosed that the company has since the takeover of Egbin Power Plant has injected over $400 million to return the plant to installed capacity of 1,200 Megawatts, but regretted that lack of ability of Distribution Companies (Discos) to pay for electricity supplied and load rejections compelled the facility to drop generation between 600 to 800 Megawatts.‎ “We even aspire to double the capacity but the system is not supporting our initiative”, he lamented.

In his remarks, Lagos state Commissioner for Energy, Mr. Olawale Oluwo said the power sector problem is structural such that there is break in the value chain resulting in the inability of Discos to effectively distribute electricity to final consumers.

Oluwo observed that technical losses due to infrastructure inadequacies poses greater challenges as Discos apart from rejecting load, are not also generating enough revenue to support their operations.

He said as a result of the inefficiencies, the state government has embarked on an ambitious power project that will bring about energy security for the state.

The commissioner said the Power Reform Programme of the government which is the Embedded Power Project will take off in July 2018.

He said “ the State House of Assembly passed the law in January and the Governor signed the bill into law in February. The implementation committee is already working and a lot of work has been going on the field and everywhere. We would do our Expression of Interest sometime in June and that process will kick-start this project,” he said.

He said the 13 locations for the pilot phase of the Embedded Power Project was currently awaiting approval of the State Executive Council and would be released soon. Oluwo said that the power and gas sectors reforms were key interventions of the Governor Ambode led administration to correct the structural challenges in the power sector and gradually position the State for 24-hour power supply.

He said that apart from the reforms in the power sector, the State Government had began implementation of other sectoral reforms including the downstream petroleum sector, the gas sector as well as the solid minerals sector and regulatory reforms. “The essence of all this is that we want to give Lagos, energy security and to achieve this, you must have security of electricity, gas and petroleum products,” he said. The Commissioner said that when the reforms are fully implemented in the next three to five years, the State’s reliance on gas from the Niger Delta region would be less critical to the State’s economy.

On his part, the managing director of the Transmission Company of Nigeria (TCN) Usman Mohammed, disagree with other speakers position that transmission inadequacies was responsible for load rejection by Discos.

Mohammed said the Company has embarked on major infrastructure upgrades across the country and that $1.75 billion would be spent on critical infrastructure provision.

In his submission, Dr. Eugene Edeoga, head procurement of the Nigerian Bulk Electricity Trading (NBET) Plc, dismissed insinuation by some of the stakeholders that present tariff regime is the bane of the Industry.

Edeoga, said Discos should look inward and improve on the efficiency and stop blaming their inadequacies to tariff.

He argued that if the Discos have adequately metered customers they would be in a position to pay for power supplied to them.

According to him, If the tariff is reviewed upward as they are canvassing, those on estimated billing would not be paying as much as they are currently billed, a bill he said cannot be supported by the Multi Year Tariff Order, MYTO.

In other words, he challenged them that consumers on estimated billing are being forced to pay what no tariff would in anyway support given the outrageous bills they pay today.

Meanwhile, Mr. Ayigbe Olotu, group finance officer of Sahara group, said the total amount owed Gencos for electricity supplied is approximately N800bn, but when interest is added, it amounted to over N1trillion.

Olotu said that Monthly, the about N30 billion is added to the bill, pointing that most of the projects in the sector are not bankable and lenders and the industry can no longer pass credit review of financial institutions.

LEADERSHIP Sunday reports that on the 1st of March, 2017, the Minister of Power, Works and Housing, Babatunde Fashola said that the Federal Government has approved the sum of N701 billion as what is termed as ‘Power Assurance Guarantee’ (PAG) for the Nigerian Bulk Electricity Trader (NBET) to guarantee payment for the evacuation of electricity produced by the Generation Companies (Gencos) to the national grid who will in turn be able to pay gas suppliers.

It is expected that the fund will be drawn on a monthly basis to tackle the liquidity challenges faced by Gencos. NBET will be required to pay Gencos in arrears of electricity generated as a deliberate step to improve their confidence and that of intending investors in the sector.

NBET is the manager and administrator of the electricity pool in the Nigerian electricity supply industry (NESI). It was incorporated on the 29th day of July 2010 and is 100 per cent owned by the Federal Government of Nigeria.





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