15 February 2019

Nigeria Wastes 42,160MW As Transmission, Distribution Challenges Linger

Abuja — Challenges facing the Nigerian Electricity Supply Industry (NESI), have led to the wastage of about 42,160.87 mega watts (MW) of electricity out of the 88,566.43MW generated by power generation companies (GenCOs) last year.

Although the current administration had vowed to address the barriers limiting power supply to consumers, statistics made available to The Guardian yesterday, in Abuja by the Association of Power Generation Companies (APGC) revealed that almost half of Nigeria's generated power was stranded. Indeed, only about 46,405.56MW was used across the country due to weak distribution capacity and transmission infrastructure, including the national grid.

The Transmission Company of Nigeria (TCN), had said the country's national grid never transmitted power above 5,375MW, while the average power generated, transmitted and distributed by the grid, which collapses habitually stands at about 3,700MW.Executive Secretary of APGC, Dr. Joy Ogaji, said the prevailing situation has worsened financial liquidity in the sector, as government has been unable to address losses from the stranded power.

The statistics further showed that in January, of the GenCos' output of 7,689.04MW, only 3,733.01MW was used, while an average of 3,956.03MW was stranded. In February, available generation stood at 7,584.46MW, while 4,001.33MW was used and 3,583.13MW stranded. Similarly, the generated power for March stood at 7,306.39M, with 4,097.62MW consumed while 3,208.77MW was stranded.

The story did not change all through the rest of the year, through to the last quarter, where 7,691.37MW was generated in October, 3,810.74MW distributed and 3,880.63MW wasted. Same with November's 7,238.12MW with only 4,093.76 utilised, and 3,144.37 stranded. In December, when power is at optimum demand due to year-end holidays, generation dropped to around 5,207.57MW, with 4,162.47MW utilised on the average while 1,045.10MW was stranded, all padding the cost burn by operators in the industry.

With the prevailing situation, generation companies have an available capacity of about 8,000MW, but the transmission system can only transmit (transport) about 5,000MW, while distribution network is capable of absorbing about 4600MW. Ogaji insisted that "Due to sub-standard transmission and distribution system, generated power becomes rejected or forced to be reduced to match the infrastructure that distributes power to the customers, making GenCos operate below their optimum capacity.

"With the growth of power generation, both installed and available in Nigeria, it is only possible for the gains of privatisation and the reform that what is generated can all be evacuated or transmitted."She said the inadequacy of power evacuation infrastructure, which is largely responsible for the recurring supply shortages in the nation, remained worrisome.

To compound the situation, Ogaji said operators' investment in power, especially the Gencos, is under threat due to a regulation introduced by the Nigerian Electricity Regulatory Commission (NERC), which allegedly favours the DisCos.She cited a publication to the effect that DisCos insist they are being over-billed on supply as captured in the Multi Year Tariff Order (MYTO), forcing NERC to adopt actual generation capacity against available generation, warning that the development could undermine the growth of the sector.

MYTO is a tariff model developed in 2008 by the NERC, pursuant to Section 32 (d) and 76 of the Electric Power Sector Reform (EPSR) Act, 2005.The aim is to ensure that prices charged by licensees are fair to customers and sufficient to allow them to finance their activities and obtain reasonable profit for the efficient operator.

She clarified: "In a layman's term, this redefinition of capacity by NERC means that if a GenCo declares 500MW as available on any day, and the grid or TCN only nominates to take 100MW, which, to a large extent, is based on what the DisCos want to take and distribute, that GenCo will only be paid for the energy and capacity equivalent of 100MW. The GenCo is left to bear the capacity cost of making available the remaining 400MW. No country can grow its power base on this flawed and lopsided regulation that penalises/punishes a generator for investing to increase its available capacity."

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