Blackouts, estimated billings characterised power sector in 2016

Efforts by the present administration to improve power supply across the country was frustrated as blackouts, estimated ‘crazy’ billings and poor generation characterized the power sector in 2016.

Nigeria generated an average of 3000MW in 2016 which was abysmal performance when compared with it’s over 10,000MW generation capacity.

Most of the power plants, including Egbin Power, operated below installed capacity in 2016 due to poor maintenance, vandalism of gas pipelines due to militancy and non-payment of debt owed by discos and inability of Gencos to pay for gas supply, among others.

The Managing Director, Benin Electricity Distribution company, Funke Osibodu stated that N250 billion is required annually for the next five years on consistent basis to address electricity challenges in Nigeria.

“Nigerians must understand that the process is not a short term fix, but a long and continuous journey. Appropriate tariff (cost reflective tariff) is needed to attract investment and grow power supply,” she said.

When the power sector reform was concluded in 2013, the expectations were that the perennial power sector challenges will be over soon, but it seems the sector’s challenges are eternal.

The problem of low generation is being compounded by weak evacuation, transmission and distribution facilities.

The Chief Executive Officer of Eko Distribution Company, Oladele Amoda, blamed the power sector challenges on paucity of fund. He stated that power sector requires long term investment and he thanked investors in his company who have been trying their best in attracting the much needed fund to the company.

He said the investors recently secured N600 million loan from a bank to purchase transformers to boost power supply within his network.

Bode Agboola, a power solution expert stated that power sector challenges are not to be fixed in short term, “they require long term investment and government guarantee of gas supply and security of power facilities.”

Mr Charles Fashola, the Managing Director, Seacof Engineering Ltd, said that lack of funding is the bane of the sector as new investors could not buy new equipment to replace the obsolete ones. He said that absence of new investments in the sector had worsened power supply in the country.

Mr Simon Andrew, a power consultant in Lagos, also said that the main issues of the new investors were revenue and funding challenges.

Andrew, who is also the Managing Partner, Slongy Power Consultant Ltd, said these operational challenges would continue until there was adequate funding and improvement in revenue profile of the Discos.

“The implementation of cost reflective tariffs, access to long-term capital and equity injection will still not address the revenue shortfall in the system in the short term. It must be understood that there is time lag between the period these investments are made and maturity of benefits.

“Even if all the required financing are available today, it will take time for technical and non-technical losses to be addressed. For instance, it takes between nine to 12 months to build injection substations; it will take at least two years for a Disco to address its metering gap,’’ he said.

Mr Francis Andrew, Managing Partner, Pacific Energy Consultants, however, warned that the nation’s power sector risks collapse if urgent alternative source of energy are not urgently explored, urging the government to act fast.

Andrew said that the power sector was faced with many challenges such as lack of inadequate gas supply, effective metering of customers, estimated billings and arbitrary increase in electricity tariff.