A Review of the Nigerian Power Sector in 2020 By Solomon Asowata, News Agency of Nigeria (NAN)

A Review of the Nigerian Power Sector in 2020 

By Solomon Asowata, News Agency of Nigeria (NAN)

The power sector is a critical aspect of the economy and getting it right will help transform Nigeria into an industrialised country hence successive governments have continued to make massive investments and implement several policies to actualise this objective.

The year 2020 marked seven years since the privatisation of the Nigeria Electricity Supply Industry but unfortunately, Nigerians are yet to feel the impact of the privatisation exercise.

Power generation still hovers around 5,000MW while transmission and distribution to end users is constantly being plagued by disruptions caused by obsolete equipment and vandalising of power infrastructure.

However, in spite of these challenges and the COVID-19 pandemic, the sector recorded some significant achievements which could serve as a launching pad to making electricity available for majority of Nigerians in the coming years.

Below is a review of some of the major issues which occurred in the sector in the outgoing year.

Siemens $2bn Power Deal 

In February, the Federal Government signed a deal with German electricity giant, Siemens Group to find a lasting solution to Nigerias energy crisis.

The deal which was signed on behalf of the country by the late Chief of Staff to the President, Mr Abba Kyari, before his unfortunate demise a few months later, will not only enhance the distribution network but will also increase generation capacity to the tune of 40,000MW.

The deal, signed under the Presidential Power Initiative (PPI) is expected to save the nation $1 billion annually with Siemens providing general technical training for employees of Electricity Distribution Companies, Transmission Company of Nigeria and the regulators.

The Federal Government also approved the sum of N8.64 billion as part of counterpart funding for the Phase 1 of the PPI which includes projects in transmission, distribution, metering, simulation and training.

Mr Saleh Mamman, Minister of Power, says, This significant, timely and high-level intervention between President Muhammadu Buhari and Chancellor Angela Merkel addresses critical infrastructure deficits in the value chain and helps reposition the power sector to become more attractive, viable and investable.

Similarly, Mr Adeola Samuel-Ilori, National Coordinator, All Electricity Consumers Protection Forum, says the deal can help Nigeria put its energy woes behind if properly implemented.

``The contract as signed, will enhance not only the distribution networks but also increase generation capacity to the tune of 40,000MW.

``Another beautiful thing about the contractual agreement is the elimination of middlemen and subcontractors which characterised past government efforts and led to humongous fraud.

``The deal with Siemens is government to government tripartite agreement.”

He insists the Buhari-led administration will largely be remembered for the success or failure of the deal just like its predecessors which spent millions on the power sector with nothing or little results.

Service Reflective Tariffs (SRT)

On Sept. 1, the Nigerian Electricity Regulatory Commission (NERC) approved Service Reflective Tariffs (SRT) for the 11 DisCos which led to increment in electricity tariffs for customers enjoying 12 hour supply and above daily.

The increment was opposed by labour groups and following talks between the government and the union leaders, its implementation was suspended on Sept. 28 for a period of three weeks.

However on Nov. 1, after an agreement was reached by the parties and slight adjustments made by the DisCos, the implementation of the revised SRT took effect.

Mr Dafe Akpeneye, Commissioner, Legal Licensing and Compliance, NERC, says the Multi Year Tariff Order (MYTO) 2020 was approved by NERC for the DisCos with effect from Sept. 1 after series of dialogue with all stakeholders in the industry.

He explains that the last MYTO was done in 2015 but became effective in 2016, adding that the new review was done to ensure that rates charged by DisCos are fair to customers.

Akpeneye says it is also to ensure that DisCos operate efficiently to recover the full cost of their activities, including a reasonable return on the capital invested in the business.

According to the commissioner, the rationale behind the SRT is to ensure that the issue of blank increment in tariffs for all customers is removed.

``The SRT is an innovation to remove unfairness in billing customers. The customers have been placed in Bands A, B, C, D and E depending on their hours of electricity supply.

"Only customers enjoying daily supply of 12 hours of electricity and above are affected by the increment and the DisCos must guarantee these hours of supply to the locations, he says.

National Mass Metering Programme 

With 59.6 per cent of electricity customers on estimated billing, the president on Oct. 30 flagged off the National Mass Metering Programme (NMMP) targeting 6 million households.

The key objectives of the NMMP are to: increase Nigerias metering rate, elimination of arbitrary estimated billing; and strengthening the local meter value chain by increasing local meter manufacturing, assembly and deployment capacity.

The programme also aims to support Nigerias economic recovery by creating jobs in the local meter value chain, reduction of collection losses and increasing financial flows to achieve 100 per cent market remittance obligations of the DisCos.

It will further improve network monitoring capability and availability of data for market administration and investment decision making.

 Mrs Folake Soetan, Acting Chief Executive Officer, Ikeja Electric Plc, says the Disco will meter 106,000 customers under the scheme in the first phase.

``For the first phase of the programme, which will run till the end of the year, Ikeja Electric is rolling out over 106,000 prepaid meters to customers across its six Business Units - Ikeja, Abule-Egba, Akowonjo, Oshodi, Ikorodu and Shomolu."

According to her, beneficiaries of this programme, which will cut across all locations in IE network, will not be required to pay upfront for the installation of meters. 

Similarly, Mr Adeoye Fadeyibi, Managing Director, Eko Electricity Distribution Company (EKEDC), says 100,000 customers under its network will get pre-paid meters during the first phase.

``The mass metering programme is a welcome development and a boost to the deepening of the Nigeria Electricity Supply Industry (NESI). 

"The programme couldnt have come at a better time than now given the impact of the COVID-19 pandemic on businesses and household income. 

``We are happy for the initiative and acknowledge governments renewed desire to improve the power supply and bridge the metering gap. 

``Electricity as we all know is an important essential needs of any society and we all have acknowledge the menace of the estimated billing both on the customers and even us as a business.

``It is my belief that with this mass metering initiative we can begin to say we are on a path to better days ahead. 

``In the next 18 to 24 months, over six million meters will be distributed across households in the country and for us at Eko, we will be rolling out over 100,000 meters in the next few weeks in the first phase of the programme, Fadeyibi says. 

Mr Uche Ike, Executive Director, The Energy Forum, believes that investments and policies made in 2020 will begin to yield the desired results in power supply and distribution in the near future.

"Hopefully, we will begin to see the benefits of the Siemens deal in the second or third quarter of 2021 but Nigeria must continue to pay its counterpart funding for the project," he says.

Also, Samuel-Ilori says NERC must live up to its statutory obligations to enable Nigerians enjoy stable power supply.

He says the regulatory agency should ensure they the DisCos are not shortchanging customers, especially with the way they went about the implementation of the SRT.(NAN)