BUSINESS ELECTRICITY: Nigeria power woes, GenCos wants TCN unbundled
The energy problem in Nigeria is one that seems to be a hard but to crack. The challenge has become one that politicians garnish every election year to woo voters. Getting out of the woods of epileptic power supply in the country has become a mirage. Some Nigerians may have submitted that it is far from possibility.
To give a new hope of a better electricity delivery in the country, President Olusegun Obansanjo in March 2005 changed the name from National Electric Power Authority (NEPA) to Power Holding Company of Nigeria (PHCN). Several projects like the National Independent Power Project (NIPP) were initiated while Rural Electrification Agency was also established to ensure villages and rural communities in the country get access to power.
In spite this efforts and billions of naira reportedly invested to guarantee steady power supply, the state of electricity in the country remain poor.
In 2013, the President Goodluck Jonathan administration in his effort to break the jinx in the power sector, privatised the PHCN. The once public owned company was unbundled to generation, transmission, and distribution companies.
The Federal Government retained the transmission company through the Transmission Company of Nigeria (TCN) while various Generation Companies (GenCos) and Distribution Companies (DisCos) acquired that chain of the power system. This development for many years had been a subject of debate. Private companies would better manage power in the country since their goal is to accrue profit from their investment.
Close to a decade after the privatization, Nigeria still navigates its route in the wood. There are those who believed that the privatization process that saw the concession of the generation and distribution of electricity to private company was done with political favoritism rather than capacity to deliver. Many have called for the withdrawal of licences of some of these companies.
In 2019, the Nigeria Electricity Regulatory Commission (NERC) threatened to withdraw licences of some of the companies for their failure to meet up with the expected minimum Nigerian Bulk Electricity Trader (NBET) for the July billing cycle.
The DisCos have also at various times and fora, lamented on various issues affecting smooth service delivery. Also recently, GenCos under the umbrella, Association of Power Generation Companies lamented that 4,159mw of the 8,14mw generated in 2020 are left stranded due to the capacity of the national grid.
The group explained that they only produced 3,987mw. They therefore submitted that for improvement in the electricity industry in the country, there is need for the unbundling of the Transmission Company of Nigeria.
The association explained, “Each GenCo was mandated to increase the generation capacity of its plant to a threshold set by the FGN within 5 years. The penalty for not meeting the MPT was a possible takeover of any defaulting GenCo by the FGN.
“Notwithstanding the non-payment of GenCos’ invoices for power supplied to the national grid, the GenCos took loans and other credit facilities to fund the capital expenditure required to meet the MPT by ramping up capacity.
“It is very important to stress that The GenCos have doubled their available capacities from 4,214MW at takeover in 2013 to 8,145MW in 2020. Out of the 8,145MW available capacity, only 3,987MW is generated for Nigerians. The balance 4,159MW is stranded as a result of constraints in the national grid capacity.”
They suggested that there should be a review of the Electric Power Sector Reforms Act (EPSRA), the Multi-Year Tariff Order, Orders made by NERC so far, Policies, Market Rule and other governance document in the Nigerian Electricity Supply Industry (NESI).
They also want the “Immediate separation and unbundling of the Independent System Operator (ISO) and Transmission Service Provider (TSP) from the existing Transmission Company of Nigeria (TCN) to drive efficiency in the wheeling and allocation of power.”
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