It is almost 12 months, another full cycle in the Nigerian power sector. While there were applauses for the sector, there are equally challenges and knocks as year 2016 ended last week. Our reporter X-rays the major issues including high tariff and poor supply that hampered the sector from recording major strides in the year 2016.
The power sector began afresh under a new name and leadership. The merger of the Power ministry with those of Works and Housing continued in full force early in 2016 as the ‘Federal Ministry of Power, Works, and Housing’. The minister, Mr. Babatunde Fashola, and the Permanent Secretary, Louis Edozien had become entrenched in the power activities by January 2016 after spending two months already as a minister.
The year in review was smooth for 30 days for the sector but, it became rough by February 1, when the Nigerian Electricity Regulatory Commission (NERC) and the Distribution Companies (DisCos) implemented the decade-long Multi Year Tariff Order (MYTO) 2015, signed off earlier in December 2015. The tariff rate saw the increase in electricity prices by an average of 60 per cent across the 11 DisCos. The rebate customers got from this was the payment of Fixed Charge only when they have supply (inherent in the Energy Cost) which had not existed earlier. However, labor unions and customer unions still rose against the MYTO 2015 with massive protests in Abuja, Lagos, Kaduna and other major cities.
The protest ran into the second day when power supply at the national grid coincidentally rose to 5,070 megawatts (mw), the first time in the annals of the power sector. The MYTO 2015 promised improved electricity supply to customers with the new cost-reflective tariff as both NERC and the operators believed the tariff would boost liquidity for improving the quality of power supply and promoting economic activities.
The assurances were provided but the later understanding from the agitating unions and customers was however short-lived after power generation crashed speedily. There were over 20 system collapses in 2016 causing nationwide blackouts for hours. From February 2016, there was less than 2,000mw of power supply to over 170 million Nigerians and the whole captured six million registered electricity customers.
The blackouts continued intensely till July as government blamed incidences on the spate of vandalism of oil and gas assets by militant groups in the South. Generation improved from July but has kept fluctuating between 3,000mw and 3,800mw. Statistics supplied by the Nigeria System Operator (NSO), an arm of the Transmission Company of Nigeria (TCN), said power supply rose to 4,000mw in November but with attendant system collapses leaving the national grid as low as 35mw for hours. By December 22, 2016, the daily national grid supply stood at 3,608mw ,which is over 1,390mw less than the 2016 projection in MYTO 2015.
Various operators, comprising DisCos and Generation Companies (GenCos), have claimed that the liquidity challenges in the power sector had hit N809 billion by December 2016 and thus the expected generation capacity was not met, they blamed the high fluctuation in foreign exchange (dollars) to have affected the supply of gas to power plants.
The DisCos now pay less than 40 per cent of their energy invoice due to the illiquidity crises. They also said that the cost of energy they pay for has risen and that it has affected their payments to the Market Operator (MO) and GenCos because the tariff paid by customers has not increased. For the public firm, TCN, it also said that the wheeling capacity has risen to 5,500mw after a four-year management contract by Manitoba Hydro International (MHI) which ended in July 2016.
The acting Managing Director, Engr. Atiku Tambuwal Abubakar, in August projected a raised capacity of 6,000mw by December and 20,000mw by 2022. The NSO daily statistics also showed that while the current transmission capability of TCN is 7,000mw, the actual Network Operational Capability to evacuate power is 5,500mw, and still 500mw short of its target.
As the operators marked the third anniversary of the privatized sector, there came many calls to reverse the privatization. The Bureau of Public Enterprises (BPE) which supervised the privatization transactions and monitors the sold utilities, in its reaction, said the private investors have a pact that allows them to invest in the utilities for five years to enhance the network. Its acting director general, Dr. Vincent Akpotaire and the minister, Fashola said government won’t reverse the privatization but will work to strengthen it.
For meter investments, many DisCo operators said the recession and forex crisis limited their procurement of meters. As at October 2016, only 161,000 meters had been installed even when most of the 11 DisCos promised to install 100,000 annually. Kano, Enugu, Jos, Kaduna, and Abuja DisCos were among those that rolled out many more meters than others.
Another decision customers said affected them this year is the DisCos’ winding up the Credited Advanced Payment for Metering Initiative (CAPMI) as directed by NERC in November 2016. This means customers can no longer pay N24,000 and N53,000 to buy the single and three-phase meters for installation in 30 days. They will now have to wait until the free meters from the DisCos ca get to them, even in the midst of many complaints of high estimated billing in 2016.
The year closes with an ongoing minor review of the MYTO 2015 by NERC. NERC itself has been under fire for not having a substantive board and leadership one year after the five-year tenure of its 2nd generation board elapsed last December. It is expected that electricity price may further rise in the coming year after the tariff review of all the indices, and these include, high dollar exchange rate, low power generation and high inflation rate. That in itself will project a price increase for per kilo watt hour (kWh) of electricity.