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The Federal Government is creating policies that will open up the nation’s electricity market to new investors in generation, transmission and distribution infrastructure, the Vice President, Prof. Yemi Osinbajo has said.
Osinbajo said on Thursday that resolving the power supply problem had been a top priority of the Federal Government in the past few years.
He, however, said the current structure of the market could not deliver on the government’s promises for power for domestic and industrial use, adding, “A substantial change of strategy is being pursued.”
Total power generation in the country stood at 3,586.5 megawatts as of 6am on Thursday, data obtained from the Nigeria Electricity System Operator showed.
This confirmed The PUNCH’s report on Thursday that the Federal Government was considering repossession of 10 electricity distribution firms as one of the options to rescue the nation’s beleaguered electricity industry.
This is coming ahead of the scheduled final performance review of the private firms that bought into the distribution companies carved out from the defunct Power Holding Company of Nigeria.
However, document available to one of our correspondents shows that the Federal Government would require up to $2.4bn (N736bn) to repossess the privatised distribution assets from the core investors if it finally takes the decision.
Giving clue that it could recover the assets from the core investors, the Ministry of Power, Works and Housing in a document sighted by one of our correspondents has described the co-owners of the distribution companies as ‘failed investors.’
Osinbajo, while speaking at the inauguration of a 2x60MVA, 132/33kV substation built by Niger Delta Power Holding Company Limited at Abeokuta, Ogun State, on Thursday, lamented the inability of the distribution companies to distribute available grid power to consumers.
“Today we have 13,427MW of installed capacity, and an available capacity of 8,342MW. The national grid has the capacity to transmit about 7,000M, an increase from less than about 5,000MW in 2015.
“But distribution capacity in the 11 Discos are significantly low, hovering at around 4,000MW on average with a peak of about 5,400MW. So despite the availability of about 8,000MW of generation and about 7,000MW of transmission capacity, lack of Disco infrastructure to absorb and deliver grid power to end users has largely restricted generation to an average of about 4,000MW.”
According to the Vice-President, at the heart of that strategy is the Nigeria Electrification Road map aimed at deploying financing and technology on commercial terms agreed with transmission and distribution companies in partnership with the German government and Siemens.
On July 22, 2019, the Federal Government and Siemens signed a Letter of Agreement on the Nigeria Electrification Road map, a three-phase project designed to achieve 25,000MW of electricity in the country by 2025.
“Second is the opening up of the market to new investors in generation, transmission and distribution infrastructure, transacting directly with each other to serve willing customers including deploying off-grid power and using micro-grids, especially for deployment of solar power,” Osinbajo said.
According to him, the policies and regulations meant to empower customers to get the services they want at prices they agree to include the Independent Electricity Distribution Networks 2012; the Mini-Grid Regulation, 2016; and the Eligible Customer Regulation, issued on November 1, 2017.
“The Electricity Distribution Franchising Regulation, which is still in public consultation preparatory to its issuance within a short period of time, sets out the rules for a distribution company to appoint or be compelled to cede consumers connected to a 33kV or 11kV feeder or a designated area to an agent or third party willing to make investments in lines, metering, transformers, other equipment and operations to serve the customers better at a mutually agreed tariff.”
The Vice-President said these polices, when fully implemented, would enable the opening up of the market to new investors.
He described the inauguration of the transmission substation in Ogun State as an important part of the Federal Government’s efforts to improve the supply and quality of power reaching the homes and businesses of Nigerians.
According to him, before the end of the year, new generation is expected from Gbarain (extra 115 MW); Kashimbilla (40 MW); Afam III Fast Power (240 MW); Gurara (30 MW); Dadin Kowa (29 MW); and Kaduna (215 MW).
The Managing Director/Chief Executive Officer, NDPHC, Mr Chiedu Ugbo, said electricity supply to the parts of Ogun State along the axis of Ota to Abeokuta was initially via a double circuit 132kV line into Ota from the mega 330/132/33kV Transformer substation at Ikeja West, which served as a marshalling station for several power plant inflows into Lagos.
He noted that a 130MVA capacity substation was built at Ota for supply to Ota and environs, while a single circuit lower capacity 132kV line was built outside Ota to connect Abeokuta via an intermediate 132/33kV substation at Papalanto, within the premises of Lafarge Cement Company.
He said the Abeokuta substation was also equipped with 2X40MVA 132/33kV transformers for supplying Abeokuta and its environs, adding, “Over time, all these facilities became overloaded and lacking capacity to cater to growing demand in these locations, necessitating government intervention through the NDPHC.
“The NDPHC constructed a total of 77.5kms high capacity 132kV transmission lines, thus providing near quadrupling of the supply (wheeling) capacity out of Ota (from 70MW to 250MW) and thereby eliminating supply constraints and attendant load shedding that had existed before at Ota, and Abeokuta,” Ugbo added.
The Ogun State Governor, Mr Dapo Abiodun, commended the NDPHC for the successful completion of the project, saying,“It is a major leap and a big development towards the Next Level agenda of the Buhari/Osinbajo administration.”
He said the project would be a boost to his administration’s agenda of creating an enduring economic development and individual prosperity for the people of Ogun State.
When contacted by one of our correspondents, the Executive Director, Association of Nigerian Electricity Distributors, Mr Sunday Oduntan, declined to comment on the move by the government to open up the market to new investors.
Also, the Executive Secretary, Association of Power Generation Companies, Dr Joy Ogaji, could not be reached for comment as she had yet to respond to calls or a text message as of the time of filing this report.
The distribution and generation companies carved out of the defunct Power Holding Company of Nigeria were handed over to private investors on November 1, 2013, following the privatisation of the power sector by the President Goodluck Jonathan administration.
But 11 of the electricity firms had been declared technically insolvent.
The Presidency said on Tuesday that the Federal Government would soon propose a bill that would address issues relating to poverty alleviation in the country.
The Special Adviser to the President on Social Investment Programme, Maryam Uwais, stated this during an oversight visit by the joint National Assembly Committee on Poverty Alleviation.
She told the panel, jointly chaired by Senator Lawal Yahaya Gumau and Muhammad Ali Wudil, that the bill would dwell on how to sustain the achievements made so far.
Uwais said the Federal Government was working on the bill in collaboration with relevant stakeholders.
She said, “We feel that we should have a very good team and the same kind of structure with the steering committee. We want to also ask for the state to come up with the same kind of structure. What we need to do is to make it attractive for the states to key into.
“We have come up with a draft bill that we are working on in-house before we come and engage the two chairmen. There are a lot of options that we are looking at, but we want to look at it first at the executive level before coming to you so that we can sustain the achievements,” she said.
She also told the panel that the Federal Government had over 700,000 people captured under beneficiaries of its programmes, adding that it sent money to only about 300,000.
“We have paid over N15m to women in Kwara State in the last three years. Other states have not started, but we are happy that few states are joining. Lagos State is already joining, because I was there yesterday (Monday).
“Right now, we are in 30 states in the school feeding programme. We are in about 56,000 schools in the country and we have received assistance from donors such as the World Bank.”
Wudil said the joint committee would go through the details of the aid received from the World Bank and other donors.
He said, “Your presentation was very wonderful, but we need to have this kind of updates; maybe after every three months, because we represent our people.
“Information is critical, and this is one of the best programmes by this government. But a lot of us may not be aware of what’s happening in our constituencies as far as this programme is concerned.
“When you talked about having a bill on poverty alleviation or whatever, I think you should look at it very well. But it can also come through a private member bill. If it is an executive bill, there is no problem.”
The joint committee had earlier said the oversight visit was an avenue for it to familiarise with the activities of the programme, its achievements since inception, as well as its challenges.
Gumau said they were at the head office of the programme to ensure that they work together with the social investment office towards the success of the programme.