Power Punch The Senate’s Bill to Improve Power Supply by aisi July 28, 2022 written by aisi The Nigerian Senate recently passed a bill to improve the power supply to electricity consumers in the country. The Electricity Bill 2022 is a follow-up to the report of the Senate Committee on Power. It aims to enable a legal and institutional framework that maximally harnesses the sector’s privatisation. The partial privatisation of the electricity sector in 2013 led to the creation of six generation companies (GenCos), 11 distribution companies (DisCos) and the government-run Transmission Company of Nigeria (TCN). Although the introduction of the private sector intended to improve investment and efficiency in the electricity industry, the sector is plagued with many challenges today. The GenCos, DisCos, and the TCN face their respective bottlenecks that impede electricity supply to customers and the sector’s growth. These challenges include unavailable gas supply, poor network infrastructure and Aggregate Technical, Commercial and Collection (ATC&C) losses. However, one of the most pressing concerns is the inability of the transmission and distribution sub-sectors to wheel and distribute generated electricity to customers. The GenCos revealed in a 2021 fact sheet that despite the average power generation capacity being 6,336.52MW every month, the capacity put on the grid averaged at 4,118.98MW. This totalled 26,976MW of stranded power in 2021. However, the Senate’s Electricity Bill to improve power supply aims to reduce the stranded power in the sector. According to Gabriel Suswam, Chairman Senate Committee on Power, the bill would improve the use of generated power through investments when passed into law. He added that the bill would encourage policies and regulations that enable the transmission network’s expansion and address the industry’s technological limitations. However, the bill to improve power supply would not be the first intervention in the electricity sector. In fact, the industry has received over ₦2 trillion in investments post-privatisation. One of these investments is the most recent Central Bank of Nigeria (CBN) intervention of $250 million (₦103 billion) to improve the rehabilitation of transmission and distribution infrastructure. In addition, there is also the CBN-funded Nigerian Electricity Market Stabilisation Facility (NEMSF) of ₦213 billion, among other interventions. The apparent failures of past intervention programmes in Nigeria’s electricity sector have led to stakeholders’ opinions. As a result, some stakeholders have suggested that the privatisation process be reversed as the challenges continue to affect electricity customers in terms of poor electricity supply, tariff hikes and the increased cost of running alternate power generation sources. According to Comrade Hassan Sunmonu, the Pioneer President of the Nigeria Labour Congress (NLC), “Even with the privatisation, the government is still spending public funds on the sector. If not, the whole country would have been in total darkness by now. I’m 100 per cent in support of the government reviewing the privatised power sector.” So, if these past interventions have failed to increase the sector’s efficiency, what assurances are there that the Electricity Bill to improve power supply would be beneficial? What frameworks would ensure the monitoring of investments to develop the electricity network infrastructure? And how can electricity customers in the country be convinced that this isn’t another inconsequential move to improve the Nigeria Electricity Supply Industry (NESI)? July 28, 2022 0 comment 0 FacebookTwitterPinterestEmail
Power Punch NERC’s PPA Order: Achievable or not? by aisi June 28, 2022 written by aisi Today, the electricity supply in Nigeria continues to worsen, and stakeholders in the Nigerian Electricity Supply Industry (NESI) have their own opinions on ways to improve the situation. The most recent of these ways is the Nigeria Electricity Regulatory Commission’s (NERC) move to activate a new Power Purchase Agreement (PPA). However, there are concerns about whether NERC’s PPA order is achievable or not. According to the letter sent to one of the Generation Companies (GenCos) by the NERC secretary, Ada Ozoemena, the PPA is expected to be activated today between the Nigerian Bulk Trading Plc. (NBET) and the GenCos. The Power Purchase Agreement conditions GenCos to produce a minimum of 5,000 MW (5 GW) to improve the country’s electricity supply situation. However, Generation Companies have come up with reasons why the order would not be achievable. GenCos have stated that to produce 5,000 MW, firstly, gas supply must be guaranteed. Gas availability has for long been a hindrance to electricity production in Nigeria. According to the National Control Centre, post-privatisation, the thermal GenCos have only gotten about 13 per cent of the 28,000 MW of gas equivalent required for electricity generation. Despite the federal government’s (FG) attempt to address the gas supply challenge to GenCos, it is still a huge factor contributing to the poor generation capacity. And this is a factor in determining whether NERC’s PPA order is achievable. GenCos have also mentioned that they are still owed about 1.64 trillion nairas from the previous agreement. They stated that discrepancies in the previous agreement led to the federal government paying 701 billion nairas to the gas suppliers, but the rest is on their account. Again, it was further agreed under clause 13.4.1 of the Agreement that: ‘for each billing period during the delivery term, seller shall invoice buyer for the capacity payment, energy payment, take or pay payment, and start-up cost payable to seller for such billing period upon receipt of the final settlement statement from the market operator following the applicable billing period.’ The payment shown in such invoice as due to seller shall be paid by buyer on or before the 15th business day following the day the invoice is delivered to sector whether buyer disputes the invoiced amount. Despite the GenCos’ claims, the NBET insists that payment was made to the generators when due. She stated: To put in context, NBET makes payment to GenCos as and when due, and has never defaulted on any payment cycle till date. Furthermore, the percentage payment made to GenCos has continually been on the increase, with the N701.9 billion PAF payment, which ensured a minimum of 80 per cent of GenCos invoices for 2018 and 2019, as well as the second PAF of N600 billion that ensured an average of 95 per cent payment of GenCos invoices for 2020. Also, with the current Power Sector Recovery Operation (PSRO) programme that caters for tariff shortfall, GenCos have continued to receive over 90 per cent payment of their generating invoices for the 2021 payment cycle. To determine if NERC’s PPA order is achievable or not, firstly, strategic efforts must be made to ensure gas availability for power-generating companies. Also, all parties should be involved in drafting agreements to encourage mutual clarity on outstanding debts. Finally, if GenCos succeed in producing 5,000 MW of electricity, will the NESI’s current infrastructure be able to accept this capacity? June 28, 2022 1 comment 0 FacebookTwitterPinterestEmail
