After successive
Peoples Democratic Party-led administrations failed to realise their
power generation targets,
Ejiofor Alike writes that President
MuhammaduBuhari's target of 10,000MW by 2019 can only be realised if his
administration develops strategies to increase available generating
capacity by addressing the challenges of gas supply, transmission and
vandalism
With the solid
foundation laid by former President Olusegun Obasanjo's administration
in the power sector to reform the sector and improve generation,
transmission and distribution, the administration had set a generation
target of 10,000 megawatts by 2007.
But he handed over
only generation that was slightly below 3,000 megawatts when his tenure
of office ended on May 29, 2007, out of the 10,000mw he had promised.
On assumption of
office, the late President Umaru Musa Yar'Adua made power generation one
of the pillars of his administration's Seven-Point Agenda.
He revised downward
the 10,000MW target set by Obasanjo for 2007 to what he thought was a
more realistic target of 6,000MW for 2009.
Yar'Adua had during
his campaign, promised to declare an emergency in the power sector but
this promise was not fulfilled before he suffered health challenges that
eventually took his life.
But by the end of
2009, the then Minister of Power, Dr. LanreBabalola, admitted that only
about 3,500 MW of electricity was actually being generated from both
Power Holding Company of Nigeria (PHCN) and Independent Power Plants
(IPP) operated entities, and blamed gas supply inadequacy, sabotage, the
Niger delta crises, among others for the failure of the administration
to attain the target.
On assumption of
office as acting President, Dr. Goodluck Jonathan had set a target of
5,000MW by December 2011, through his Presidential Task Force on Power,
headed by Prof. Bart Nnaji, who later became Minister of Power.
However, the target
was not met and Nnaji's successor, Prof. Chinedu Nebo shifted the
5,000MW target to December 2014 and later January 2015 but it was still
unrealisable.
But by the time 2015 ended, Nigeria's generation was around 4,000MW of electricity.
After the previous
administrations of Obasanjo, Yar'Adua and Jonathan failed to achieve
generation targets, President MuhammaduBuhari has set 10,000MW for 2019.
It has been argued that setting frivolous targets to score cheap political points has been the bane of Nigeria's power sector.
According to
experts, setting targets without finding permanent solutions to funding
challenges, gas pipeline vandalism, weak transmission infrastructure and
perennial shortages of gas will not take any administration anywhere,
as far as the power sector is concerned.
Under the capital
spending plan for 2016 fiscal year, the Ministry of Power, Works and
Housing got the lion share of N422.9billion in the budget.
But the tackling
vandalism and gas shortages should be a priority of this administration
if the 10,000MW target set for 2019 will be realistic.
There is no doubt
that Buhari's target will be more realistic than the previous targets
given the foundations laid by Obasanjo by way of enabling legislations
and the power projects executed by Jonathan, which are well-positioned
to boost generation to an all-time high if the perennial challenges are
permanently tackled.
The country's peak
generation ever attained was 5,074.7MW, while national peak demand
forecast is 17,720MW. The country currently has an installed capacity:
11,165.40MW but only an available capacity of 7,139.60MW.
The former Chairman
of NERC, Dr. Sam Amadi and a former Group Executive Director (GED) in
charge of Gas and Power at the NNPC, Dr. David Ige told THISDAY in
separate interviews at the weekend that President Buhari's 10,000MW by
2019 was realistic and achievable.
To Ige, the target
is realistic and adequate in the sense that a significant portion of
that target was almost already in place from a generation point of view,
while a lot is being done on both transmission and gas supply, that can
bridge the gap by 2019.
Ige said the
federal government should incentivise the gas producers, which are
mainly Nigerian independents, stressing that the key challenge they have
is access to acreage.
According to him,
the international oil companies (IOCs) sit on most of the country's gas
reserves, yet have not made meaningful contribution to the domestic
capacity, whilst the Independents with less than 10 per cent of the
available reserves are making the most contribution.
" I suggest the
incentives should include a more visible reward for those that
contribute to the domestic market e.g. make more acreages available to
the Independents, review the fiscal terms for gas for this category and
adjust as appropriate to reflect the lack of robustness of their
portfolios. Federal government must deploy more stringent criteria
before renewing acreages for underperforming companies," he added.
On the clamour for
higher gas price as incentive, Ige, who is the Chief Executive Officer
of GasInvest Limited, said the domestic gas price was adequate.
"It may interest
you to note that on aggregate, the domestic gas price is higher than the
transfer price to export. More importantly, the pricing of gas, beyond
gas in the domestic obligation is done on a 'willing buyer, willing
seller' basis, that is, market determined. What we need to address is
the unsustainable and avoidably high cost of production (by the NNPC/IOC
JVs') of gas and oil. Efficiencies must be introduced so as to make
Nigeria competitive. Price cannot be used as a mitigant for unchecked
high costs," Ige explained.
On his part, Amadi
said the problem of generation was two-fold: access to adequate gas
supply to generators and bankable contracts.
According to him, NERC had solved the main regulatory problem of gas supply, particularly pricing.
"What remains is
to move quickly to contract-based trading; Let every generator have
bankable contracts with gas suppliers and with bulk trader. Let Bulk
Trader have bankable contracts with discos. Anyone who fails in the
value chain bears the cost. Simple! With consumers now paying the cost
reflective tariff there is no room for excuse anymore why we can't march
straight to the contract-based market. The excuse of revenue shortfall
is better managed inside a contract market rather than outside. If we do
these things very well and restore NERC to its statutory form and
powers, then 10,000mw target is readily achievable," Amadi explained.
"Clearly the target
of 10,000MW is very achievable by 2019. That is not a tall target
considering where the sector is now, but it is a reasonable one, as it
is better to over perform. What is required to achieve that target is
better project management. I have argued that the real challenge of the
electricity sector reform now is project management and not necessarily
change of model. We have a project management problem not a modeling
problem," Amadi added.
The former NERC
boss noted that what the agency did in NERC in the last five years had
guaranteed a stable electricity model even in the face of very acute
problems of poor quantity and quality of electricity.
Tackling militancy/vandalism
Militancy and vandalism are twin evils that have crippled Nigeria's power sector by disrupting gas supply to the power plants.
A Chief Executive
Officer of an Exploration and Production (E &P) company, who did not
want to be quoted, told THISDAY at the weekend that the problem of E
&P companies was not the drop in oil price but production deferment.
"Last year, we
suffered almost 100 days of production deferment out of 365 days in the
year. We are just beginning this year and we have suffered almost 50
days. All the companies using Forcados pipeline have not been producing
since the past six weeks but they are doing all they can to evacuate
condensate gas to keep delivering gas to for power generation. If they
have not been doing that, the current power situation would have been
worse," he explained.
Many analysts believe President Buhari's administration is mishandling the Niger Delta crisis.
This
administration's first six months were devoid of vandalism of oil and
gas assets but the honeymoon is over as destructive attacks on gas
facilities have brought power generation to drop to an all-time low.
While some have
aligned with government's decision to go after agitators who vandalise
gas infrastructure, others have suggested that the administration should
opt for negotiations as the late President Yar'Adua's administration
did, which resulted in the acceptance of the Amnesty Programme by
repentant militants.
Speaking on the
issue of vandalism, Ige suggested that social engagement that will
encompass inclusion and empowerment is inevitable in the Niger Delta.
According to him, force goes only so far, given the terrain and the capacity of the military.
He said global and
local enforcement of the anti-corruption principle would gradually make
it more difficult for those engaging in vandalism to corruptly enrich
themselves via use of bank verification number and tracking of accounts.
Ige suggested
technology deployment for surveillance of infrastructure and rapid
response using drones, monitoring and classification of contractors for
effective policing of contractors that may be colluding and rapid
response repair system.
"Whilst much can be
done to reduce vandalism, it may not be possible to eliminate it
completely in the short term. Nigerian Gas Company and the IOCs in
charge of infrastructure ought to have in place a rapid response and
repair mechanism that minimises downtime from pipeline attack," he
added.
"Overall, I believe
the target is realisable. If we did all that was possible to bring the
many gas projects that are over 80 per cent complete to 100 per cent
complete, you will be amazed how rapidly the story of power will change
in Nigeria. Encourage and incentivise the Independents, engage the
militants, outlaw community interruption of contractors working on
government projects, address the payment challenge in the sector and
clear all outstanding debts to gas suppliers. These are all very doable
and the results will amaze Nigeria," Ige added.
Transmission constraints
Though the
country's current transmission capability is 7,000MW, actual network
operational capability is only 5,500.00MW, according to data obtained
from the Transmission Company of Nigeria (TCN).
According to Amadi,
"If we start implementing the tariff as proposed with its incentives
for distribution efficiency, then we can be sure that Discos will be
able to receive even 15,000MW by 2019.
"Then you go to
transmission. Part of the tariff review is the change in transmission
charges so that more investment can be made in transmission. If you
marry better revenue with more efficient and less political management
of the TCN you will be sure that TCN will wheel out over 10,000MW by
2019. But if we continue with business as usual you can't guarantee
this. But NERC's regulatory framework guarantees this level of
efficiency if enforcement is vigorous," he added.
Amadi however,
added that without appointment of commissioners, NERC would remain
comatose, in spite of the hard work and best intentions of the
management staff.
He called for
massive investment on network to expand the capacity and also ensure
quick response to line and fault clearing so that there are no downtimes
in distribution of electricity.
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