How long are Nigerians to wait for steady power supply?

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Babatunde Raji Fashola (SAN), Nigeria's Minister of Works, Power and Housing.

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By Simon Echewofun Sunday

As a guest speaker at the dialogue, Mr. Fashola asked stakeholders in the power sector to look forward to the implementation of policies that would improve gas supply and liquidity, while assuring of completing some projects this year.

Daily Trust reports that key of the constraints dragging down the sector include, reduced quantity of gas supply by Gas Companies (GasCos) thereby cutting generation level, poor revenue collection, foreign exchange crisis, poor metering, and regulatory issues.

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Generation drops as gas supply drags

Spokesperson for the Generation Companies (GenCos) group – the new Association of Power Generation Companies (APGC) – Mrs. Joy Ogaji said in November 2016 that the huge backlogs of debts owed for gas caused the drop in supply, and this equally cut  power generation.

Another industry official last week said the GasCos were persuaded to give gas in December, resulting in the over 4,000mw electricity sustained throughout the yuletide. “After the first week of 2017, it was business unusual when the suppliers decided to cut gas supply saying they too needed money to finance the Forex components of gas production,” he revealed.

The national grid, according to the Nigeria System Operator (NSO) yesterday, improved to only 2,600 megawatts (mw) after it went down to 1,900mw last Thursday with three system collapses recorded so far. The quantity of supply, experts said, is barely enough for the industrial hubs of Lagos State let alone serve the entire nation of about 193 million population as cited by the United Nations. The inadequate supply has been followed by outages in many parts with some electricity customers in Abuja, Nasarawa, Benue, Kaduna and Kano states claiming to have stayed for about seven days without a blink.

Fashola’s approach: The minister admitted that there have been prolonged outages and assured that he, the Permanent Secretary (Power), Mr. Louis Edozien and other officials were trying to intervene.

He also confirmed the cause of drop in generation as he blamed the sabotage of gas pipelines by those he described as “some of our angry brothers”. However, the key issue at stake (GenCos’ huge gas supply debts), he said had discouraged the GasCos who withheld supply of gas.

He explained that the frequent outages due to sabotage of power assets caused a slid in revenue from the Distribution Companies (DisCos) who could not pay the GenCos. They too could not pay gas suppliers and the GasCos could not pay their bankers for debts that have accumulated since 2015.

Fashola said the federal government and the World Bank were coming up with a policy that would boost liquidity in the sector and clear the gas debts. Although it is yet to be presented at the Federal Executive Council (FEC) meeting, the minister said such policy would stimulate better performance from power operators.

“If we have that, at least, we can be sure that those who are supplying gas will not be shutting down because their creditors are pulling them,” Fashola assured.

Poor collection dropping liquidity

The DisCos have said the low revenue collection is often occasioned by inadequate electricity to give to their customers. However, industry stakeholders also advanced that poor metering capacity has promoted the evasiveness of many customers from paying for the electricity they consume. One of such is the over N100 billion debts owed by unmetered Ministries, Departments and Agencies (MDAs) of governments.

The Association of Nigerian Electricity Distributors (ANED) last December said the non-payment of electricity bills has resulted in the 11 DisCos having over N200 billion as invoicing debts with the Nigeria Bulk Electricity Trading Plc (NBET), the public agency that pays GenCos for generated power.

Stakeholders have insisted that NBET is supposed to use its huge sovereign guarantee fund to offset the GenCos’ gas debts until there is more power and the DisCos’ collection improves.

FG’s plan: Apparently, it seems NBET has crashed on this role as the minister revealed that it is this new policy (yet to be approved) that will help achieve the financial strengthening of NBET. The policy will also help to realise a deepening of metering by DisCos; sanctions for energy theft and better contract performance from operators in the power sector, Fashola noted.

This piece first appeared on Daily Trust 24/01/2017.


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