Disco inefficiency may stall Nigeria’s 9,000 MW grid power plan
Nigeria’s power generation is set to hit 9,000MW from next year upon completion of eleven key power projects but this is also raising concern that without investments to deepen distribution capacity, over 4,000MW of electricity could be constrained.
Babatunde Fashola minister of Power, Works and Housing while giving the keynote address at the French Week organised by the Franco-Nigerian Chamber of Commerce and Industry in Lagos on Monday, listed the projects and urged the audience consisting of over 200 investors to begin to see the challenges in the power sector as investment opportunities.
Fashola listed some of the projects expected to be delivered to include Azura Power in Edo state with 450MW capacity, Afam power plant in Rivers State with 240MW, a thermal power plant with 227MW capacity in Alaoji, Abia state, a 225 gas fired plant in Egbema, Imo state and a 215 MW dual fired Kaduna Power Plant.
Others are the 254MW capacity Gbarain power plant project, built by the Niger Delta Power Holding Company (NDPHC), 40MW Kashimbilla plant in Taraba state, 29MW Dadin Kowa hydro power plant in Gombe State. There is also a 10MW wind farm in Katsina, 30mw Gurara Hydro power plant in Niger State. The 700MW Zungeru hydro project is set to be completed in 2019.
When completed, these projects could ramp up Nigeria’s power generation from the current level of about 7,000MW to 9,000MW. It could also create fresh problems. Data from the Transmission Company of Nigeria (TCN) indicate that in a ten day period between August 13 and 22, DisCos rejected an average of 1,163.83MW daily which translates to 9,310MW rejected in 10 days.
DisCos say they cannot be compelled to distribute power to areas they are experiencing low collections especially as they already pay far below the cost of power.
“The issue of load rejection needs to be put in context. If I am buying a product at N68 and I am only legally allowed to sell that product for N31. 58 as is the case now, it then means that even if I am able to collect 100 percent of the expected, I still cannot pay for the product 100 percent,” said Sunday Oduntan, director of Planning and Research and spokesman of the Association of Nigerian Electricity Distribution, ANED.
Meanwhile Fashola told the investors that this particular challenge presents an opportunity for investors to tap into such policies like the eligible customer declaration and mini grid regulations to take advantage of this stranded capacity.
“I find it rather strange that business men and entrepreneurs are still talking about power challenge in Nigeria, because the current data and record show that DisCos have a customer base of about 7.5million households in a country of over 180million people so that cannot be a challenge in my humble view, that’s an enormous opportunity,” said Fashola.
Fashola further said, “It’s an opportunity that I think the likes of Schneider and Total have seen, it’s an opportunity that I invite all of you to see because it is there.”
Fashola said opportunities lie in the construction of mini grids, an area the regulatory commission has issued regulations saying very clearly that if you build a mini grid of about 100Kwh, you are not required to obtain a permit but for projects above 1MW.
Laurent Polanceaux, French Consul in his remarks urged the government to show the same enthusiasm for offgrid and renewable energies.
On his part, Bismark Rewane, economist and CEO of Financial Derivatives Company urged restraint, calling for actions that will stay the course of current reforms.
“As the elections are approaching, it is easy to confuse progress for success, while progress is being made, but in reality more work needs to be done,” said Rewane.
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