The guns in the Niger Delta have been silent in the last four months. The militants who took up arms to protest Nigeria’s skewed income distribution system that has impoverished the region that accounts for 90 per cent of its revenue, have seen reason to give peace a chance.
The dividend of the tenuous peace in the region is noticeable in the nation’s oil fields. Production surged in February to two million barrels per day (mbd). With oil price hovering around $53 per barrel, Nigeria’s income has improved significantly.
The nation’s foreign reserves have crossed the $30 billion mark, thus empowering the Central Bank of Nigeria (CBN) to intervene in the foreign exchange market to beef up the tottering fortunes of the naira.
Since February when the CBN intervention in the foreign exchange market commenced, the apex bank has pumped $2 billion dollars into the market to fill a yawning supply gap and beef up the exchange rate of the naira. Last Friday, the naira closed in the parallel market at N385 to the dollar. Things may be looking up.
Unfortunately the tenuous peace in Niger Delta is not making positive impacts in the power sector. We had all along blamed the gunmen for the epileptic power supply in Nigeria. Their attack on pipelines hauling gas to the nation’s power generating plants crippled their operations. Now the guns have been silent for four months but the darkness has refused to go away. Instead of light, what comes out of the power sector is an endless chain of buck-passing. Last week, a segment of the industry reeled out statistics that sounded like an odd combination of good and bad news rolled into one.
Joy Ogaji, executive secretary of the Association of Power Generation Companies (APGC), an umbrella body of the GenCos, told newsmen that the GenCos have built their combined installed capacity to an all-time high of 12, 500 megawatts (mw).
She argued that at the moment the GenCos are capable of wheeling 8, 000mw of electricity into the national grid at any given time. Ironically, they cannot do it because the Transmission Company of Nigeria (TCN) and the distribution companies (DisCos) cannot handle it. TCN is the only arm of the power sector still owned by the federal government.
The APGC scribe said that though TCN claims to be capable of transmitting 5, 500mw to the DisCos for distribution to consumers, the industry believed that TCN can only handle 4, 500mw.
The DisCos are not faring better either. Ogaji said the DisCos can only handle 4, 600mw.
There are some missing links in the statistics reeled out by APGC. Statistics from the Ministry of Power, Works and Housing put power generation slightly below 4, 000mw. If the GenCos have 8, 000mw available and the TCN is capable of transmitting 4, 500mw to the DisCos which in turn have capacity for distributing 4, 600mw, why does official power generation figure lumber below 4, 000mw? What stops the GenCos from wheeling 4, 500mw into the national grid for onward transmission to the DisCos that by APGC’s account has higher capacity than the TCN?
The truth however is that if power supply to consumers’ homes rises to 4, 500mw, there would be significant improvement in the areas currently connected to the national grid.
APGC’s other reason for Nigeria’s persistent darkness is the debt contagion in the power sector. That is an indisputable fact. It could be deciphered from Ogaji’s argument that the GenCos can only operate at 67 per cent of their installed capacity because they lack the funds to purchase gas. Ironically, even if they were able to operate at 100 per cent of installed capacity, the TCN and the DisCos, the weak links in the power supply chain would still perpetrate the darkness.
However, the GenCos are handicapped by an asphyxiating debt contagion. Ogaji claimed that the power generation companies are owed a whooping N600 billion.
From her account, the money for the power supplied and consumed in January was only paid at the beginning of April. That makes the GenCos chronic debtors to gas suppliers. The power sector debt crisis in turn reduces the ability of gas suppliers to invest in new processing plants that would end gas flaring in Nigeria’s oil fields.
With the debt contagion in the power sector inhibiting investment in gas processing and transmission facilities, beating the 2020 deadline for ending gas flaring may be elusive.
Nigeria has been very slow at adopting solar energy as a way out of its endemic power problem. Even the GenCos are very rigid about diversifying their power sources.
Ironically, the challenge to the industry may be coming from a sector completely alien to power generation and distribution. MTN, South Africa’s telecoms giant which dominates Nigeria’s GSM scene has floated a solar energy pack capable of powering a television set, a fridge and four light bulbs at the rate of N150 per day.
If the telecoms giant is capable of marketing the package, the first casualty of its intrusion into the power sector would be generator dealers. Eventually, the GenCos and DisCos would feel the pinch of the innovation if they fail to respond appropriately.
