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Don’t expect regular power supply soon — Experts

By BusinessNews Staff on March 31, 2014

Experts in the power sector have predicted very slow capacity growth for the private sector-driven electricity industry.

They also noted that this would disrupt the supply of electricity to consumers and advised them not to expect any quick solution to the current power situation in the country.

An Original Equipment Manufacturer with a significant presence in the country’s power distribution and transmission landscapes, Schneider Electric, rated the capacity of the distribution companies low, noting that the growth trajectory was also poor.

The Country President, Schneider Electric Nigeria Limited, Mr. Marcel Hochet, in an interview with our correspondent, said though the country’s actual generation capacity was 3,500 megawatts, he noted the Discos lacked the capacity to distribute the available power.

According to him, the Discos do not know how much power they receive from the Transmission Company of Nigeria and how much power they actually distribute.

The Schneider Electric boss also explained that the Discos lacked the capacity to efficiently bill their customers and recover payment for electricity supplied.

In view of this, Hochet joined other industry stakeholders to state that the Discos as well as the generation companies are currently in dire strait with regard to finance.

In view of this, he urged the new investors to optimise their assets rather than expand them due to financial constraint.

He warned that the expansion of power infrastructure would take a longer time than customers expected and said this would automatically affect electricity supply to consumers.

He said, “The Discos need to optimise their assets. We have to make sure they are able to distribute what is available, which is about 3,500MW. They (Discos) don’t know the megawatts of energy they receive and what they deliver to their customers. They also need to be able to bill their consumers correctly.

“The only thing we can do now is to ensure that what they currently have are well managed; the infrastructure expansion will come later and it will be slow.”

The Federal Government handed over to private investors 11 distribution companies on November 1, 2013; about four months after, the new owners have yet to inject fresh funds into the network to improve their distribution capacity.

The Director-General, BPE, Mr. Benjamin Dikki, had said the Discos would be required to invest about $1.8bn (about N288bn) as capital expenditure over the next five years to meet the required capacity.

The BPE boss stressed that the Discos would be required to spend a total of $357.7m in 2013 alone.

Of this amount, Dikki said the Abuja Disco would be expected to invest $36.6m; Benin, $24.3m; Enugu, $27.2m; Ibadan, $43.86m; Jos, $22.75m; Kaduna, $29.96m; and Kano, $30. 38m. Others are the Eko Disco, $45.2m; Ikeja, $58.74m; Port Harcourt, $25.5m; and Yola, $13m.

The BPE boss added that the same financial outlay of $357.7m was expected to be injected annually into the distribution networks between now and 2017; this would amount to about $1.8bn.

A director, CBO Capital Partners, Mr. Bex Nnwawudu, in a power sector document released in November 2013, had said about $21bn was required over the next seven years to achieve adequate distribution of power to industries and households in the country.

He also said about $4bn was required to install between 23 million and 30 million electricity meters across all segments of consumers in Nigeria.

With the exception of the Ikeja Electricity Distribution Company, which last week said it would be injecting N600m into its distribution network upgrade, none of the Discos has invested a dime into the system since they took over the defunct PHCN assets.

A senior official with one of the Discos, who asked not to be named because he was not authorised to speak on the issue, said the power firms had been unable to raise funds for capital and operational expenditure from the banks.

This, he said, had adversely affected the electricity distribution network, thereby causing the epileptic supply situation currently being experienced in the country.

Hochet, the Schneider Electric boss, who confirmed the financial mess the companies were in, said, “The Discos are facing serious financial challenge. Whenever we want to sell our technology and solutions to them, they ask us to bring not only the solutions but also the finance.”

The Discos are said to have be battling with lack of funds to scale up the distribution networks, inject new transformers, replace several kilometres of aluminium conductors and acquire pre-paid meters for a robust metering scheme.

The source told our correspondent that one of the reasons the Discos have been foot-dragging with providing pre-paid meters was because it would affect their revenue.

The source said, “Why do you think that most of the Discos have been unable to jettison estimated billing? It is because they know that immediately they do that, it will be difficult for them to survive.”

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