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Uncertainty over TCN as Manitoba management contract expires

By on June 11, 2015

As the contract awarded by the Federal Government to the Canadian firm, Manitoba Hydro International, to manage the Transmission Company of Nigeria expires next month, all concerned are waiting for the new administration to give direction as to whether it should be renewed or the firm should be privatised.

The immediate past Minister of Power, Prof. Chinedu Nebo, had last year indicated that the TCN would be privatised. The company was left out of the process that saw the successor generation and distribution companies unbundled from the defunct Power Holding Company of Nigeria handed over to private investors in 2013.

The Federal Government had in 2012 signed a three-year contract for the management of the TCN with Manitoba Hydro International of Canada after it emerged the sole bidder. The contract has an option of a two-year extension.

The transmission network, a critical link in the electricity value chain, remains a weak link with a current wheeling capacity of about 4,800 megawatts, according to industry experts.

Some of the challenges said to be facing the electricity transmission company include lack of funds, high transmission losses and radial grid leading to frequent system collapses.

Experts have continued to stress the need to expand the transmission network, saying it would not be able to wheel the electricity generated if the power plants in the country were to operate at full capacity.

The latest figures from the Federal Ministry of Power showed that 3,359.24MW of electricity was generated on Monday, June 8, while 3,281.84MW was sent out to households and businesses.

It has been estimated that a sum of $3.8bn will be required to reinforce the transmission infrastructure.

An energy law and policy expert at Banwo and Ighodalo, a Lagos-based law firm, Mr. Ayodele Oni, said the TCN should be unbundled into separate entities of transmission services provision and system and market operations.

“The transmission services provision entity should be privatised. Government can control the entity that does the system and market operations. It is the transmission services provision that requires major investments and should be privatised,” he said.

When contacted for comment on what would be the fate of the TCN after the expiration of the Manitoba contract, a top official at the Bureau of Public Enterprises, who spoke on condition of anonymity, said “When we get to the bridge, we will cross it. We have not started any privatisation process. We are not yet clear whether the TCN will be privatised or not.”

On his part, the Chairman, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, told our correspondent that the decision as to whether the contract would be renewed or terminated was that of the Ministry of Power and the BPE.

On whether the TCN would be privatised, Amadi said, “It is a policy decision for the new government. Let’s wait and see what the new government will come up with.”

A managing director of one of the privatised power firms, who spoke with our correspondent on condition of anonymity, said there were currently over 50 transmission projects being hampered by lack of funding, describing the management contract as “a disservice to Nigerians working with the TCN.”

He suggested that the Federal Government should either look for partners to finance transmission projects or privatise the TCN.

“Some distribution companies that need transmission expansion in some areas can decide to finance some projects after which they can later be reimbursed by the government,” the source said.

 

[Punch]