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Power Sector Reform: Electricity mess persists as consumers lament extortion

By BusinessNews Staff on March 2, 2014

Unlike previous governments without genuine, determined efforts to solve the age-long electricity crisis which had plagued the country, the current administration of President Goodluck Jonathan seemed to have taken the bull by the horns with his transformation agenda including the roadmap on power that guaranteed massive access to electricity.

With a fast growing economy and dynamic population of over 167 million people, demand for electric power has out-spaced supply tremendously. The sincerity of the administration in privatising the power sector is not in doubt because in the last two or three years, a well thought-out power sector reform is being implemented almost to the letter especially with the unbundling of the octopus – the Power Handling Company of Nigeria, PHCN into separate generation, transmission and distribution successor companies.

Undoubtedly, the power sector is capital intensive, needing huge financial and technical resources to turn the sector around from the country’s dire electricity shortage and the dismal, unacceptable situation, which had seriously retarded national progress and undermined socio-economic development of Africa’s most populous nation.

The power sector reform anchored on wholesale privatisation saw PHCN assets sand liabilities effectively transferred, funded to a considerable extent by indigenous financial institutions that provided over $3.4 billion.

Recently, a power financing conference was held in Abuja where potential investors met with business owners and regulatory decision makers to comprehend the magnitude of emerging opportunities in the Nigerian power sector.

Tagged as Nigeria Power Sector Investors Conference convened by the Federal Government, it was meant to showcase the new successor power companies and the Transmission Company of Nigeria, TCN, with a view to matching them with credible investors. About 400 foreign and local investors were at the conference.

The Federal Government explained that the power sector requires about $10 billion in the next five years in order to provide additional 5,000 MW to the national grid. For this purpose, a Power Sector Intervention Fund, PSIF, has been established of which an initial deposit of $300 million made to enable interest players in the electricity industry to access cheap long term funds.

Represented by the Vice President, Muhammed Namadi Sambo at the investors conference, President Jonathan said that the special fund will be contributed by the Federal Government, Development Financial Institutions, DFIs, as well as local, global and financial partners.

According to him, in order to meet our strategic national economic growth and developmental goals as contained in the Vision 20: 2020 and the Transformation Agenda, there is need to take decisive and courageous measure to work towards a 40,000 MW target in the years ahead. This informed the decision to reform and privatise the power sector. Investors were told that the transmission network requires an annual investment of about $1.5 billion for the next five years to ensure its reliability and stability.

It was pointed out that the Transmission Company of Nigeria, TCN, has commenced aggressive implementation of the expansion blueprint funded by a mix of appropriation and funds from financial and multilateral institutions. He paid tribute to the dynamism of the Nigerian private sector that ensured the raising of over US $2.5 billion for the successful conclusion of the power sector divestment process, saying that the private sector is better suited to effectively manage and attract the huge capital required for constant and affordable power to all Nigerians.

Those who made presentations at the conference included Dr. Ngozi Okonjo-Iweala, the Minister of Finance and Co-ordinating Minister of the Economy, Minister of Trade, Industry and Investment; Mr. Olusegun Aganga, the Minister of Power, Prof. Chinedu Nebo; Governor of Kogi State, Capt. (rtd) Idris Wada who talked about opportunities in Kogi with Lokoja as the confluence of two major rivers – Benue and Niger for hydro-electricity, abundance of coal and that investors are welcomed, assuring of security.

A representative of the banking institutions disclosed that N750 billion had been provided by banks in the country and more would be given to support the power reform.

A top official of the US government in Washington – an Assistant secretary in the Power Regulatory Department assured support of the Obama administration and a bright future for electricity markets in emerging countries where progress has been made so far and distribution is essential. He said that the world looks up to Nigeria to have a strong regulatory system partnering with US regulatory system.

A representative of NNPC assured power investors at the conference of availability of gas required for the generation process.

Saturday Vanguard can reliably reveal that $11.7 billion will be required by the generation companies. Also $1.5 billion will be required yearly for the next five years to meet gas challenges in the power sector, making a total of $7.5 billion for gas infrastructure.

The Transmission Company of Nigeria requires about $4.4billion to increase power transfer capacity, make the network more stable and reliable, improve efficiency of electric power transfer by reducing transmission technical losses and enable TCN to increase transmission capacity to 16843 MW by end of 2018. TCN is the transmission service provider.

Meanwhile, the Nigerian Electricity Regulatory Commission, NERC, chaired by Dr. Sam Amadi is worried by rising cases of high bills given to consumers. At a recent power sector consultative forum with civil society organizations, Amadi said NERC will ensure that the rules of engagement are followed in the new electricity supply arrangement in the country. He demanded for metering plans from the distribution companies who have duty to meter consumers. They are to do this as part of their operations. But if they cannot do that immediately, he advised they can adopt the Credit Advance Payment for Meter Installation, CAPMI, as alternative for consumers who are willing to advance money to their distribution companies for speedy installation of prepayment meter.

This will help to check “crazy” bills and also facilitate deployment of metersto consumers who advance money for their pre-paid meters which had become elusive.

NERC was created in pursuant to the provision of section 32 of the Electric Power Sector Reform Act ESPRA, charged with various functions including to create, promote and preserve efficient industry and market structures and ensure optimal utilisation of resources for the provision of electricity service, regulation of the electricity market, issues of licenses, formulate regulations and settle disputes.

Investigation showed inconsistency on electricity tariff. For instance, the N750 levied on consumers have been stopped, but this charge is still contained in bills. When this reporter went to pay the February bill 2014, N750.00 was listed among the current charges, demanded by Eko Electricity Distribution company EKEDC.

A consumer, who gave his name simply as Abayomi complained of lack of power supply to his premises for several weeks, yet the bills kept coming and the charges rising. He told Saturday Vanguard: “We are still paying for darkness. Those coming to give us bills are still behaving like PHCN men. They don’t listen to complaints and act accordingly. They still behaved to customers with impunity. The reforms are yet to be seen.

“Maybe with time, things could get better. But for now, nothing is happening.

“The new owners are still in the shadow of PHCN. We are expecting a change.”

Deinde Joseph says things have not changed for good. “For two or three days, there is no power in my area. At times, power is rationed – three days in a week, but bills do not reflect this fact. Worse is that the pre-paid meters promised are not in sight

[Vanguard]

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