In this report, the Transmission Company of Nigeria and stakeholders in the sector provide more reasons why it has become necessary for power distributors to recapitalise, Okechukwu Nnodim writes
Power distribution networks in various parts of Nigeria have been collapsing as a result of the rainfall being experienced across the country, the Transmission Company of Nigeria has declared.
According to the TCN and other stakeholders in the power sector, this and more were reasons why it has become vital for the Federal Government and investors in power distribution companies to recapitalise the firms in order to invest adequately in the networks of Discos.
TCN’s Managing Director, Usman Mohammed, disclosed this recently in Abuja while addressing interested parties who submitted tenders for the design, supply and installation of Optical Ground Wire across some transmission lines and Universal Transport Network Equipment at some substations for monitoring, control and maintenance of system operation facilities.
He said, “Another new dimension that speaks to why the distribution arm must be recapitalised is the fact that when it now rains anywhere across the country, the distribution network collapses like toilet paper. Even Abuja that was built as a modern city, three times it rained in Abuja for not more than 10 minutes, I drove round Abuja city centre and more than 90 per cent of Abuja has no electricity.
“Why? Because even the network that was built by FCDA (Federal Capital Development Authority), which is a public company, cannot be maintained by the private sector operator. They (private operator) have mismanaged and they could not manage it, to the extent that when it rains, Abuja network, which is supposed to be a modern network, collapses like toilet paper.”
Mohammed added, “This is how all over the country, their (Discos) networks are collapsing because of rain. I will give you another example, on May 21, the whole country had this problem of overvoltage. To the extent that we had a system collapse, we tried to bring the system back, but because of the dropping of load by the Discos, we could not secure anything but to force the system to collapse again.
“This was because if we had left the system for another five or 10 minutes, we would have had fire explosions across the country. And even with that, after we collapsed the system, we had explosions in various places like in Jebba, Shiroro and Jos. So that is how pathetic it is.”
The TCN boss argued that the over $1bn investments in the transmission had not been adequately felt by power users because of the poor networks in the country’s electricity distribution arm.
He said, “The Nigerien people are not connected to our network. They are connected to the distribution network. So the Nigerien people in a way do not feel what we are doing. But the fact is that even our equipment is not guaranteed because there is no investment in the distribution network.
“You may ask how? We have 737 interfaces between us and the distribution companies. Out of these 737 interfaces, only 421 are protected on the distribution side. The remaining 316 are not protected or not fully protected. So you will see a 33kV breaker that will trip for about 30 times in a month.
“But in Europe or America, you will find a 33kV breaker that has been installed for like 10 years and it had not tripped for once. At the end of the day, we are having a lot of challenges in managing our network and our transformers are getting damaged. So the Discos must have the required investments in order to have the right protection on their side.”
Mohammed explained that managers of modern grids across the world focused more on frequency and spinning reserve management, not on distribution, but stressed that this was not the case in Nigeria.
“Now, if you go to a modern grid across the world, when you are managing frequency or spinning reserve, you are not supposed to be managing Discos. Rather, you are supposed to manage the tripping of lines or tripping from generators. But in Nigeria, management of Discos is now the problem. So we must have investments in the distribution network,” he stated.
Also, the National Secretary, National Electricity Consumers Advocacy Network, Mr Obong Eko, stated that NECAN had always called for increased investments in Nigeria’s distribution network.
He told our correspondent in Abuja that “the power distribution arm is the closest part of the sector to the final consumer.”
Eko added, “So if this arm of the sector does not have the required investment, then all the impact or positive strides recorded in other arms of the sector may not be felt as much by the final consumer.
“Therefore, you will agree with me that this, of course, is a good reason why the Discos must increase their investments, whether it is through recapitalisation or by whatever means that will ensure that the investment is done.”
But power distributors recently argued that the capital expenditure allowance provided for Discos by the Nigerian Electricity Regulatory Commission, as contained in the 2015 Multi-Year Tariff Order, was inconsistent with the present day realities in the sector.
The Discos’ submissions were further captured in a recent report on the challenges of Nigeria’s power sector that was put together by the French Agency for Development.
The AFD, however, observed that the Discos needed to carry out the massive investment.
It stated that the power firms needed to invest massively in Average Technical Commercial and Collection loss reduction plans including the roll-out of meters, increasing network reliability and network expansion, modernisation and new technologies, customer service improvement plans, internal transformation programmes, capacity building and training, etc.
The French agency encouraged power distributors to increase their transformation capacity at injection substations, redistribute loads connecting substations, get feeders and new transformers, and carry out metering and new connections.
On the concerns by the Discos as regards CAPEX issues, the report noted that there was inconsistency in the capital expenditure allowance provided for the firms in the regulations of the NERC.
The AFD stated that after assessing two projects for metering roll-out in two Discos, it was discovered that the average price for a single phase prepaid meter installed was between N32,700 and N55,000.
Also, the average price for a three-phase prepaid meter installed was between N74,600 and N83,600.
“The capital expenditure allowance limits one Disco to install only around 60,000 to 70,000 meters per year and nothing else in network rehabilitation/expansion, reliability and modernisation.
“Just to close the metering gap in Nigeria, the investment required would be close to $1bn, whereas the CAPEX allowance for all Discos per year is $120m,” the study stated.
It added, “On the other hand, the CAPEX allowed to TCN is over five times more than the one allowed to all Discos together.
“This is not consistent with having an overall perspective. In the meantime, Discos must draft their performance improvement plans to seize the total investment required by the distribution sector.”