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When Will Nigerians Enjoy Stable Electricity?

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Unarguably, the provi
sion of stable and uninterrupted power supply is key for accelerated economic and industrial development of any country. Analysts are quick to point out that Nigeria’s quest to become one of the 20th economies in the world may as well be a mirage without stable electricity supply.
They say that stable electricity supply will reduce the cost of manufacturing and services; boost investment and employment, among others.
However, in spite of its importance, efforts to guarantee sustainable stability in the power supply chain has remained elusive despite huge investments in the sector by successive administrations since independence.
For instance, available records showed that the Olusegun  Obasanjo’s government spent over three billion dollars on its National Integrated Power Project (NIPP) as at 2007. This, according to Gov. Gabriel Suswam of Benue, the Chairman, Joint Transaction Technical Committee, is out of the over 10 billion dollars earmarked for the NIPP.
He said that the amount was also inclusive of the two billion dollars Federal Government’s counterpart funding for Mambilla Hydro Power project and the 1.4 billion dollars set aside for additional nine turbines plants.
At the moment, four of the projects which on completion would generate 4,774MW, had been completed, while six others are at 80 to 90 per cent completion.
To further boost the initiative, the President Goodluck Jonathan’s administration has strengthened the power sector reform by fully privatising the Power Holding Company of Nigeria (PHCN).
The exercise eventually resulted in the unbundling of the PHCN and the establishment of power Distributing Companies (DISCOs) across the country.
Although the reform is yet to significantly improve power stability nationwide, the World Bank, however, applauded the government for the initiative, with a call on other African countries to emulate the policy.
Mr Mukhtar Diop, the bank’s Vice President, Africa, made the commendation while listing some infrastructural achievements in Africa, during the recent African Union Summit on Financing Infrastructure Development, in Dakar, Senegal.
According to him, the power reform is one of the ways of solving Africa’s problems by Africans. “We must commend the leadership in Nigeria for the successful completion of the privatisation of the country’s power sector. “The electric reform in that country is one of the ways of solving Africa’s problems by Africans. We commend the country for that.”
It is, perhaps, against this backdrop, that President Goodluck Jonathan promised to restore uninterrupted power supply to Nigerians by the end of 2014.
Jonathan gave the assurance while commissioning the NIPP 500MW Omotosho II Power Station at Omotosho in Okitipupa Local Government Area of Ondo State.
He said that his optimism was based on the progress in the completion of the ongoing 10 independent power projects spread across the country.
“My administration is committed to boost electricity supply in the country. Today, we are in Ondo State to commission Omotosho Power Plant that will also serve the people of these areas and improve electricity supply in the country.”
But in spite of the government’s assurances, pundits doubt that uninterrupted and stable power supply to Nigerians would be achieved by the end of 2014.
Mr David Ladipo, whose company, Azura, is spending 700 million dollars to build a 450 MW plant in South Africa,  insists that with  the situation on ground, it will still take Nigeria 50 years from now to enjoy stable power supply.
Ladipo told Reuters news agency that Nigeria would need about 140,000MW to guarantee stable power supply.
‘’Nigeria is still scores of years away at this threshold. At present, it generates a meagre 4,000 MW for a population estimated at 170 million.
‘’South Africa, with a population of about 50 million people, produces about 40,000 MW  of electricity and has been trying in recent years to increase output.
“It will probably take Nigeria another 50 years before it attains the same level of electricity consumption per capita as South Africa currently enjoys today,” Ladipo said.
However, Gov. Babatunde Fashola of Lagos State believes that with patience and commitment, Nigerians will soon enjoy the dividends of the ongoing power sector reforms.
Fashola expressed the optimism in Lagos at the closing ceremony of the 7th Lagos Economic Summit, tagged: Ehingbeti. According to him, the privatisation of the power sector will not be successful without the cooperation of investors and consumers.
He urged the public to develop energy conservation culture and manage existing power infrastructure adequately. “We should desist from illegal connections of electricity and ensure that our bills are paid appropriately.
“Electricity poles should not be used as speed breakers by reckless drivers; we should all protect the infrastructure from being damaged,’’ the governor said.
The Minister of Power, Prof. Chinedu Nebo, shares similar sentiments, noting that the Federal Government has concluded plans to explore ways of implementing the Indian power sector model in order to further boost the nation’s capacity to generate more power.
Nebo stated this recently in Abuja when he received a delegation on power from India.
The minister said that the Nigerian power sector which was still in a transitional stage after the privatisation still had a lot to learn  from the Indian experience.
According to him, this is because of the peculiarity between both nations’ power sector. He said the ministry would soon summon a stakeholders’ forum of all Generating Companies (GENCOs), Distribution Companies (DISCOs) and the regulatory bodies to take a closer look on how India transformed its power sector.
Nebo also invited the Indian delegation to the first National Council on Power conference slated for August 2014 in order to have a robust discussion.
The minister assured the delegation that the Federal Government was committed to achieving 10,000 MW by the end of the year despite the challenges.
Speaking on behalf of the DISCOS, the Chief Executive Officer of Eko Disco, Mr Oladele Amoda, said the company had already had a technical arrangement with Tata of India.
He urged the India delegation to take seriously the issue of transfer of technology so as to fast-track the development of the sector.
The Indian High Commissioner to Nigeria, Mr Ajjampur Ghenashyam, who also spoke,  advised Nigeria, as the hub of economic activities in the West African sub-region, to take the lead in the development of regional power market.
He said that India had achieved over 400 per cent leap in generation capacity in the last 10 years due to the competitiveness of the market.
Ghenashyam said countries like Nepal, Bangladesh, Bhutan and Pakistan had already been enjoying from seamless cross-border market and this had further boosted confidence for investment flow into the sector.
The envoy said that India was ready to partner with Nigeria in the development of the nation’s power sector.
Nonetheless, analysts have advised the government to also invest in the development of alternative sources of energy, such as wind and solar in order to boost the capacity of the country to meet its energy requirement.
They also advise the government to fast-track the completion of the NIPP projects in order to realise the objective of providing uninterrupted power supply to Nigerians by the end of 2014.
Mr Adamu,writes for   News Agency of Nigeria (NAN).

 

Sani Adamu

L-R:  Chairman, Liaoning Efacec, Chief Sam Amyamele, Vice President, Engineering, Mr Li Jiawei, Vice President, International, Ms Hliang Xae Li and Minister of Power, Prof. Chinedu Nebo, signing a memorandum on power in Abuja, recently.

L-R: Chairman, Liaoning Efacec, Chief Sam Amyamele, Vice President, Engineering, Mr Li Jiawei, Vice President, International, Ms Hliang Xae Li and Minister of Power, Prof. Chinedu Nebo, signing a memorandum on power in Abuja, recently.

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Oil & Energy

NERC, OYSERC  Partner To Strengthen Regulation

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THE Nigerian Electricity Regulatory Commission (NERC) has stressed the need for strict adherence to due process in operationalizing state electricity regulatory bodies.
It, however, pledged institutional and technical support to the Oyo State Electricity Regulatory Commission (OYSERC).
The Chairman, NERC, Dr Musiliu Oseni, who made the position known while receiving the OYSERC delegation, emphasised that the establishment and take-off of state commissions must align fully with the law setting them up.
Oseni said that the NERC remains committed to partnering with State Electricity Regulatory Commissions (SERC) to guarantee their institutional stability, operational effectiveness and long-term success.
He insisted that regulatory coordination between federal and state institutions is critical in the evolving electricity market framework, noting that collaboration would help to build strong institutions capable of delivering sustainable outcomes for the sector.
Also speaking, the Acting Chairman, OYSERC and leader of the delegation, Prof. Dahud Kehinde Shangodoyin, said that the visit was aimed at formally introducing the commission’s acting leadership to the NERC and laying the groundwork for a productive working relationship.
Shangodoyin said , the acting members were appointed to provide direction and lay a solid foundation for the commission during its transitional period, pending the appointment of substantive members.
“We are here to formally introduce the acting leadership of OYSERC and to establish a working relationship with NERC as we commence our regulatory responsibilities,” he said.
He acknowledged NERC’s readiness to provide technical and regulatory support, particularly in the area of capacity development, describing the backing as essential for strengthening the commission’s operations at this formative stage.
“We appreciate NERC’s willingness to support us technically and regulatorily, especially in building our capacity during this transition,” he added.
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NLC Faults FG’s 3trn Dept Payment To GenCos

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The Nigeria Labour Congress and the Association of Power Generation Companies have engaged in a showdown over federal government legacy debt.
NLC president Joe Ajaero has faulted the federal government’s move to give GenCos N3 trillion from the Federation account as repayment for a power sector legacy debt, which amounts to N6.5 trillion.
In a statement on Thursday, Ajaero said the Federal Government proposed the N3 trillion payment and the N6 trillion debt as a heist and grand deception to shortchange the Nigerian people.
“Nigerians cannot and should not continue to pay for darkness,” Ajaero stated.
Meanwhile, the Chief Executive Officer of the Association of Power Generation Companies, APGC, Dr. Joy Ogaji, said Ajaero may be ignorant of the true state of things, insisting that the federal government is indebted to GenCos to the tune of N6.5 trillion.
She feared the longstanding conflict could result in the eventual collapse of the country’s power.
According to her, the federal government’s N501 billion issuance of power sector bonds is inadequate to address its accumulated debt.
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PENGASSAN Rejects Presidential EO On Oil, Gas Revenue Remittance  ……… Seeks PIA Review 

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The Natural Gas Senior Staff Association of Nigeria(PENGASSAN) Festus Osifo, has faulted the public explanation surrounding the Federal Government’s recent oil revenue Executive Order(EO).
President of the association, Festus Osifo, argued that claims about a 30 per cent deduction from petroleum sharing contract revenue are misleading.
Recall that President Bola Ahmed Tinubu, last Wednesday, February 18, signed the executive order directing that royalty oil, tax oil, profit oil, profit gas, and other revenues due to the Federation under production sharing, profit sharing, and risk service contracts be paid directly into the Federation Account.
The order also scrapped the 30 per cent Frontier Exploration Fund under the PIA and stopped the 30 per cent management fee on profit oil and profit gas retained by the Nigerian National Petroleum Company Limited.
In his reaction, Osifo, while addressing journalists, in Lagos, Thursday, said the figure being referenced does not represent gross revenue accruing to the Nigerian National Petroleum Company Limited.
He explained that revenues from production sharing contracts are subject to several deductions before arriving at what is classified as profit oil or profit gas.
Osifo also urged President Bola Tinubu to withdraw his recently signed Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity, 2026.
He warned that the directive undermines the Petroleum Industry Act and could create uncertainty in the oil and gas industry, insisting that any amendment to the existing legal framework must pass through the National Assembly.
Osifo argued that an executive order cannot override a law enacted by the National Assembly, describing the move as setting a troubling precedent.
“Yes, that is what should be done from the beginning. You can review the laws of a land. There is no law that is perfect,” he said.
He added that the President should constitute a team to review the PIA, identify its strengths and weaknesses, and forward proposed amendments to lawmakers.
“When you get revenue from PSC, you have to make some deductibles. You deduct royalties. You deduct tax. You also deduct the cost of cost recovery. Once you have done that, you will now have what we call profit oil or profit gas. Then that is where you now deduct the 30 per cent,” he stated..
According to him, when the deductions are properly accounted for, the 30 per cent being referenced translates to about two per cent of total revenue from the production sharing contracts.
“In effect, that deduction is about two per cent of the revenue of the PLCs,” he added, maintaining that the explanation presented in the public domain did not accurately reflect the structure of the deductions.
Osifo warned that removing the affected portion of the revenue could have operational implications for NNPC Ltd, noting that the funds are used to meet salary obligations and other internal expenses.
“That two per cent is what NNPC uses to pay salaries and meet some of its obligations.The one you are also removing from the midstream and downstream, it is part of what they use in meeting their internal obligations. So as you are removing this, how are they going to pay salaries?” he queried.
Beyond the immediate impact on the company’s workforce, he cautioned that regulatory uncertainty could affect investor confidence in the sector.
“If the international community and investors lose confidence in Nigeria, it has a way of affecting investment. That should be the direction. You don’t put a cow before the horse,” he added.
According to him, stakeholders, including labour unions and industry operators, should be given the opportunity to make inputs at the National Assembly as part of the amendment process saying “That is how laws are refined,”
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