Oil & Energy
Economist Gives Reason For High Cost Of Electricity
A Development Economist, Prof Uche Nwogwugwu of the Nnamdi Azikiwe University, Awka has attributed the crisis in the Nigerian electricity sector to poor generation and energy loss in the course of transmission.
Nwogwugwu told The Tide source in Awka, Anambra State at the weekend that the high cost of electricity in Nigeria was mainly due to the inefficiency in the sector, noting that customers should not be made to fund the cost.
The Energy Expert who said about 40 per cent of energy generated was lost in transmission because of aging infrastructure, pointed out that supply has not matched demand.
He said general expectation was that upon unbundling of the sector, Nigerians would enjoy better electricity services but expressed worry that poor supply and increased cost had characterised the sector.
“Energy is not cheap no matter the source, where it is cheap, it may have either been paid for or subsidised just like any other commodity but it is important because it is a critical infrastructure for sustainable economic development.
“The history of electricity generation in Nigeria is public domain, from the era of Electricity Company of Nigeria to this stage where it has been unbundled and gave rise to Generation, Transmission and Distribution companies.
“But much as the GENCOs have not generated maximally, and TRANSCOs not been able to transmit electricity without energy loss, there is bound to be crisis in Nigeria energy sector.
“Electricity supply has not marched demand, a situation where we have about 40 per cent of total generation lost to transmission and energy theft is quite worrisome.
“Because of these identified challenges, increasing the cost of electricity becomes the only likely way the industry players can remain in business, which in turn hurts the economy by depleting income and consumption,” he said.
Nwogwugwu said what the sector needed now was additional investment by investors to improve efficiency rather than stifling the economy by making people to pay more.
He faulted blamed the players in the sector for having jot demonstrated that they had the manpower and financial capacity to drive and efficient and cost reflective electricity sector.
“It is a systemic problem, at the unbundling stage, the companies were even given loans as a way of making them start up smoothly, meaning that from inception they lacked the capacity to drive the sector.
“There is need to clean and upgrade the upgrade electricity infrastructure to reduce losses, these companies were supposed to come with money and expertise.
“Already, our industries are starved of energy what it means is that producing optimally but the complaints now are coming from the household consumers.
“The impact of increasing electricity cost is that it will negatively affect consumption pattern and the dilemma is that electricity is completely inelastic.
“Customers will have no option than to pay because they need electricity but the question is, will the commodity be available, how will the increase affect supply,” he said.
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Delta Targets 120MW Power Boost, Moves To Cut Reliance On National Grid
The State Commissioner for Works (Rural Roads) and Public Information, Charles Aniagwu, disclosed this at a press conference in Asaba, weekend, noting that the initiative was part of wider reforms aimed at opening up the power sector to private investors.
Aniagwu, who was accompanied by the Executive Assistant to the Governor on New Media, Felix Ofou, said the state was exploring alternative sources of electricity to support businesses, households and communities while reducing pressure on the national grid.
He said the government was particularly interested in exploiting Delta’s abundant natural gas resources for power generation, pointing to the Kwale Free Trade Zone, which is part of the state’s special economic zone, as a major opportunity for investors.
According to him, prospective investors were taken to the zone during the state’s recent economic summit to enable them to assess the availability of gas as a key raw material for electricity generation. ComparePower Rates
The commissioner explained that generating more electricity locally would not only increase supply in Delta but also free up power on the national grid for use by other consumers.
Aniagwu cited the 8.5MW Independent Power Plant located behind the state secretariat in Asaba as an example of what could be achieved through alternative power sources.
He said the facility had enabled the secretariat complex to operate independently of the national grid, thereby making the electricity that would otherwise have been consumed there available to other users.
He added that the planned 120MW partnership with Supply Power would further strengthen the state’s electricity supply capacity and provide a more reliable power base for small and medium-sized enterprises.
Aniagwu said the state government was also intervening in areas traditionally regarded as the responsibility of electricity distribution companies because inadequate power supply could no longer be allowed to constrain economic development. LearnQuantum Physics
He identified the extension of the electricity grid from Abraka towards the Ndokwa axis as one of the interventions being undertaken to connect more communities to electricity.
The commissioner, however, raised concerns over the burden placed on communities that are often required to provide transformers and other electricity infrastructure, only for distribution companies to take over the facilities and subsequently collect electricity bills without adequately accounting for the investments made by the communities.
He said the state would continue to support efforts aimed at energising communities, noting that improved electricity supply would stimulate businesses, create jobs and help tackle social problems associated with unemployment and idleness.
On regulation, Aniagwu said the government was working with the Ministry of Energy and a committee set up to develop an appropriate regulatory framework for the state’s emerging power sector. SwitchEnergy Plans
He said the proposed energy commission would be responsible for regulating new electricity producers, determining appropriate tariffs and overseeing distribution networks.
The commissioner stressed that liberalising the sector required effective regulation to protect consumers and investors, adding that decisions on power distribution infrastructure, including the use of overhead or underground lines, must take into account the peculiarities and safety requirements of each location.
He warned that power expansion without adequate regulation could expose residents to electrocution and other hazards, stressing the need to protect electricity infrastructure while ensuring consumers were not subjected to unfair pricing.
Aniagwu said the state government’s broader objective was to build an efficient and sustainable electricity market driven by private investment and capable of powering businesses, households and communities across Delta State.
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