Octagon Rooms

Power – A painful, but defining factor for Nigerians Businesses

Posted on: October 3rd, 2016 by The Moderator 2 Comments

Welcome to the Octagon

We appreciate you taking time out to Join this Chat Session which will end in an hour. We have two moderators in the room who will only offer guidance where necessary. Please feel free to openly share your thoughts and experiences.

Let’s begin with some introductions before going into the discussion. Can everyone let us know who they are and share a bit about what they do ? Thank You.

Ade: Good afternoon. My name is Ade Dania. I’m a Director of Plethora Gas and Power ltd. One of the bidders for Ughelli Power station.

Dimeji : Good Afternoon All, My name is Dimeji Adeyinka. I work for Pacific Energy Co Ltd. My company owns Olorunsogo Phase One 336MW and Omotosho Electric Ltd 336MW and currently biding for Omotosho Phase 2 (NIPP) 500MW.

I am the Instrumentation & Control Manager at Olorunsogo Phase I, where I provide technical strategies, processes and services that reduces unexpected downtime, increase manpower efficiency and operation & maintenance cost.

I also volunteer as a lecturer on Gas Turbines and HRSG to NAPTIN trainees with over 200+ students till date.

Dare: I am Dare Aliu, a power Engineer.

Tunji: Tunji Kamson here. I am the Executive Director Sweet Group of Companies  comprising sweet sensation Restaurants, Sweet Farms and Sweet Foods Limited.

Obiora: Hi my name is Obiora Okoye, Project Director at General Electric. and leading the development of a 500MW greenfield IPP in Aba.

The Octagon: The ever increasing demand and meagre supply of energy in Nigeria has been a great challenge to her development. This situation is becoming critical, with increasing population not balanced by an adequate energy development programme. The incessant power generation failure has grossly affected the economy, seriously slowing down development.

Analysts observe that the privatisation of the power sector in Nigeria notwithstanding, the country has yet to provide steady power supply.

They note that steady electricity supply is crucial to industrial development of any country, especially Nigeria that is planning to become one of the best economies in the world by 2020.

Do we think there is any end in sight to the daily blackouts in what should be Africa’s largest economy? Is the current government doing enough to solve this issue? To what extent would steady supply impact mot just small businesses but the Nigerian economy as a whole? What should small businesses in Nigeria do to circumnavigate this challenge?

Ade: In response to your question I would like to give you food for thought. If Nigeria was to start generating 40,000 megawatts tomorrow you may not be aware that the end users would not see up 75% of that? The infrastructure in place to transmit and distribute the power is so dilapidated they cant carry the amount of power Nigeria needs. TCN currently asks the generation companies  at times to limit what they generate as the transmission network cant absorb the load.

Tunji: Steady Power Supply, not surprisingly will positively affect all businesses and the Nigerian economy. Energy Costs constitute a considerably large chunk of most businesses costs especially Retail businesses. Also demand for forex from Generator Importers will reduce with More power supply and this will likely result in less pressure on the Naira.

Obiora: We did an analysis that showed 12.5GW installed, 3.9GW operational, 3.6GW transmitted, 2.9GW billed and 1.9GW collected. So Ade I agree with your analysis most of that additional capacity  is lost. Transmission is often cited as the largest bottleneck but I also think that collections by Discos are very poor – Average default rate is 44%.

Ade: That said even if TCN was to become a reliable conduit of power to the DISCOs you have multiple issues in the power supply value chain. Starting with the fuel source required “Gas”. Then at distribution level you have tariff  issues and collection issues. One is a government issue setting unworkable tariffs. Secondly is that of the people unwilling to pay for power consumed.

Obiora: This is where the liquidity will ultimately come from the support the infrastructure development.

Ade: Obiora, i think the question of collection can be directed to a large consumer of power in this discussion. Tunji, In your various business do you get metered or estimated billing?

Tunji: Its a mix. At some locations we have MD meters. some others, entirely estimated (coded) billing.

Ade: Tunji you’re happy to pay the estimated billing charges?

Tunji: I’m not Happy to Pay estimated billings. As much as I understand from discussion with the distribution companies how current forex rates are affecting their ability to import meters, no business owner wants to receive an estimated bill every month.

Ade:  Tunji your view with regards to estimated billing is far kinder than most people. Most billed in such manner would have used expletives to describe their bills.

Tunji: Oh yes. The estimated bills are ridiculous (insert expletives here).

Ade:  Dimeji can i ask please of your installed capacity what are you actually generating?

Dimeji: Olorunsogo & Omotosho Power Plant phase one has 16 units @ total of 672MW (Iso condition), 626 (op condition). On our best days, We generate 70% of the op condition even with the bottlenecks we can control.

Dimeji: I will contribute from a generations plant point of view.

As at 23rd of sept. We have a total of 83 power generation units in Nigeria with a total installed capacity of about 8017MW with a capability of 7590.5MW but we have only 53 units actually generating 3561.5MW

The bottlenecks hindering full capacity generation are

  1. Grid instability due to dilapidated infrastructure that the govt failed to maintain optimally since 1972
  1. Gas constraints in regards to Quality, volume. This is because the govt failed to do their due diligence during the implementation of thermal power plants. We don’t have enough gas for the thermal plants in Nigeria.
  1. Inherited degraded infrastructure from PHCN. The investors are trying to rehabilitate these units but due to low forex accessibility to purchase capital parts and pay technical partners is a big burden.
  1. Delay in revenue remittance from govt is really affecting the generation investors as most of them took loans to buy and service the plants . Their ROI timeline is being delayed daily. They are forced to use their money to service loans, buy capital parts, pay owner Engr & technical partners salaries.

Dare: To add to Dimeji’s point,

5) we lack adequate technical expertise. We still import most plant high-level technical staff. This is due to the fact that our universities also aren’t any good.

6) Greed and corruption- the amount of monies that have been sunk into these infrastructure could have actually provided us with circa 30,000 MW of generated power and transmission lines that can conduit Circa 40,000MW. But all that money has been diverted since 1999.

7) Lack of knowledge on the part of the government. Every govt that has been sworn in since 1999 only play politics with the issue of power. They never actually allow those who know to handle the affairs autonomously eg the case of Dr Ransome Owan who was politically weeded out though he single handedly started NERC and knew what it took to get us out.

Yes one or two companies accessed a few billions but the impact was never felt because CBN always released the monies when the plans were dead. When you plan a project, it has a period after which it is dead and that’s when CBN usually wants to release funds. Basically if you ask me, I don’t see a way  out in the next decade. And that’s because these NDA folks just took us back another 12years by blowing up the few gas holes we have.

Obiora: Corruption has certainly been a major factor….still is. To what extent is this CBN power intervention fund helping? Has anyone actually benefitted?

Dimeji: I totally agree with Dare. The technical partners ensure that they don’t pass on their knowledge to remain on the market. ManPower training is very important, your staff (Nigerian) are your assets really.

Ade: I disagree. KEPCO have done a fair degree of knowledge transfer at Egbin.

Dare: When you transfer knowledge to 15 people in a country of 160million with over 1m Engineers then you can’t call that fair.

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2 Responses

  1. Ofi says:

    Hello all. Interesting and enlightening (pun intended) discussion. I m radio host (Nigeria Info Abuja), TV anchor (Wazobia TV Max) and energy consumer 😉
    First, its apalling that we’ve spent billions of dollars all for consolidated darkness.
    Second, as Dare pointed out we haven’t developed our capacity to provide OUR OWN power – so we’ll be here for a while.
    Third, why in God’s name are we still talking coal, gas and fossils? In a world where Germany and Europe are shutting coal sites, we are insisting 30% of our power come from coal.

  2. Ade Dania says:

    These nation’s are able to shut coal site’s because they have found cheaper fuel sources. They have made investments in renewable, and nuclear energy. We have neither the technology or financial might to do the same. So for now we need to make best use of what’s avaliable, which means coal must be given serious consideration.

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