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Power – A painful, but defining factor for Nigerians Businesses

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

Dimeji: Well let me not generalize. Most investors & technical partners sign a BOT (Build, Operate, Transfer) contract, but do a survey and you will realize they do not transfer totally.

Ade: I’m not a politician but the problems besting the power sector are very much political. Government needs to prioritise the power sector if they want genuine and rapid development of the nation. Whether the owners of the assets were favoured by the prior administration or not it’s time to look forward and not try to lead a nation staring at the rear view mirror. If you as an asset owner are not intelligent enough to stipulate in your contracts knowledge transfer then you deserved to be ripped off by your service providers. Others should follow the lead and request  transfer of knowledge. May be only 15 as you put it. But its better than none and is an example for others to follow.

Dimeji : You are right, it is political. The privatization investors (discos and gencos) should join forces and find a lasting solution than thinking just about their investments. It will be a win win for them and it will benefit Nigeria as a whole. A re-orientation of the power sector opportunities is needed for the youth engineers. The average Nigerian man thinks a power plant Engineer is the NEPA guy that climbs poles on the streets. Whereas there are bare opportunities in a power sector for engineers and entrepreneurs.

Ade: Very many opportunities indeed. Your assessment is correct. In short there’s no real end in sight till government does and about turn and fully commits to supporting the power sector. The benefits are there for all to see and makes no sense that in this day and age there is any discussion as to why we don’t have the necessary things in place to produce adequate and stable power supply. Gas shortages in a nation with huge gas reserves that are still  being flared ? A regulator sets a tariff and the Politicians decide that the people cant pay it. Despite the fact said tariff was FAR lower than the cost of using generators that almost all households and businesses use.

Dimeji: In the interim, they should look into reciprocating engines. Community IPPs and save themselves the cost of Generator maintenance and sourcing of diesel. The IOCs don’t want to invest in gas infrastructures. If they didn’t do it when Oil was the big deal, I wonder if they will do it now that their revenue has reduced.

Dare: Solutions solutions solutions . CNG was the solution till NDA struck. LNG was looking like it then Forex wahala struck . Let every local government generate power using CNG to reduce the load on the grid and we might start lighting up Nigeria.

The Octagon: What do we all think about this solution? How do we go about this?

Dimeji: I support this. It should be mandatory, I guess some people were receiving fat Cheques and permitting the flaring.

Obiora: I think the government needs to redevelop its gas strategy and seriously look at gas pricing to stimulate investment. There’s also a need for government to support  NNPC counterpart funding in the JV’s as most IOCs don’t want to carry NNPC in the current economy.

Ade: Again government needs to get tough. For the good of our nation make it part of the terms of doing business here. Force them to help develop it. If not let them leave. Plenty of willing participants to take their place. The idea is workable but poorly thought out..You’re simply pushing the issue down the road to be met on another day. Stop treating symptoms. Fix the cause!

Dare: I don’t quite see what you disagree with here because you will agree that we need to decongest our dependence on the national grid.

Ade: I run a small bakery also. And trust me the amount we spend on diesel monthly is ridiculous. We have meters but what good is that with no power?! Government meeds to be  true to the change mantra and actually make a difference by being a government for the people.

Dare: So imagine your local community generated its own constant power using alternative sources and only gave you a per hour bill. Now imagine us reducing that number by half.

Ade: Decongesting i don’t agree with. If you look at how much of the nation is actually connected to the grid. You will realise we are far away from over congestion. Poor infrastructure yes. Over congestion? No. Again it’s a short term fix to the problem. Not an actual solution.

Obiora: Local community solution has worked in India and some other Asian economies. There is no silver bullet. You have to attack the problem multiple angles.

Ade: Attack multiple angles whilst creating multiple new issues with each angle? Just to repeat. I didn’t say it wont work. But not a lasting solution. If every little community did that can you imagine the mess of a network there would be? And who will ensure these things are done to a satisfactory standard who will monitor safety of equipment? A government that can barely cope with the few power companies that we have?

Obiora: It has worked in other parts of the world. That said, Nigeria it’s a unique beast. I think distributed power is ultimately the way to solve this problem. Yes we need the large scale grid connected power projects as part of the solutions mix but you see all the problems that accompany that – government needs to support a policy framework for decentralized power.

The octagon: We will appreciate if everyone can share their final points on how we can either get businesses to circumnavigate these challenges or put pressure on government to solve these issues.

Ade: The government of GEJ continued and concluded a process championed by the government of Olusegun Obasanjo. They unfortunately did not do a thorough job of it hence we’re here today. The government of PMB needs to take the bull by the horn and deliver what was envisaged by the people who saw privatisation as the way forward. That really is what needs to be done.

Dimeji: Long term solution is really for the govt to rehabilitate the grid in totality, build more generation power plants not dependent on gas i.e. (Coal power plants in Enugu where coal is abundant), optimize the hydro power plants etc. Implement tax weavers for generation investors and allocate forex to them, ensure the PPA & GSA is binding, discos need to roll out pre paid meters to everyone, I mean every single person and if the person opts out they get fixed fees. The govt should sanction discos that wont remit the % agreed upon so they can pay gencos and genco can pay gas.. The entire value chain  needs to be restructured and enforced with license revoking penalties. And then eventually we need decentralized Power.

Ade: Well Said!

Obiora: Agreed.

The Octagon: Thanks Guys. We appreciate your taking the time to join us today. This was truly insightful.

Ade: Thank You

Obiora: Good Chat! Thanks.

Dimeji: Good chat everyone, nice meeting you all.

Dare: Have a Good evening folks.

Tunji: Nice meeting you all.


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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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