At the end of the Nigeria’s 13th annual power and utility roundtable discussions with the theme: Setting A New Power Agenda: Post 2023 Elections, organized by PWC in Lagos on Thursday, 8th December, 2022, the panelists concluded that the presidential candidates of the frontline parties vying for leadership of the country in 2023 and their economic teams “have no clue of what it takes to address the country’s critical electricity challenges”. Although the panelists claim they have carried out a clinical diagnosis of the manifestos of all the frontline parties, their verdict is that the manifestos fall short of grasping what the real issues are with the power sector.
This is exactly not the case. Not at least for those aspirants who have clearly indicated their resolve to sustain the incremental progress being achieved under the Presidential Power Initiative (PPI) a.k.a Siemens’ project as therein lies a clear understanding of the issues around the power sector and a clear pathway towards recovery. This article is to show that the PPI was set up by the government of His Excellency, President Muhammadu Buhari, to address the issues raised by the panelists and that all that is needed is for the incoming administration to build on the foundation laid in the beautiful legacy of the PPI bequeathed to Nigerians by Mr. President.
Power: The Way to a Brighter Nigeria
The nation’s intractable problems in the power sector are multi-faceted and will not be solved overnight. What the Presidential Power Initiative, among other interventions, is doing, is to put in place prudent, practical measures that improve the situation today and make the power sector viable and sustainable for all Nigerians moving forward. The Presidential Power Initiative (PPI) is a three-phase power project in partnership with Siemens of Germany which unlocks about 2,000MW of stranded network capacity by resolving bottlenecks in the transmission and distribution network interfaces within two years to raise grid capacity in the power sector to 7,000MW. In Phase 2 of the PPI, the plan is to raise the end-to-end capacity of the Nigerian power grid to 11,000MW. In the third phase, by building more renewable and conventional power generation plants whilst modernizing the power system, the plan is to enhance the operational capacity of the grid, end-to-end, to 25,000MW. To achieve this, the PPI has four major components, viz:
(1) Transmission Network Investments,
(2) Distribution Network Investments,
(3) Centralized Meter Data Management Systems (CDMS) and,
(4) Power System Simulations, Training & Network Development Studies.
The Meter Data Management Systems workstream, amongst other things, aims to stop the illiquidity problem in the power sector, provide revenue assurance, and ensure transparency between customers and the distribution companies (DisCos). By ensuring a technology-driven intervention where all consumers are metered, the issue of estimated billing, electricity theft, and so on will soon be of the past. With this project successfully implemented, the commercial viability of the power sector will be assured and investors will be wont to come in and participate more readily in the Nigerian power sector. This speaks clearly to lingering issues raised by the panelist such as low debt recovery mechanism, commercial and collection losses, DisCos’ lack of transparency with customers which affect the financial and commercial viability of the power sector.
The Nigerian Electrification Roadmap (NER) published by Siemens on which the implementation of the PPI rests is very clear on government’s determination to root out the problem of estimated billing in a deliberate manner. Giving the chance, the PPI will end this unpopular and harmful practice and ensure that all electricity bills are meter-based. This can easily be done by streamlining and accelerating existing schemes such as the National Mass Metering Programme and the Meter Asset Provider Scheme. This will go a long way in encouraging local manufacturing of electricity meters in a way that will contribute to local content development in the power sector. To succeed, there is need to ensure that abstraction of electricity is punishable by law just as utilizing the principles enshrined in estimated billing to leave consumers worse off. As part of the PPI, there is support for Domestic Manufacturing of Electricity Meters in order to Eliminate Estimated Billing. Also, the DisCos would have to interface more with the various state legislatures to enact the appropriate law to criminalize and prosecute meter-bypass and energy theft. Collaboration with the state legislature is needed to expedite legal actions against anyone involved in the criminal act, irrespective of the status of the individual. A technology-driven solution is what we aim to provide.
We believe that with the implementation of well-thought out initiatives highlighted above, the problems of poor customer enumeration and metering, where, according to the panelists, “In the last nine years, only 45 percent of customers have been metered out of the 8,881,443 registered active electricity customers”, will no longer be the case. Also, as part of the PPI, the Centralized Data Management System (CDMS) will serve as a reliable customer data bank to support the current market and investors willing to participate therein.
Network Development Studies
Unlike with past interventions, the Presidential Power Initiative carries out a proper financial model for the investments to be undertaken in partnership with Siemens in the electricity supply system prior to committing resources. The seasoned project managers in FGN Power Company of Nigeria (FGNPC), the Special Purpose Vehicle (SPV) set up by the Federal Government to implement the PPI is saddled with this responsibility. This is not the business-as-usual arrangement because it resolves the twin problems of inadequate modelling and poor project management that have been the bane of the power sector and raised by the panelists.
Also, under the PPI, investments in transmission and distribution networks are based on detailed study of the power system using analytical tools. This is why a key element of the Presidential Power Initiative (PPI) is the network development studies which takes into cognizance previous efforts like the Fichtner, JICA, and similar studies conducted in the past in conducting a comprehensive power system study that looks at the entire power system, end-to-end, in providing appropriate power system solutions. This is the right approach that will ensure the DisCos are fully capitalized to meet their estimated $4.262 billion funding for new transformers and injection substations as highlighted by the panelists.
The panelist also maintained that “It is unfortunate that over the years, the Nigerian Government has embarked on transmission expansion without carrying out the necessary study of all the power projects. Most of the time we failed to establish the study of those on the right of way and how to compensate them before going ahead with the projects.” This is no longer the case with the approach of the Presidential Power Initiative. If you look at what we are doing currently, especially the various right-of-way issues we are resolving in all parts of the country, you will see the progress being achieved under the Presidential Power Initiative, where there is a validly constituted right-of-way and land committee that works with relevant agencies and stakeholders of Federal and State Governments. This has yielded increased cooperation and synergy of work for effective implementation of power projects.
The failure of the privatization exercise is now slowly, but surreptitiously, being corrected by the PPI and should be sustained by the incoming administration. The way projects and investments are being implemented under the PPI today, approval of the Nigerian Electricity Regulatory Commission (NERC) is being sought for every investment in the transmission and distribution networks in line with due process. Thus, the implementation of the PPI means the DisCos will no longer struggle to crowd in investment and raise the needed capital to improve their networks, because of issues of commercial viability, and adequate tariff.
Gas-to-Power Value Chain
FGNPC has conducted an in-depth analysis of the technical and non-technical challenges facing the gas-to-power supply chain. Very pragmatic solutions in the short-to-medium-to-long term have been planned for implementation in 2023. The comprehensive review of the gas-to-power value chain has identified misalignment in regulatory reforms, inactive contractual regimes, market illiquidity, enforcement of domestic gas obligation, grid stabilization and control using automatic voltage control systems (free governor control), including supply and infrastructure challenges as some of the key problems to address in the near term. The executive management is fully abreast of the problems and have come up with ingenious solutions to address them. We will advise the government to set the right policy environment to encourage bilateral transactions in the electricity market in a way that facilitates the participation of eligible customers, independent electricity traders, consumers, prosumers, embedded generation and more. Working with the Nigerian Electricity Regulatory Commission (NERC), we will be able to strengthen provisions that allow generation companies to sell available power to the DisCos, independent electricity suppliers, and eligible customers, through partial activation of contracts for phased bilateral contracting for power between generation companies (GenCos) and end users.
As part of the three-phase power project, the PPI will invest in the entire gas-to-power value chain to improve the end-to-end capacity of the generation, transmission, and distribution systems in Nigeria. The PPI is clear on how it will deploy the portfolio of energy mixes/resources in Nigeria to crystallize industrialization including fossil fuels, Hydro and renewable systems. In her decade of gas, Nigeria has plans to optimize the use of gas-based industries to advantage as a transition fuel in the quest towards a low-carbon economy in the year 2060. This is why, by means of the PPI, government has started an early engagement of the Rural Electrification Agency (REA), mini-grid developers, suppliers of Solar-Home Systems and many others.
Lack of investment in Protection Systems
We have developed national standards and philosophies for network protection, design, control, and automation of power systems in Nigeria that will ensure effective coordination of protection systems, end-to-end, in the power sector value chain. We are also procuring and installing protection and control relays, auto-reclosers, ring main units (RMUs), sectionalizers, battery banks and chargers, testing equipment, fault locators, etc so as to improve the quality of power supply to Nigerians in the short-term. This is apart from thousands of power distribution transformers and lines being planned for installation in 2023 and beyond.
Sector Coordination & Inter-Agency Collaboration
For the first time in the history of the power sector in Nigeria, the government has introduced a multi-agency collaboration of all stakeholders in the power sector. This is a well coordinated task force in the form of a Ministerial Power Sector Working Group which gives day-to-day actionable plans and targets on resolving major challenges facing the power sector and these are constantly being met. This brings together, on a Bi-Weekly basis, all the chief executive officers and senior management of all the agencies of government working in the power sector to provide a well structured and coordinated response to challenges and problems of the sector. Using this platform, we have developed an incentive based regulatory regime that will drive improvements in the efficiency and operations of power sector utilities in Nigeria. Our plan has specific output measures with benchmarks of measurable indices that will drive positive developments when implemented.
The PPI takes an end-to-end approach to the resolution of the intractable challenges of the power sector in Nigeria and believe that the solutions, which have been categorized into short-to-medium-to-long term implementation phases, will open the window of opportunities to attract foreign investors into the power sector.
By Dr. Engr. Idowu Oyebanjo FNSE FNIPE FNIEEE CEng MIET UK
