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Posts Tagged ‘Power challenge in Nigeria’

A different approach to solving the power challenge

powerWhy is there still no power? Many Nigerians cannot wrap their heads around it. What with all the soundbites and political promises, the much talked about power roadmap and the privatization of the power assets. Indeed the way the privatization and unbundling of the then PHCN was sold to Nigerians, it was supposed to be like the wave of the magic wand that would turn everything around and turn the days of darkness to a distant memory. Now, years after, we do not seem to have made any progress. Power generation is continues to fall short of 5000MW at the best of times, and drops to zero at some other times. When Raji Fashola was appointed to the ministry, many cheered, expecting a swift turn around, but the sector has since proven that it not about strong men or hifalutin profiles.

Despite privatization and the enormous resources committed to the power sector, it has continued to defy all proffered solutions. The situation is compounded by the vandalism of pipelines in the Niger Delta which results in disruptions of gas supply to power plants, huge technical and commercial losses across the value chain and as it were, dwindling capacity of the grid and a weak transmission infrastructure which is dilapidated and susceptible to frequent breakdown.

The Distribution Companies on the other hand continue to wail about operating at a gross loss, with mountain heap of debt owed them, the rampant incidents of power theft, inability to attract new investment and a general hostile operating environment, with regulatory provisions they insist are unfavourable to them especially with regards pricing.

The challenge one must observe goes way deeper than just issues around generation, transmission and distribution. There are a host of other very critical issues which are seldom talked about but which are pivotal to solving this problem. First among this is pricing. If pricing is right, it will unlock the financing that is needed to build the power plants. Right now, the sector is not attractive to investors and the reason is obvious. While this is a really sensitive issue given the kind of hardship Nigerians are enduring at the moment and the political need to keep things going towards the next election, it is a conversation that must be had if indeed we wish to enjoy reliable power in this country.

The next issue is securing the gas feed stock that can power the plants. This will include keeping the peace in the Niger Delta, policing the pipelines, adopting modern technology and seeking alternative sources of gas outside of the very restive Niger Delta.

The third issue which is often over looked is the challenge of collection. No matter how much power you generate and distribute as long as you cannot collect from the end users, you will be unable to pay those generating and you will not be able to pay those providing the gas. Issues of power theft and non-remittance of charges to DISCOs especially by Government agencies cannot continue. Closely related to that is the need to solve the challenges around metering which is a giant challenge on its own.

The resulting effect of all these is that we’ve all continued to run on generators as a country with all its adverse economic implications. Multinationals, industries and small businesses trying to get a return on investment are suffocated with huge overheads on account of poor power supply. The Nigerian economy has lost and continues to lose significant industry and commercial entities due to the lack of energy and there doesn’t seem to be an end in sight for this quagmire.

The truth is, we must begin to think differently if we must solve this power conundrum. By this I refer to the need to explore other approaches to energy access including standalone electricity models, captive power generation and off-grid models.

One can say with some measure of confidence that for the millions of Nigerians who don’t currently have access to electricity, the old assumption that they will have to wait for grid extensions is being turned on its head by new technological possibilities in the off-grid captive and embedded power space. With their adoption, a broad transformation in the electricity sector in the coming years is possible. This will have a major impact on the future sustainability of incumbent generation, transmission and distribution utilities, and will also provide the needed push to jump start the Nigerian economy.

Off Grid system refers to any electricity supply system with its own power generation capacity, supplying electricity to more than one customer and which can operate in isolation from or be connected to a distribution licensee’s network. In simple terms it is the ability to generate power which can be consumed and paid for by persons within a particular locality (estates, university communities, industrial parks, resorts etc) without it being injected into the national grid. This power can be appropriately priced and sold to the willing buyers under pre agreed conditions. Herein lies, in my opinion, the solution to Nigeria’s power issues. Fortunately, the current regulatory framework recognizes this and has made provisions which various stakeholders in the sector can take advantage of.

Our ability to develop off grid systems will free up pressure on the national grid and make power available to be distributed to the rest of the populace. It will also solve a lot of the other current issues in the value chain from pricing to gas supply, to collection and power theft. These things are known. The worry however is that we are known for sloganeering and mouthing off on the best ideas, developing blue prints and releasing white papers, but when it comes down to implementing it, we somehow fail consistently.

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