Hurdles constraining power sector
As the sector nears five years after privatisation, a tripartite hurdle of inadequate regulatory might, gas constraints caused by vandalism and the liquidity in the sector bedevil it. On regulatory constraints, the tenure of the 2nd Commission at NERC ended in December 2015 with an acting Chief Executive Officer (CEO) appointed till February 2017 when the third set of commissioners was inaugurated without a chairman till date. However, a Chairman/ CEO for the commission is yet to be cleared by the Senate as at June 2017.
Some operators in the sector have said the new set of commissioners lack an understanding of the electricity market except for the Vice Chairman, Sanusi Garba who had been a director in the ministry and later at the NDPHC. Experts have also claimed there are poor penalties and sanctions for power operators from NERC as they are treated with kids’ gloves leading to poor investment and benchmarks in the sector.
For vandalism, beginning from 2014, few months after private investors took over, the menace took a toll on gas pipelines causing the electricity grid to drop most often to about 2,500MW. There are about 26 operating power plants in Nigeria out of which only three are hydropower based. The others are often at the mercy of vandals. The Nigeria National Petroleum Corporation (NNPC) recorded over 1,000 of such incidents between 2014 and 2016.
The first eight months of 2017 were significantly affected by vandalism as power supply was continually epileptic. This year, vandalism and pipeline explosion at the southern part of Nigeria triggered the loss of over 2,000MW and the gas supply constraint at the GenCos has been affecting power output. This challenge is on despite government’s target of 10,000MW by 2019.
As the liquidity crisis of over N1trn in the power sector rages, operators have blamed it on the non-cost reflective tariff for selling electricity to consumers. The DisCos’ group, Association of Nigerian Electricity Distributors (ANED) said the present tariff has caused under-recovery for DisCos and has constrained further investments in metering and other infrastructure.
NERC which did an upward review of the MYTO on February 1, 2016 has since refused to review or implement any tariff even when its rule mandates it to review the tariff every six months, they said. The DisCos only paid about 8 per cent of their monthly bill for the bulk energy generated for December 2017, NBET said, even as five DisCos still fail to remit that percentage.
While the GenCos have gone to court over poor market remittance which was at 30 per cent but rose to 80 per cent through the PAG funding, the DisCos have blamed their woes of their inability to pay much for energy on energy theft, poor payment of electricity bills by consumers and the fluctuating foreign exchange rates.
Overwhelmed by complaints of inadequate power supply and poor metering, government has created the eligible customer regulation that enables capable customers to turn to a GenCo or TCN for direct electricity supply while bypassing the DisCos whose supply has been poor. The new Meter Asset Providers (MAP) regulation created this month is to ensure that other firms now provide meters to electricity consumers instead of the DisCos’ monopoly, in a bid to curb the estimated billing faulted for being mostly inaccurate.