POWER SECTOR RECOVERY PROGRAMME – PART 2 Implementing the Recovery Programme

The Federal Government (FG) of Nigeria, working the World Bank and other partners, has set out the power sector recovery programme since April 2017. Its objectives include but not limited to the strengthening of the sector’s governance framework and electricity market, improvement in the quality and security of power supply, encouraging transparency, probity and accountability by all stakeholders with a clear focus on service delivery to customers. The FG aims to achieve all of these by means of various financial, technical, operational, governance and policy interventions.

The implementation of the power sector recovery programme will require a collaboration and commitment which responds to the unique challenges facing NESI. This can only be delivered by a power system architect – a team of multi-disciplinary technocrats that will draw on their respective strengths and engage with a broad community of stakeholders and other specialists. Of utmost importance in this regard is the technical expertise, knowledge and experience of seasoned power system professionals in the established power industry (including retirees) who must obtain a balance between commercial and customer requirements with technical considerations. In addition, the perspectives of the domestic, industrial and commercial consumers, policy makers and their supporting agencies, generator importers, vested interests, manufacturers of equipment and those who may be involved at any point in the electricity supply chain must be well accommodated.

The power sector is undergoing a significant change in landscape at an unprecedented rate and it is therefore expedient to create the right conditions to encourage needed investment and innovation to move the sector to the next level. The challenges facing NESI are different from those of developed economies and must be treated based on its unique characteristics!

The main drivers for the proposed power system architecture include energy sufficiency and sustainability, quality and security of electricity supply, economic development, competitive market mechanism, communication and transparency, technology, data management, cost reflective tariff (CRT), customer focused service delivery, policy and governance framework, training, safety, environment etc.

The successful implementation of the power sector recovery programme requires overcoming technical, governance, commercial and other barriers.

Technical Barriers

The power network is weak and significant upgrade is required to realise the objectives of the recovery programme. Experienced sector technocrats have reached advanced age with a majority now retired following the privatisation of PHCN in 2013. The lack of technical expertise will affect the proper implementation of upgrades to power infrastructure or assets, including the IT and communication backbone required. In addition, the current state of the transmission and distribution networks is such that financial intervention only at the generation end of the value chain will not have any noticeable impact. The total technical losses on the network means that electricity generated will never get to the customers except a revamped network is used. Commercial and collection losses add volumes to this. Loss reduction is highly technical and it is a specialist area that technocrats will have to resolve. It is doubtful that the current operators of these networks can meet their loss reduction obligations for different reasons.

Governance Barriers

Policy somersaults experienced in the sector since privatisation in 2013 has created investor scare over the years. Therefore, emerging policies, legislations, regulatory independence, and targeted industry codes (technical and non-technical) are required to restore investors’ lost confidence. New codes will have to be introduced especially as it relates to energy sufficiency and efficiency, environmental impact, including the role of renewable and untapped fossil-fuel sources. The implementation of the policy on eligible customers must be such that investors and key stakeholders such as the DisCos and TCN must feel comfortable with their fears and concerns promptly addressed. The disagreements relating to the reconstitution of the boards of the DisCos, financial transparency and recapitalisation also need to be resolved.

Significant investment in gas-to-power infrastructure plus measures to ensure the safety of the assets is a major pre-requisite for the successful implementation of the recovery programme. There must be a concerted effort to stem the tide of militancy, pollution of the environment, including the vandalization of gas pipelines and power infrastructure. Localization of the industry and resources thereof is mandatory. Host communities should be made key stakeholders to the extent that the security of the infrastructure will be paramount to them. In the meanwhile, alternative methods such as LNG, CNG, LPG and mobile gas transportation should be considered for gas-to-power. Rather than gas flaring, effort must be made to increase the volume of gas available to gas-fired plants dotted around the country. A quick passage and implementation of the PIGB is apt in this regard.

Commercial Barriers

The Nigerian electricity market was declared pre-maturely. However, if it cannot be scrapped, significant efforts will be required to strengthen it. Regulators will have to be trained sufficiently to handle the dynamics and peculiarities of an electricity market. Anomalies in the commercial framework, payment settlement systems, existing contracts, and market structure have to be dealt with. The entire information and communication management strategy required for a functional electricity market needs to be reviewed and implemented.

Among the pre-conditions for release of loans from the World Bank and partners are the issues of cost-reflective tariffs, metering of customers and mechanism for repayment of loans. These have to be dealt with.

Another barrier to a successful implementation includes the absence of special courts to prosecute individuals or company representatives who act in a manner that undermines the safety and smooth running of NESI including those involved in collusion with staff of electricity companies, the theft or by-pass of electricity, those responsible for electrocution, manufacturers and vendors who facilitate the importation, design, construction and installation of sub-standard components etc.

The Nigerian power system will become more complex as times progresses and a “whole-system” or holistic approach is the best way to achieve a vibrant and healthy power sector. The various aspects of the power sector recovery programme are interdependent and only a power system architect or similarly constituted body can deliver this programme in a systematic, efficient and timely manner.

A close monitoring and continuous review of the implementation of this complex and urgent power sector recovery programme by a formally constituted power system architect is now on a critical path.

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