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Acute outage imminent as TCN, DisCos face-off deepens

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The lingering challenges confronting the Nigeria Electricity Supply Industry (NESI) is taking the worst turn as face-off between Transmission Company of Nigeria (TCN) and Distribution Companies (DisCos) over a recently introduced minimum remittance order has continued to cripple power generation across the country.

Already, over 40 per cent of the plants have been shut down, as the level of power generation stood at a mere 2137.6 Megawatts on Wednesday this week going by statistics from the Nigeria Electricity System Operator.Indeed, generation hovered between 4214.4MW and 2137.6MW.
 
With the enforcement of the new order, which meant that DisCos would have to pay for 100 per cent of the energy sold to them, most of the utility operators are drastically reducing demand from GenCos, who are forced to reduce generation since the country lacks the capacity to store energy.TCN’s General Manager in charge of Nigeria Electricity System Operator, Emmanuel Umoh, said the decline in generation remains imminent because of low demand for electricity by the distribution companies.

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With many manufacturers exploring off-grid solutions, some of the stakeholders in the power sector have sought the development of off-grid solutions for many households to bridge the supply gap in the electricity market.Besides, constrained revenue in the last eight months between January and August rose to N395.43b billion.
 
Specifically, monthly constrained revenue showed that the nation in January, lost N41.37b; February, N44.38b; March, N49.35b; April, N49.14b; May, N45.25; June, N50.30b; July, N57.62b; and in August, N58.01b.The collapse, last week Friday, which is the ninth system failure between January and August 2019, was confirmed on Twitter by Distribution companies (Discos) whose coverage areas were rocked by the blackout.
   
Best described as a loss-making sector, which is currently at the verge of bankruptcy, TCN which is practically bridging the loopholes expected of the Nigerian Electricity Regulatory Commission (NERC), had earlier this year sought to implement market rules, which would lead to strict adherence of inherent regulations, especially proper remittance by DisCos.
   
The state-owned arm of the industry had suspended and issued disconnection orders against Kano, Enugu, Eko, Port-Harcourt and Ikeja DISCOs over allegations of infraction of market rules.While the operator is still battling with Kano DisCo, it lifted the suspension on Enugu, Eko, Port-Harcourt and Ikeja DisCos having complied with stated market conditions.
   
Going by the standard practice, the Nigerian Bulk Electricity Trading Plc (NBET) is mandated to buy electricity in bulk from generation companies through a policy called the Power Purchase Agreements and sell to the DisCos, on the backdrop of helping the government to absorb shortfall over technical losses and poor remittance. DisCos have reportedly been unable to accurately remit for the energy sold to them.
   
While such debt stood at N890bn as of July 2018, according to the Ministry of Power, Works and Housing, NBET’s statistics showed that the debt stood at N266.24bn between February to July this year. This brings the recent non-remittance to a total of N1.156 trillion.
     
The continuous decline in demand, patronage of unqualified electricians, poor maintenance and upgrade of power infrastructure and other challenges, which are far from over in the sector, could continue to lead to the collapse of the nation’s electricity grid, Umoh said.Executive Secretary, Association of Power Generation Companies, the umbrella body for the generation companies, Dr Joy Ogaji, said that power generation may continue to decline.
   
According to her, the reduction in the generation is unavoidable due to reactions to the minimum remittance, adding that the generation fell to about 2,000MW on Thursday.While the power sector was deregulated and designed to operate profitably in the hand of private operators, government’s continuous interference in the spending on the sector were blamed for most of the problems in the industry, even as Ogaji urged the federal government to allow bilateral contract between GenCos and DisCos as solution to the current challenge.
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She said the current arrangement only benefits NERC, TCN and NBET, stressing: “NBET arrangement cannot work. Vesting contract has no meaning.“The mechanism of NBET has failed woefully and it is increasing government’s spending on the sector. What we need is to transit to a full bilateral, where DisCos can take power directly from GenCos so that they would be pushed to perform. But right now, all what we give is an excuse to blame the government’s part of the problem. The government needs to take defensive action. The government needs to sit up.”
   
According to her, though the current reality mandated the DisCos to pay Market Operators (MO) 100 per cent, only NERC, NBET and TCN are the beneficiaries, leaving out the generation companies.“From the month of May till now, NERC and NBET are being paid 100 per cent of their entitlement. It is only the GenCos that are still suffering. So, what is the incentive for NERC and NBET to ask that GenCos be paid 100 per cent since theirs is paid? The issue of self-interest we talk about in the country has been sold into the market,” Ogaji said.
   
An Associate Professor of Energy Law at the University of Lagos, Yemi Oke, insisted that the prevailing challenges in the sector kept recurring because of the flaws that bedevilled the existing design of the sector.

Oke said to create headway, there is a need for aggressive metering to enable consumers to manage or control what they consume, a cost-reflective tariff, re-acquisition or re-financing of the current structure as well as massive education and enlightenment of the people, especially labour groups.
   
“Federal Government (NERC) must back-off from all forms of off-grid licensing and regulation and allow states to play very actively, as against passive roles. The legal and regulatory framework of the power sector is faulty, unrealistic and counter-productive. We need to urgently revise the law -Nigerian Electric Power Sector Reforms Act of 2005. It was merely intended as a “Reform” instrument or legislation. It was never intended as a legal document for operationalising the power sector in Nigeria.

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“Again, the sector is over-regulated by NERC in terms of needless, overlapping regulatory provisions (all kinds of needless “Regulations”) that ought to be streamlined and integrated into two or two-sector regulations,” Oke said.
   
The Spokesperson for the DisCos, Sunday Oduntan, did not respond to calls and request for clarification as at the time this report was compiled. Similarly, when contacted, NERC’s spokesman, Usman Arabi, stated that he was in a meeting but failed to revert at the time this report was compiled.
On his part, the Chief Executive Officer, VICMO , a solar energy firm based in Lagos, Olufemi Adebowale Vicmo , said the power situation in Nigeria will not improve until Nigerians try another means of generating energy.
   
Vicmo said: “One of the solutions for Nigeria is if individuals can afford to install solar energy systems in their homes. Once you install it, you don’t need power from the grid or generator and standard solar energy can last for 40 years. The only service required is cleaning the solar panel. The battery itself lasts for 20 years if it is properly installed. That is the only way we can solve the problem of Nigeria’s electricity.“If we have many houses using solar energy, the distribution companies will come to the poor people and start begging them to subscribe monthly for N1000 to enjoy 24 hours of electricity. “The only thing is that government needs to bring the manufacturers of solar solutions to Nigeria to aid deployment and reduce cost.”
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