Billions of Naira down the drain as avoidable grid collapse persists
The unbundling and partial privatisation of the nation’s power sector in 2013 targeted a competitive market that would attract private investment, promote efficient management of the sector, increase power generation, as well as provide a reliable and cost-efficient power supply.
But eight years into the privatisation, only marginal improvement has been recorded in the area of increasing installed capacity for power generation; transmission network expansion, and roll out of pre-paid meters, etc.
On the flip side, operational generation capacity has considerably dropped; recovery of the cost of electricity production has remained poor, while revenue has continued to dip tremendously.
Expectedly, several factors have been blamed for the failure to meet set goals and targets. And they include questionable privatisation model, poor pricing of electricity, liquidity challenges, and a shortfall in gas supply.
While the sector still operates in fits and starts despite being privatised, the unending collapse of the national grid has added its woes to the litany of worries experienced by Nigerians, whose lives and livelihoods are affected.
For instance, Mrs. Mercy Onyemaechi, 42, lost her husband in 2016 after a protracted sickness that affected her family’s finances. With nearly nothing left to take care of her two children- Chukwuemeka and Hanabel, the widow, – a housewife had to take her destiny into her hands.
After trying to run some businesses, which failed, she established a crèche, which was also closed down after most of her clients abandoned her in the wake of the Coronavirus disease (COVID-19).
It was not long after Onyemaechi shut down the daycare before she began dealing in pap, a staple across the country better known as akamu and ogi.
Onyemaechi, who makes about N3, 000 daily from supplying her clients in their homes in the Bomsac area of Asaba, Delta State, relies on electricity to preserve the pap, which she makes from a bag of corn worth about N20, 000.
As time went by, her clientele expanded hence the need for her to increase the quantity of pap that she produced. In doing so, she had to refrigerate part of it and sell the rest gradually. With six hours of power supply daily, she had no qualms doing that with back up from her power generating set. But before long, epileptic power supply became Onyemaechi’s next big headache.
On November 29, 2020, she processed about 50kg of corn to pap, but at about 11:25 am the same day, the nation’s electricity grid collapsed leaving the entire country in darkness, and setting the widow up for losses.
“After my power generating set developed a mechanical fault, I relied on public supply, which was not restored for over 48 hours. As a result of several hours of a power outage, the pap became sour, unfit for consumption, and ended up as waste,” the widow said.
For Onyemaechi and millions like her across the country, the collapse of the national electricity grid creates losses and consequently undermine their contribution to national economic development.
Like Onyemaechi, the story of Memunat Abuh, a graduate of business administration, who settled for fashion designing after failed attempts to secure a white-collar job is equally pathetic.
Abuh had turned her apartment in the Dutse area of Abuja into a tailoring workshop and hired four designers to operate the five sewing machines, which she acquired with a daily income of over N30, 000, Abuh settles her workers and caters for other expenses. But persistent power outage has encumbered her business immensely.
“One of my clients was travelling to the United Kingdom on November 29, 2020, and was to go with a dress that I had started making. Several hours before the 4 pm that I was to deliver her cloth to her, we were still hoping that public electricity supply would be restored, especially because we enjoy a 10-hour electricity supply daily. Sadly, the power supply was never restored for the entire day. It was a disappointing and painful episode for me, and my client.
“It is so difficult to make profit if we continue to depend on our power generating sets to service our clients because I spend well over N5, 000 and sometimes more daily on fuel to generate power. A lot of customers find it difficult to pay for our services since we have to spread the running cost into what we charge them. Beyond that, a number of them lost their jobs at the height of last year’s covid-19 lockdown, so patronage is low. Now, we end up wasting a lot of man-hours waiting for public power supply to be restored,” Abuh lamented.
As Abuh, like other entrepreneurs, struggles to operate her small fashion business within the present harsh business environment, the rate of unemployment still soars, poverty continues to ravage the country, while the importation of textiles and readymade clothing is experiencing an exponential increase.
The Nigerian Textile Manufacturers Association (NTMA), not long ago, said the country spends $4 billion yearly on importation. Despite her struggles, Abuh had started exporting some of her products to other neighbouring countries, as well as to Europe and America. Within the country, she has to up her game to compete with fabrics/ready-made clothing that is smuggled into the country.
The Director-General of the NTMA, Hamma Kwajaffa, who recently referred to the smuggled goods said: “Smuggled goods have continued to flood major textile markets in Lagos and Kano states; textile products importation does not only undermine the local industry, but steals our jobs; it deprives the government of revenue, and it is a drain on Nigeria’s precarious foreign exchange reserves,” he said. While Small and Medium Scale Enterprises (SMEs) are choked by the situation, the manufacturing sector is the worst hit.
Also deeply affected by the poor power situation in the country is Ade, who runs a steel mill where military and personal vehicles are fortified in the Shagamu area of Ogun State.
According to him, constant power outage creates a lot of problems for his machines leading to losses, including loss of man-hours. The situation got so bad that at some-point Ade was forced to go off the national grid, and deploy off-grid solution for his electricity needs, which is also detrimental to the environment, and a direct testament to the fact that the ease of doing business in the country has remained a major problem for investors.
Increasingly, some heavy-duty manufacturers/electricity consumers with sensitive equipment have already gone off-grid in a bid to power critical operations without damage to their machinery, while others, including some serviced by Kaduna Electricity Distribution Company and other DisCos are seriously considering alternative power sources.
Although the spokesperson for the DisCos, Abdulazeez Abdullahi, said some of the affected customers have made their intention to reconnect after the national grid has been stabilised, the development is breeding distrust in the system.
Incessant Grid Collapse
AT about 11:25 am on November 29, 2020, the country’s national electricity grid operated from Osogbo in Osun State collapsed, but the general public took it as the routine power outage, which they have sadly become so used to. It was not until, 5:20 pm that day that the Transmission Company of Nigeria (TCN) wrote to journalists, explaining that the “nation’s electricity grid experienced multiple trippings, which led to the collapse of the system.”
Before the TCN took that step, the country had already experienced six hours of darkness after the collapse. That was not the first time the system would collapse in 2020, or since the sector was privatised in 2013 with the expectation that sanity would return to it upon privatisation. Indeed, by the last count, the country has experienced a national grid collapse 126 times, a development that experts say is one of the cardinal reasons that the sector has failed to perform since the privatisation.
Unlike many other countries, Nigeria operates a single grid, and anytime the system collapses, the entire country is thrown into darkness. On average, it takes about nine hours to restore power since the system is restored gradually.
Although the Federal Government-owned TCN describes the situation as a normal global occurrence, the collapse of power supply, every time it occurs, comes with a huge economic loss for consumers, especially commercial entities.
The World Economic Forum’s data that measured grid-related performance under the Energy Architecture Performance Index (EAPI) for 2017, however, ranked Nigeria 110th among 127 countries. Interestingly, African countries like Congo, Namibia, Ghana, South Africa, Cameroon, Kenya, Zambia, Botswana, and Sudan were ranked far higher and better in terms of system performance, than Nigeria.
Data from the TCN indicate that from November 1, 2013, to December 2020, the number of recorded total grid failures was 84, while the grid partially collapsed 43 times.
In 2013, the country recorded 24 power system collapses. The collapse stood at 13 in 2014; 10 times in 2015, and 28 times in 2016, while in reduced to 24 in 2017, and 13 times in 2018. The years 2019 and 2020 made up the balance.
Reasons For System Collapse
THE TCN has repeatedly blamed DisCos’ load rejection attitude for the collapse, even as fire outbreaks have also led to system collapse. The TCN also believes that the DisCos lack the needed infrastructure to support the grid.
On the other hand, the Association of Nigerian Electricity Distributors (ANED), the umbrella body of distribution companies, has consistently decried repeated system collapse, blaming the situation on the obsolete, analog system being used by the TCN.
The Director of Research and Advocacy, at ANED, Sunday Oduntan, had fingered the lack of standard power protection equipment across transmission substations as the major cause of incessant system collapse.
There is also an alleged imbalance between power generation and supply, meaning that the level of load being generated remains higher than what can be wheeled to end-users. The struggle demands constant checks to keep the system in control.
Grid Collapse As Violation Of National Grid Code
SECTION 15.3.1 of the National Grid Code states that the frequency shall be maintained at 50 Hz. This means that the National Control Centre, overseen by the TCN would control the system frequency within a narrow operating band of +/- 0.5 per cent (49.75 – 50.25 Hz) from 50 Hz, at least 97 per cent of the time during normal conditions.
Besides, under system stress, the frequency control on the power system is expected to be exercised within the limits of 50 Hz +/- 2.5 per cent (48.75 – 51.25 Hz). But the grid performance from 2015 till date has not met these extant regulations. Be that as it may, the TCN had pointed out that the Nigerian Grid Code Frequency Standard is 49.75Hz, and 50.25Hz, while the WAPP Frequency standard is 49.80Hz and 50.20Hz.
It also noted that the National Grid achieved frequency control of between 49.80Hz and 50.20Hz for 64.47 per cent of the time, and frequency control between 49.75Hz and 50.25Hz for 85.55 per cent between December 27, 2018, and January 12, 2019.
“The frequency control is the best achieved in the history of Nigeria and is also the best in West Africa as of today. The frequency control achieved from January 8 to 12, 2019, is the best so far by any power utility in West Africa,” a spokesperson for TCN, Ndidi Mba said.
How Grid Collapse Affects Stakeholders
USUALLY, both the public and private sectors suffer the most when the national grid collapses, just as there are several levels of financial losses when the public power supply is cut. But grid collapse leads to higher financial losses, as the restoration period is usually longer.
This development, which directly makes a mockery of the projected objectives of privatisation, remains a major loss to electricity users, whose bills have been increased with the promise that the power supply would be stable for longer hours.
The Executive Secretary, Association of Power Generation Companies (APGC), Joy Ogaji, said besides the technical, commercial, and economic effects of frequent grid collapses, it also damages electrical units/installations, as well as increase maintenance cost of machinery to about three times the normal costs.
“The GenCos in signing the contracts for their machines also signed the number of times their machines will make stops, which is an average of 20 stops in a year, as recognised by the Multi-Year Tariff Order, and the Nigerian Bulk Electricity Trading Company. Unfortunately, due to frequent system collapses, ramp up and ramp down instructions of the system operator, the machines make over 365 stops in a year with sometimes more than one stop in a day,” Ogaji said.
This development, according to her, leads to extra investments for damaged units without an increase in plant capacity, defective gas control valves due to wear and tear, more downtime of the generating units, cracks on exhaust sleeves, irregular heating and cooling cycles of hot gas path components that is fatigue-damaged, cracks on ceramic tiles of the combustion chamber, malfunctioning of electrical controls and protective relays among others. Ogaji said the inability of the system operator to maintain grid stability leads to huge damage and higher costs.
“Also, operation of these gas turbines far away from their baseloads implies a reduction in efficiency, or in other words, an increase in consumption of gas by as much as 15-20 per cent, a cost not recognised by Nigerian Bulk Electricity Trading Plc., nor captured in the Multi-Year Tariff Order (MYTO).
“All electrical appliances (thermal and hydro plants) have set conditions under which they function at optimal levels, and are designed to operate optimally and efficiently at baseload,” Ogaji stated.
As a result, GenCos can no longer sustain these costs alone given the level of remittance in the market, which barely covers the operating cost, she noted
Added to this, Odutan, who had pointed out that transmission networks constitute the vital arteries of the entire power value chain, indicated that the industry’s growth is contingent on the development of a robust and non-collapsible transmission to acceptable technical limits, has exposed generator units to perform beyond factory-rated capabilities.
Earlier on, some DisCos had lamented that repeated grid collapse affected customer satisfaction, and lead to losses thereby limiting their capacity to meet up with remittances, as liquidity crisis may worsen in the sector.
The development, the added, also affected the aggregate technical and commercial losses, as well as constitute a snag on key performance indicators (KPI) for the DisCos, which were offered licenses on the promise that they would reduce these losses.
Experts Unsettled By Unending System Collapse
PRICEWATERHOUSECOOPERS’S Associate Director, Energy, Utilities, and Resources, Habeeb Jaiyeola, who linked the issue to the balance of power demanded by the DisCos and power generated by the GenCos, said billions of naira was being lost anytime the system collapsed.
He said the fact that Nigeria had excess generating capabilities over current off-take by DisCos requires several ramp-down by GenCos to prevent excess supply to the grid.
Jaiyeola noted that the situation requires very strict monitoring as the absence of such could lead to the collapse of the grid, adding that equipment failure due to obsolescence, or maintenance gaps could equally lead to collapse. He noted that the economic impact of the situation remained quite high, considering that the power supply had remained perpetually epileptic.
“The public and private sector experience several levels of financial loss when the power supply is cut, and with a grid collapse, the ease of restoration might not be quick hence leading to higher financial losses. The consistent ramp-down of the GenCos power plants also results in shortening their useful life as a result of excessive wear and tear, which has negative financial implications to the GenCos,” he said.
Jaiyeola noted that the willing buyer-willing seller concept coup requires contract negotiations, which may result in financial penalties for the power suppliers when a grid collapse occurs.
SOME stakeholders believe that there is the need for government to either privatise the TCN, or unbundle it to create room for investments, even as they blame the prevailing situation on poor infrastructure and failure to leverage modern technology, and decentralising the grid.
Jaiyeola called for appropriate investment in the national grid infrastructure to prevent grid collapse as a result of obsolete equipment.
He was hopeful that the Siemens deal, signed by the government and other efforts of the Federal Government would resolve some of the issues.
“The only sane thing to do to save the sector from collapsing is for GenCos to adhere to Section 12.6.6 of the Grid code by allowing the generator to disconnect the Generating Unit for reasons of safety of personnel, Apparatus, and/or Plant,” Ogaji said.
Managing Director of Aquivis, Jimi Kolawole, said the government must adopt modern technology and privatise the transmission company to drive fresh investment that would help to sustain the network.
“The infrastructure is old, there’s a need for an upgrade. We also need to deploy technology, especially on the 33/kva lines,” Kolawole said.
“The losses in terms of economic activities run into billions of naira. Nobody relies on the grid anymore, industries are looking for their off-grid solutions. Going forward, the government needs to look at privatising TCN,” he added.