Category: Electricity
08/27/10
Nigeria: FG to sell 51% stake in electricity companies
The Federal Government plans to sell 51 per cent of its stakes in the 17 out of the 18 successor companies of Power Holding Company of Nigeria.
Eleven of the companies are into distribution and they will be sold in 2011. Six are in the generation business.
According to the roadmap to power sector unveiled on Thursday by President Goodluck Jonathan, the government will not sell the Transmission Company of Nigeria.
But the transmission company, which is in charge of the National Grid, will be managed by the private sector.
The roadmap reads, “With regard to the medium to long term horizon, the government intends that full responsibility for the operational effectiveness of the distribution companies should shift from the Federal Government to the private sector no later than 2011.
“Nevertheless, the actions and decisions of the Federal Government will continue to exert a significant impact on their commercial effectiveness.
“All the distribution companies are expected to be privatised based on a core investor sale of a minimum of 51 per cent of the government‘s equity in the companies.
“The PHCN successor, thermal generating plants, will be privatised via the sale of a minimum of 51 per cent equity to core investors that clearly demonstrate the technical and financial ability to operate and expand each plant.”
The roadmap can be sighted on www.nigeria. powerreform.org.
Jonathan had at the unveiling of the roadmap in Lagos, said that the Federal Government was preparing to leave the power sector in the hands of private operators.
He explained that the government would retain the transmission grid and regulate the operators of the generating and transmission companies.
The President also assured that power would become stable in 2012, the year that independent power producers would have added 5,000 Mega Watts.
He said, “By 2012, Nigerians will not only celebrate one day of stable power supply but one week and one month of uninterrupted power supply.
“We have stated on a number of occasions that on the attainment of stability in the sector, government will disengage from generation and distribution of electricity in the country.
“Government will encourage private sector participation in this area. Therefore, as articulated in the Electricity Power Sector Reform Act, the private sector will be responsible for generation and distribution, while government will still hold the transmission grid but with private sector management.”
The President said at the event attended by 13 state governors and deputy governors , including Mr. Babatunde Fashola (Lagos) and Otunba Gbenga Daniel (Ogun), that independent power plants built by private operators would soon be inaugurated.
He said, “We are in the process of inaugurating independent power producers, international oil companies and companies that have captive production of electricity to produce at least 5,000MW of new capacity.
“These plants will begin production in 2012 and 2013.
“Government will provide incentives that will encourage them to invest in the construction of the power plants.”
Jonathan pointed out that the success recorded in the telecoms sector had shown that only a private-sector led reform could revive the power sector.
“It is obvious that the electricity sector can only expand, like the telecoms sector did, after privatisation,” he added.
The President added that government had decided to implement the power sector reform Act by privatising the 11 electricity distribution companies to bring efficiency into distribution management.
“The distribution infrastructure is dilapidated. The Federal Government has decided to follow through on the Power Sector Reform Act by privatising distribution companies to bring about effectiveness,” Jonathan said.
He also said that government had taken steps to reconstitute the board of the Nigerian Electricity Regulatory Commission, which was dissolved by the late President Umaru Yar’Adua.
He said, “The list of the members will be sent to the National Assembly on Monday, next week. I will also send a chairman that will have credential like the INEC chairman (Prof. Attahiru Jega). I decided to do so because we need a revolution in the power sector.
“We expect that those who will be in that commission will drive the power sector reform initiative.”
Jonathan said that Nigeria’s electricity tariff was the lowest in the West African sub-region, stressing that government was adjusting it for it to be “cost reflective.”
He, however, added that the interest of the ordinary customer would be protected in the tariff adjustment.
The President also said that government had made available, the sum N57bn for the payment of monetisation arrears of Power Holding Company of Nigeria workers.
Jonathan added that government had set aside funds to pay severance packages to the PHCN workers that might be affected by the sale of the 11 distribution companies.
Also, the Minister of State for Power, Mr. Nuhu Wya, said the power sector could only be rescued from total collapse through sustainable policies anchored on reforming it along commercial imperatives.
At the event, Fashola called on the Federal Government to start the implementation of critical power projects from Lagos State in order to enable the nation achieve the greatest impact with minimum effort and resources.
A statement by his Special Assistant on Media, Mr. Hakeem Bello, quoted the governor as also saying that investment decisions should be made in Lagos on the basis of economic and developmental common sense rather than emotional “cronyism.”
He said ”This(Lagos) is Nigeria‘s largest consumer market, this is Nigeria‘s financial power house, this is the country‘s largest consumer of electricity, and this must be the prime destination for the investment of Nigeria‘s prime resource if we truly desire to achieve the greatest impact with the minimum of effort and resources.”
Fashola noted that year 2010 was the 21st year since Nigeria’s capital moved from Lagos to Abuja.
”This(Jonathan’s) visit, coming 21 years after that historic movement, is capable of many interpretations; but I do sincerely expect that after we have listened to Your Excellency(Jonathan), the most important interpretation will be the one you will leave us with,” he said.
He pointed out that cities like Paris, New York, London, Accra were the places from which global impression of France, United States, United Kingdom and Ghana were formed.
The governor said, ”The impression of Nigeria is formed from Lagos by the millions who use her sea and airports. If we must therefore improve on that impression, Lagos is like the sitting room of the Nigerian household that must be maintained in a pristine condition; and must get federal funding support for electricity, roads, water supply and critical infrastructure.”
Jonathan, in his address, commended Fashola for the warm reception he received.
The other governors that were present included Adebayo Alao-Akala (Oyo), Patrick Yakowa (Kaduna), Liyel Imoke (Cross River), Aliyu Doma (Nassarawa), and Saidu Dakingari (Kebbi).
The National Union of Electricity Employees has called off its nationwide strike. The union reportedly took the decision in the early hours of Thursday.
The PHNC workers had on Wednesday commenced a nationwide strike, citing the non-payment of their monetisation arrears by the management as reason for their action. More details later
08/18/10
NIGERIA: FG to unveil new power roadmap Aug 26
President Goodluck Jonathan will on August 26 unveil a new roadmap designed to solve the nation’s power crisis.
The Senior Special Assistant to the President on Power, Prof. Bath Nnaji, disclosed this at the Nigeria International Power Expo and Conference, which began in Abuja on Monday.
The public ceremony, slated for Lagos, will be the defining point in the short time that Jonathan has to complete the Yar’Adua/Jonathan Presidency, which had promised to declare emergency in the nation’s power sector as a campaign promise more than three years ago.
The roadmap, prepared by the Presidential Taskforce on Power, contains short-term, medium-term and long-term plans needed to deliver the nation from darkness.
Nnaji, who said the nation’s power problem had been intractable for a long time, added that very soon, Nigerians would begin to see the impact of the Federal Government’s actions in the sector.
He emphasised the strategic importance of two committees set up by the President in handling the power crisis.
These are the Presidential Action Committee on Power, chaired by Jonathan himself, and the Presidential Taskforce on Power, chaired by Nnaji.
According to him, the PAC was set up to “break the long bureaucratic time it takes to take decisions handled by the Ministry of Power.”
Since all necessary parties involved in taking decisions on power, including the President, are represented in the committee, he said it was easier to take and implement decisions aimed at moving the power sector forward.
Nnaji said, “The mission of government is to have a sector that will be driven by the private sector. The sector has been intractable for a long time.
“The President set up the committee to fast-track decisions on power. It is the highest decision making body on power. The engine room is the Presidential Taskforce on Power. The intention is to ensure that, if we set up a target, we will meet it.”
He also said, “In small ways, you will begin to see progress and you will continue to see progress. We want to see that the problems are finally resolved.”
He added that the outcome of various efforts would see power driven by the private sector.
“We want to see people manufacturing units here, not just coming to sell them. Already, we are beginning to see some manufacturing in the sector. We want to see more of it,” Nnaji added.
Also present at the event was the Senior Special Adviser to the President on the National Integrated Power Projects, Mr. Dagogo Jack, and representative of the Minister of State for Power, Mrs. Genevieve Ejiogu.
Nigerians would have had a long laugh at the news that the Power Holding Company of Nigeria, PHCN, was embarking on strike. Whether it was NEPA (Never Expect Power Always) or PHCN (Problem Has Changed Name), Nigerians knew what to expect from the organisation - darkness, irregular power supply and excuses that are longer than the River Niger, which is sometimes blamed for its low water levels.
At other times, the high level of the waters of the Niger has been cited as the reason for power failure.
One thing that PHCN does excellently is sending bills regularly, especially to locations that have been cut off from the famous national grid. Nigerians have no expectations from PHCN.
Almost every Nigerian supply his own electricity, at least a huge part of it. In most places the supply from the PHCN is used as supplementary. Businesses, homes and any serious enterprise know better than depending on PHCN.
Nigerians would have wanted to see the face of a PHCN strike. Without a strike it fails to supply electricity. PHCN hardly works. Is it possible that while on strike there may be electricity, since there would be no workers to switch off the lights?
PHCN is one of the last public institutions that the Federal Government must make definite decisions about if it is to improve the general well being of Nigerians. Billions of Naira poured into a wasteful national agency cannot produce any meaningful results.
The workers wanted to embark on strike over arrears of their entitlements dating back seven years. Governments that refuse to cater for the welfare of their workers but expect them to be productive.
Arrears in workers' entitlement tally with the arrears of government investments in the power sector over the decades. So many words have been used to address the urgency of increased electricity supply. The woes from poor electricity, as well as the billions of Naira that can be saved monthly if there is improved electricity, are too well known that they have become recitals at seminars on Nigeria 's under development.
Yet governments have done pretty nothing and PHCN workers have relapsed into annoyingly agitating for improved welfare, when they are not productive and cannot be without the equipment they require to work.
The proposed strike was called off after government threw N5 billion at PHCN to pay the workers. Where does government get money for purposes that would not be really helpful? Does PHCN not make any money of its own to use in looking after its workers?
PHCN workers vote of no confidence on the newly appointed Presidential Special Adviser on Power, Professor Barth Nnaji, shows how self-serving the strike was meant to be. While some are hoping that Nnaji a world acclaimed expert in engineering, robotics and power systems would rescue the country, PHCN workers were so peeved about their seven-year-old arrears that they wanted Nnaji's head as if he was there in 2003.
There must be a solution to electricity supply and the government must find it. The solution is far from throwing money to stop a PHCN strike, when the facilities that the organisation requires to supply electricity are unavailable.
When next there is threat of another strike what would the government do?
President Goodluck Jonathan has said Nigerians that the problem of power supply in the country is likely to continue long after 2011.
He spoke while responding to a question at a Town Hall Meeting held in the Governor's Lodge in Uyo, Akwa Ibom State while on a two-day working visit.
Asked to give a definite time and date when Nigerians would start receiving regular power supply, the President said, even if he were a native doctor, he would not attempt to give a specific date as requested.
His words: "It is not proper to make that promise again, when Nigeria will have a steady power supply. Even if I am a native doctor, I cannot venture into that. We cannot even say next year. If we will have a target, it will not give us what we want.
We can only have steady power supply when we achieve 40,000 mega watts. "We are taking it very seriously everyday to review the situation. By God's grace, we will continue to progress and cannot get worse than what we have now.
We will continue to improve until we get a stable power supply for our domestic and industrial use."
Citing his experience as governor in Bayelsa State, he said he found that when one comes up with 10,000 megawatts for instance, more people will immediately go ahead and apply for power lines and soon after that, power would become inadequate.
He argued that there was always that problem of trying to meet the demands for power and he then said power problems in the country cannot be over by this time next year.
He however assured that government was taking the issue of power very seriously, "we meet every week to look into the matter and we will continue to tackle the problem until we get steady power supply,"he added.
On the issue of kidnapping in the country, the president said it was very critical and that it has reached an embarrassing level.
He said government was employing modern technology to track kidnappers.
He assured that government was trying to go to the National Assembly to try and find ways to review the laws on kidnapping with a view to making it more severe on those who engage in it.
He said whenever a single person was kidnapped in this country, even if it is 2am at night he is always informed.
According to him, "we are taking the matter very seriously and we will not fail to deal with the perpetrators. You even find that some communities in the country have turned it into a business and people who even have chains of degrees have been found to be aiding abetting this criminal activity.
You also find that there are highly placed individuals who are involved in it because sometimes when somebody is kidnapped you find these highly placed individuals going to negotiate the ransom." he said.
Continuing, he said, "The issue of kidnapping has become very critical. We have allowed it to deteriorate to a very embarrassing state. Some highly placed people are involved in it. We are not sleeping; we are finding ways to track down kidnappers and we are trying to pursue the use of ICT equipment to track them down."
On the issue of refineries, the president said, "it is not in the place of government to be directly involved but to encourage the private sector to invest in it."
Continuing, he said, "what is actually limiting the establishment of these refineries is the pricing of the petroleum products which government wants to sort out. If government will be involved, it will still be as a kind of private public partnership but not directly like having the NNPC building refineries."
The President also argued that one of the greatest problems in the country is lack of planning.
His words: "We do our budget without proper planning. We struggle with little resources to do so many things and this one of our greatest problems that hinder project execution.
I will plead with members of the National Assembly that if they are interested in any project, they should approach the ministry or department of government that will be in charge of that project so that they can work together in planning the project."
07/01/10
Nigeria: Jonathan Rolls Out Nine Month Plan On Power
Following the assumption of full responsibilities of Nigeria's troubled Power sector, President Goodluck Jonathan constituted a Presidential Action Committee to oversee the new reforms in the sector. To underscore the enormous task before it, Jonathan elected to head the all important committee which has the minister of state for Power, Nuhu Somo Way, as vice chairman.
Other members of the Committee include: Finance Minister, Olusegun Aganga; Central Bank Governor, Sanusi Lamido Sanusi; the Director General of Public Procurement [BPP], Mr. Emeka Ezeh as well as his counterpart from the Bureau for Public Enterprise [BPE], Dr. Christopher Anyawu(who is on suspension now).
Explaining the composition of the Presidential Committee Wya said: "We are getting the Central Bank of Nigeria to be involved to facilitate our transactions, as most of our accounts are at the apex bank. We also want to sort out issues about clearing our goods, to also ensure that whoever is giving us power, his investment is protected. We have the Bureau for Public Procurement which is also part of the Committee to ensure that procurement is processed quickly."
He further explained: "We have the Ministry of Finance which is in charge of financing our operations so that whenever there are challenges, the ministry will handle it quickly and then we have people from the private sector that are coming to assist us. So, we expect that the Presidential Action Committee on Power with the Acting president as Chairman and me as deputy chairman will ensure that all issues militating against the prompt execution of power projects are concluded within the shortest possible time." Although mixed reactions had trailed the retention of the Power Ministry's portfolio by the President, stakeholders were united in their opinion that the decision underscored Jonathan's desire to deliver sustainable electricity to Nigerians.
As Nigerians waited with baited breadth, the Presidential Action Committee on power on June 2, 2010, presented a Nine month action plan on the power sector. The Action Plan, a copy of which Daily Trust obtained, reiterated the pledge by the President to make light available to Nigerian homes and businesses within a short time.
Specifically, the plan set forth a nine-month timeline for achieving results in the power sector reforms through the following objectives: To establish and sustain effective communication with stakeholders and the public on the Action Plan; make every Nigerian electricity consumer a responsible customer complying with tariff and service obligations and to establish a competitive power procurement framework that delivers increased power generation to meet increasing customer demand.
To achieve these objectives, the Action Plan hopes to fast-track the completion of the moribund NIPP projects to deliver additional 576MW by December this year [2010] and to fast-track the rehabilitation of PHCN generation companies to deliver 730MW within 9-12 months.
On power transmission and distribution as contained in the report, the Presidential Action Committee proposed to fast-track the procurement and deployment of shunt reactors and capacitor banks at the identified nodes to drastically reduce incidences of grid system collapse. It also proposes to fast-track the delivery of 360MVA additional distribution capacity within a period of 9-12 months.
One interesting thing about the report is the "irreversible steps" proposed by the Presidential Action Committee in realising its objectives. These include: Resolving and reconstituting the Nigeria Electricity Regulatory Commission, NERC, resolving labour issues, inaugurating the boards of the PHCN successor companies and expediting action on the power sector privatisation process and the establishment of a competitive procurement process for new power in addition to the NIPP.
The overall goal of the Presidential Action Plan on Power, as contained therein, is to achieve improved power supply within 9-12 months; significantly improve supply and stability in the medium term and to achieve reliability and sustainability in the long term.
The federal government had rolled out a similar "Strategic Plan" to meet the target generation capacity of 6000MW by December last year. Among other objectives the plan was based on optimizing the existing capacity within the host PHCN power plants through an aggressive repair and rehabilitation exercise, reinforcing the transmission and distribution network as well as completion of on-going projects.
When the strategic plan failed to achieve the target generation of 6000MW by December last year, the Power Ministry attributed it to a number of challenges, particularly shortage of gas supply to power the thermal station. Other challenges advanced by the Power Ministry for the failure to deliver on the 6000MW of electricity to Nigerians were, infrastructure inadequacy, proper funding and administration as well as procurement challenges.
It is against the backdrop of the failure of previous policies in the power sector, coupled with other challenges that some analysts see nothing different with the reforms contained in the new plan of Action rolled out by the Presidential Action Committee.
This has further raised questions over the huge financial investments that have been committed to the power sector in the past with little or no significant results. As one analyst puts it: "Now that government has introduced another action plan to improve electricity, Nigerians are waiting to see whether President Jonathan will deliver the lights after nine months, or come out to apologise to Nigerians over another failed promise."
06/16/10
Nigeria: Jonathan Rejigs Power Reform Structure
Abuja — President Goodluck Jonathan yesterday moved to boost his determination to revamp the power sector with the composition of a new structure for power reform.
The new structure is to be driven by the Presidential Action Committee on Power chaired by him, supported by a Presidential Task Force on Power.
This comes as a major impediment to the realisation of stable power supply in the country seems surmounted with the Federal Government's approval of a new gas supply/purchase template for the gas-to-power domestic market.
Speaking in Abuja at the signing of an agreement for the supply of 65mmcft between the Egbin Power Generating Company, a subsidiary of the Power Holding Company of Nigeria (PHCN), and the Nigerian National Petroleum Corporation-Pan Ocean Joint Venture, Minister of Petroleum Diezani Alison-Madueke said the gas supply/purchase agreement would serve as format for all gas transactions in the domestic gas to power market.
The Presidential Action Committee will provide leadership and guidance for the development of the sector and determine the general policy direction and strategic focus of the ongoing power reform.
This committee has Vice-President Namadi Sambo as alternate chairman and its other members include the Minister of State for Power, the Ministers of Finance, National Planning and Petroleum Resources, the Secretary to the Government of the Federation, the Head of Service, Governor of the Central Bank of Nigeria, Special Adviser to the President on Power and Chief of Staff to the President.
The Presidential Task Force, on the other hand, is charged with developing and driving the action plan for the nation's power sector with achievable targets within the lifespan of the present regime.
It will also articulate a proper plan of action for implementation in the areas of power generation, transmission distribution as well as all issues regarding power sector reform.
The taskforce will report to the President and the Presidential Action Committee on a regular basis.
The Presidential Task Force is to be chaired by the Special Adviser to the President on Power.
Members include the Permanent Secretary (Ministry of Power); Group Managing Director, Nigerian National Petroleum of Corporation (NNPC); Managing Director, Power Holding Company of Nigeria (PHCN); Managing Director, Niger-Delta Power Holding Company (NDPHC); Director-General, Bureau for Public Procurement (BPP); Director-General Bureau for Public Enterprises (BPE); Accountant-General of the Federation; Chief Executive, Nigeria Electricity Regulatory Commission (NERC); CEOs of two power distribution companies; CEOs of two generating companies, and Director of Power in the Ministry of Power.
The Senior Special Assistant to the President (Special Projects) will serve as Member/Secretary.
Under the new arrangement, the ministry of power will, however, continue to supervise the day to day affairs of the ministry and relevant agencies, as well as fund the various projects approved in the 2010 budget.
It will also provide a conducive environment for the presidential taskforce to carry out its assignment.
All requests for the award of contracts for the consideration of the Executive Council of the Federation (EXCOF)â-àare to be handled by the ministry.
Alison-Madueke said the agreement has been designed in such a way that the gas and power sectors would have bankable instrument that is robust enough to attract external finance as well provide for new investors to engage in supply development for the power and other domestic markets.
The minister said the agreement is for the supply of 65mncf/d of gas from Pan-Ocean's Ogharafe Gas Plant to Egbin.
She said Pan-Ocean is one of the three planned suppliers of gas to Egbin, while others include NNPC/SPDC JV and NNPC/Chevron JV.
Describing yesterday's agreement as a landmark achievement, Alison-Madueke said it would help potential investors in Independent Power Projects (IPPs) to have the immediate visibility of the terms and conditions of gas supply in Nigeria , hence expediting their investment decision.
She said the Federal Government is currently spending an average of $1bn yearly on gas development projects to shore up availability of the product.
The minister noted that apart from addressing the fundamental challenges of gas-to- power, the ministry has now progressed to developing a world class domestic GSPA template for the Nigerian domestic gas to power market.
According to her, similar templates are being developed for other sectors too.
"I have directed that the template be loaded on the website of the Gas Aggregation Company of Nigeria (the company set up to regulate domestic gas sector)," she said.
Highlights of the agreement include obligations and liabilities in gas supply while off-take are now explicitly specified, thereby removing the current situation of supply or off-take on best endeavour basis.
Another provision is that when gas is supplied, it must be taken and vice-versa, otherwise penalties (take or pay) apply, clear line of sight between buyers and supplier of gas is now being established through this legally binding contract.
"The new agreement provides a platform for the immediate roll-out of the new gas price to power. It allows a clear and transparent segregation of value chain by separating the gas transmission agreement from the gas supply agreement thereby enabling transparency in pricing and liability," the minister said.
The minister said for Nigeria to realise the potentials inherent in the sector, it is essential that the processes of the sector are bankable and robust enough to attract external finance as well provide for new investor to engage in supply development for the power and other domestic markets.
According to her, the contractual process must be such that it enforces performance of all players in the value chain from producer to the up-taker. Performance is crucial to the sustainability of supply. The current arrangement is relatively loose and poor performance is evident, she stated.
She said what used to be the case under the old arrangement, is that there could be supply of off-specification gas by suppliers or continued cases of gas supply by the producer with the PHCN not being able to take the gas, adding the new dispensation prescribes penalties for any such default.
The General Manager Corporate Strategy of Pan Ocean, Mr. Adeshina Shittu, said the gas agreement provides for take-on-pay and has set in motion threshold for failure to supply or failure on the part of PHCN to pay. "There are penalties enshrined in the agreement to ensure that parties comply.
Some of these penalties come in form of discount and if the inability to supply leads to disruption of PHCN power stations or damage to generation facilities and as such PHCN is not able to supply power, the gas supplier may have to pay for the repair of the plant and in addition foot the bill for the use of alternative LPFO product by PHCN for power generation," he said.
Minister of State for Power Nuhu Wya said the unveiling of the gas sale agreement has broken the mystery surrounding instability in gas supply to the country's power stations.
Wya said with the signing of the gas deal, both the gas suppliers and PHCN power companies would no longer have any excuse not to provide Nigerians with much-needed electricity.
"I am pleased with this development and I want to assure Nigerians that with the collaborative arrangement, more stable power supply is guaranteed," he said.
The minister said there would be no hiding place for either PHCN or other power producers as every contestable issue has been addressed by the GSPA template.
The Coordinator of PHCN, Engr. Hussein Labo, listed other power stations to benefit from GSPA to be signed next week with Chevron and Shell to include Olorunsogun, Omotosho, Ughelli, Sapele, Afam and Geregu.
05/28/10
Nigeria: Power Sector Reform Comes Back On Stream
Abuja — Worried about the poor state of electricity generation in the country, President Goodluck Jonathan has directed the ministry of power and other relevant agencies to immediately restart the implementation of power sector reforms.
The Federal Government is also jointly executing a $300 million pilot project in renewable energy, with the provision of $100 million, while the World Bank is making available $200 million.
And the Presidential Action Committee on Power has said it is working assiduously to fast track improvement of electricity supply within the next three to six months. The Minister of State for Power Mr. Nuhu Somo Wya who conveyed the president's order also said processes leading to the privativation of the generation and distribution networks had already commenced.
The power sector reform formulated by the former President Olusegun Obasanjo administration was designed to have the electricity generation and distribution assets of the Power Holding Company of Nigeria (PHCN) privativatised. But after the initial unbundling exercise to create semi-autonomous entities, the reform was discontinued.
Speaking yesterday at the opening of a workshop on renewable energy jointly organised by the Ministry of Power and the World Bank, Wya said the government had the will power to reform the power sector. He disclosed that international investors had shown interest in developing the power sector.
They have however expressed reservations about the unfavou-rable environment which the Federal Government is working hard to address, the minister explained.
"President Goodluck Jonathan who is the Chairman of the Presidential Advisory Commit-tee on Power has directed that reforms in the power sector be recommenced immediately. We are already putting machinery in place to make sure these reforms are implemented," said Wya.
"In the reform, all the obstacles are to be removed to ensure that whoever wants to participate in the generation of electricity is encouraged to go through the regulatory framework that is enacted for the sector to ensure that they do their business in ernest. Nigerians can have regular power supply when these regulatory frameworks are put in place and are working.
"Federal Government is dismantling all obstacles that impede the smooth operation of the power sector as robustly and efficiently as possible. We are providing enabling environment for everybody to participate. We are already in discussions with some state governments to partnering with them in the area of generation and distribution," he said.
THISDAY had exclusively reported that the Federal Government had held talks with state governments in the South-south geo-political zone over the possible acquisition of the Port Harcourt distribution company.
However, it has been gathered that the progress of the Presidential Committee on Power mandated to find solutions to the challenges of electricity supply in the country is being slowed down by personality clash involving key appointees on the committee.
On what government is doing to promote the development of renewable energy resources in the country, Wya said at the federal level, the ministry was trying to develop a pilot scheme to assure people that renewable energy projects could work.
"We have started with a 10MW wind energy farm in Katsina, another one in a place called Waya in Bauchi State and there is one solar energy project in Plateau State," he stated. According to him, the Federal Government could not solve the problem of the power sector alone.
He said government was also working to create the enabling environment for the integration of renewable energy-based power supply by removing barriers to investment and market development through robust policy actions.
Wya explained that the Nigerian Electricity Regulatory Commission (NERC) is currently developing a feed-in-tariff for renewable energy power and regulatory framework/technical standards for distribution, generation and decentralized solutions for off-grid and mini-grid systems in rural and semi-urban areas.
"It is a thing that everybody will participate. For instance, the requirement of electricity for small community in the country may not be more than one per cent and the local government should be able to pull resources to solve their needs," he said.
Commenting on the criticisms trailing the recent increase in consumer electricity tariff from N6.00 per unit to N8.50, the minister said Nigerians should be prepared to pay whatever it costs to provide stable electricity supply.
He said the cost of paying for the increase in tariff is far cheaper than the cost of darkness Nigerians are experiencing now. He maintained that government would from time to time undertake review of the tariff structure to enable the power generating comapnies stay in business.
The Senior Energy Specialist at the World Bank Mr. Waqar Haider said the components of the proposed renewable power project with the government include independent mini-grid development (for remote areas with concentrated loads), Standalone energy systems (with scattered small loads) and Technical Assistance and capacity-building for federal, state and local governments, community associations and non-governmental organisations (NGOs) on how to operate renewable facilities on a sustainable basis.
In a related development, a statement by the Head of Press and Public Relations in the Ministry of Power Mr. Greyne Anosike made available to THISDAY yesterday said the committee has promised that within three to 12 months, it would take steps to promote medium to long term sustainable electricity supply.
It also emerged that the consumer debt profile of the PHCN has hit N70 billion.
Anosike said the committee's undertaking was made during a preliminary presentation to donor agencies, members of the diplomatic corps as well as stakeholders in the industry on Monday in Abuja.
Addressing the stakeholders, which included Wya and the Minister of National Planning Commission, represented by the Secretary of the Commission Prof. Sylvester Monye, a member of PACP and Senior Special Assistant (Special Duties) to Mr. President Nze Akachukwu Nwankpo hinted that in line with the yearnings of Nigerians, PACP was working towards sustaining electricity availability in major industrial and commercial hubs.
Nwankpo said the president had directed the Task Force to restore sanity to the sector within three to six months, adding that in order to realise the objective, the task force had been focusing on all initiatives that would sustain availability, quality and reliability while simultaneously implementing short, medium and long term solutions that would make electricity availability predictable in Nigeria.
He emphasized that though the report would be approved soon, its broad objectives, nonetheless, is to restore within six months, consumer confidence in the electricity supply sector and make every Nigerian a responsible consumer that complies with tariff and service obligations as well as establish a competitive power procurement framework that delivers increased generation to meet increasing consumer demand.
The minister said PHCN is being owed more than N70 billion by consumers and observed that no agency whether private or public could perform miracle with this volume of debt owed it for service already rendered. He warned that government would henceforth hold communities which allow their power facilities to be vandalized responsible.
The statement further said the approved Report of the Task Force would be unveiled in the next one or two weeks.
03/22/10
PHCN in N459bn Debt Overhang
The Power Holding Company of Nigeria (PHCN) is said to be presently reeling under the weight of a staggering debt profile amounting to N459,103,103,252,394.
Out of this figure, PHCN owes Shell Petroleum Development Company and Agip Oil Company N55, 132,468,318 for power supplied to the national grid under its power purchase agreement.
THISDAY gathered that the huge debt profile hanging over the electricity company had to some extent undermined the effort to improve power supply in the country and is fast threatening the solvency of the organisation whose staff strength is presently put at 50,000.
According to a financial document obtained by THISDAY at the weekend, which detailed the various financial liabilities of the power utility company, trade liabilities stand at N161,191,209,808.90 as at January 13, 2010 while the total indebtedness arising from loan and related obligations is put at N297,912,042,586.08.
The company is also said to have incurred N10,037,18-7,532.42 from fuel and gas supplies by SPDC and the Nigeria Gas Company, while a total of N129 billion stands against the accounts of the company as superannuation fund (money set aside for staff retirement benefits).
In the same vein, outstanding loans by the company from federal and state governments, including amounts borrowed from banks and organizations stand at N297,912,042,586.08.
Some of the debts could be traced to as far back as the 1970s and 1980s. For instance, the sum of N37,414,913,177.11 was said to have been obtained in the 1970s as federal government serviced On-lent debts meant to finance the construction of Egbin and Jebba power stations.
Against the background of recent fears that 20,000 PHCN staff might be laid off as a result of the deteriorating financial position, the former Minister of Power, Dr. Lanre Babalola, had expressed the need to have a proper appraisal of the workforce and to prepare for additional staffing requirement in view of the additional capacities the National Integrated Power Projects (NIPPs) will add to generation, transmission and distribution across the whole country.
Prior to the dissolution of the Executive Council of the Federation, there were indications that moves were being made by the former minister to work out modalities with the Ministry of Finance on how to get money to address PHCN liabilities and commitment to the electricity workers and other debts that had accumulated over the last ten or so years.
Part of the strategies being planed by the ministry to reposition the sector include the assignment of some of the liabilities to some of the successor companies, which stand in excess of N400 billion.
Other plans include structuring of the debt for repayment, write-off of some of the debts.
The former minister whose views were contained in a written memo on how to restart power sector reform, said the fear of the sector unions concerning alleged lay off of workers was misplaced, adding that studies have shown that Power Holding Company of Nigeria (PHCN) has about 50,000 staff strength, most of whom are in non-core operating areas.
He said optimal staffing level is not as high as the nominal staff roll, adding that the studies also indicate that there are areas of understaffing, particularly in core areas of the business and overstaffing in non-core areas.
"Right now, the pension liabilities of PHCN workers amounted to about N129 billion, arrears due to implementation of workers’ monetization, which is N65bn, with other commitments yet to be honoured by the PHCN", he said.
According to him, the generation and supply infrastructure being developed under NIPP will more or less double current system capabilities.
"This implies that upon completion, more job openings and opportunities will be made possible by NIPP. The holistic framework that has been developed intends to tackle the problem by first of all by retraining staff, undertaking internal redeployment, no cost rationalisation, reassignment, redeployment through outsourcing and voluntary early retirement scheme", he said.
Based on government blueprint to re-position the power sector reform of the sector, efforts are to be on to ensure genuine development of power sector involving the private sector players that can bring the kind of capital or investment needed to revamp the industry.
The reform plan states that in order to ensure that PHCN is positioned to deliver on improved power supply to Nigeria, it is absolutely important that the generation, transmission and distribution successor companies are appropriately staffed and structured.
02/15/10
Babalola Orders PHCN to End Power Supply Crisis
As the power situation in the country takes a turn for the worse, the Federal government has asked the management of the Power Holding Company of Nigeria (PHCN) to speedily finalise discussion on various projects that will improve electricity supply.
The Minister of Power, Dr. Lanre Babalola, in a statement signed yesterday by his Special Assistant on Media, Mr. Lawal Yakubu, directed the management of PHCN to accelerate and conclude discussions on Gas Supply and Purchase Agreement (GSPA) and Gas Transportation Agreement (GTA) with the Nigerian National Petroleum Corporation (NNPC).
When completed, these agreements are expected to help tackle the gas supply challenges that has affected operations at the thermal stations.
The minister in his directive asked PHCN to intensify effort at reaching agreement with oil companies to guarantee supply of gas to the thermal power stations.
“You have to accelerate and conclude the ongoing discussion with NNPC on gas issue and sign the agreement immediately and also finalize the framework for back-up fuel agreement based on LPFO and LPG for other power stations apart from Egbin in order for us to resolve this gas challenges," said the Minister who summoned the top management of PHCN to a meeting in his office.
"We cannot continue to fold our arms and wait for manna to fall from heaven. PHCN as an operator should be concerned about the declining generation as a result of gas challenges and come up with solution," he continued.
He added that the country currently has over 5,000mw generation capacity but lamented that lack of gas continues to affect the sector.
Babalola also directed PHCN to come up with an interim plan on the alternative source of fuel such as Low Pour Fuel Oil (LPFO) and Liquefied Petroleum Gas (LPG) to drive the power stations that are currently idle.
He stated that while availability of gas is being tackled, PHCN should look at all the generating stations and access the units that could be modified to use LPFO or LPG as a stop-gap measure.
The minister said the signing of gas purchase agreement with the NNPC will help to secure commitment to its delivery pointing out that such pact will help all parties to keep to terms and conditions of sale and purchase agreement. He further argued that a penalty clause in such circumstances will allow all the parties to be aware of their obligations.
Babalola explained further that with the GSPA in place, it will help to instill confidence on the part of gas producers and NNPC as well as remind PHCN to keep to all the terms including payment for gas supply.
He stressed that the Nigerian Electricity Regulatory Commi-ssion (NERC) with the support of the World bank has provided the framework in the GSPA and Purchase Agreement (PPA) to make operators accountable for their operations.
Regarding the state of power facilities, the minister said the contractors handling repair works at the Delta power station are concluding the rehabilitation of two generating units which will increase Delta's capacity by an additional 200MW. This in effect will increase Delta's capability to 520MW. Gas limitations, however, restricts actual generation to about 150MW.
Power supply situation across the country has gone from bad to worse with most cities experiencing load-shedding. In Abuja the Federal Capital Territory (FCT), the situation has become so critical such that residents in some neighbourhoods, especially those living in satellite towns go without power supply for days.
At a Press conference held in Abuja early this month, the minister blamed the drop of power generation from 3,710MW in December last year to 2,700MW on a sharp drop in gas supply .
PHCN had listed six thermal power stations that are idle as a result of lack of gas to drive the machines for electricity generation. It said Egbin thermal station has available capacity of 1000Mw but forced down to 400MW. Sapele has all its units intact but produces nothing due to lack of gas.
Other power stations with the same problem are: Delta, Geregu, Omotosho and Olorunsogo
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