A day after the power grid collapsed for the second time
this year, the Federal Government has disclosed that as part of the overall
reform of the sector, the Transmission Company of Nigeria, TCN, would be
unbundled into two distinct entities.
The government admitted that TCN, which is responsible for
managing the national power grid as well as delivering bulk electricity to
distribution companies and eligible customers, has been identified as the
weakest segment in the Nigerian Electricity Supply Industry, NESI.
Speaking in Abuja yesterday at the opening of a Ministerial
Retreat organized by the Federal Ministry of Power, the Minister of Power,
Chief Adebayo Adelabu said TCN would be restructured to become the Independent
System Operator, ISO and the Transmission Service Provider, TSP.
The three-day retreat has the theme: The integrated national electricity policy and strategic implementation plan: Navigating and aligning on the path to enhanced electricity reliability.
Chief Adelabu explained that the restructuring must
synchronize with the evolving landscape of State Electricity Markets,
addressing calls for the decentralization of the national grid into regional
grids interconnected by a new higher voltage national or super-grid.
He observed that the goals of the reforms introduced by the
government to improve power supply have largely remained unmet, urging
stakeholders and operators to renew their efforts to ensure that these were
achieved.
According to him, “one of the main objectives of the
Nigerian electricity sector reform programme initiated over 23 years ago is to
make electricity available to consumers across the country with efficiency and
consistency, which in turn lead to general reliability and affordability. Even
as electricity consumption per capita was at 140 KWh in 2021, relatively low in
comparison to neighbouring countries and almost three times lower than the
average for Sub-Saharan Africa, Nigeria is a case study in a deep electricity
paradox.
“Nigeria has grown to become the host of probably the
world’s largest fleet of diesel- and petrol-powered generation capacity that is
utilized for base load supply. Various figures have been mentioned but it is
safe to say that this fleet measures no less than 40,000MW of total capacity.
At an average operating cost of no less than N250/kWh as opposed to an average
economic tariff today of approximately N120/kWh (weighted between petrol and
diesel generation), the daily cost of this extreme inefficiency in electricity
supply in Nigeria, is measurable in tens of billions of Naira daily.
“This is hard-earned money that would better be deployed to
savings, discretionary consumer spending and tax revenue for governments
instead of being literally burnt and going up in diesel and petrol emissions
that harm our environment and contribute to incessant noise pollution in many
of Nigeria’s cities”.
Chief Adelabu who expressed satisfaction at the large and
quality turn out for the retreat, said the outcome would be implemented in
full.
He expressed regret over the second power grid crash on
Monday, explaining that it happened for a few hours and “was operational again.
It was not due to strategic faults in the grid. Immediately it collapsed, our
people swung into action and made sure the grid was restored”.
NERC projects N1.6trn
subsidy in 2024
In his presentation, the Chairman, Nigerian Electricity
Regulatory Commission, NERC, Engr. Sanusi Garba disclosed that without a cost
reflective tariff the government would have to pay about N1.6 trillion to
subsidize electricity tariff shortfall in 2024.
He explained inflation and the Federal Government decision
to unify the foreign exchange market have pushed cost reflective tariff to
N124/kWh from the subsidized N73/kWh charged to Band-A customers, adding that
this year alone, subsidy is expected to top the N600 billion mark.
He disclosed that the financial burden due to tariff
subsidies between 2015 and 2022 stood at N2.8 trillion, adding that it was
imperative that the government supports the review of end user tariff to
minimize fiscal burden in the sector.
He therefore proposed the implementation of an automatic
monthly tariff adjustment to manage volatilities in foreign exchange and
inflation.
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