Sopuruchi Onwuka

Inability of the electricity distribution companies in Nigeria to take up available generation from the power grid continues to hamper efforts at boosting affordable power supplies to homes and businesses in the country.

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The situation which has left significant proportion of the nation’s 12,000 megawatts of electricity generation capacity and over 8 megawatts of transmission capacity redundant has also rendered investments in full industry value chain unattractive.

According to Executive Director in charge of Transmission Service Provider (TSP) at the Transmission Company of Nigeria (TCN), Engr. Oluwagbenga Ajiboye, the commercial crises in the Nigerian Electricity Supply Industry (NESI) remains the bane of the sector.

Engr. Oluwagbenga Ajiboye, who was quoted by participants at a media workshop, declared that the distribution companies have proved incapable of effectively making returns from the full generation load available on the national grip. He noted that actual distribution capacity in the industry has stalled, leading to high redundancy levels at the upstream end of the industry.

The Oracle Intelligence reports that the industry regulator, the Nigerian Electricity Regulatory Commission (NERC) has been making relentless efforts at creating secondary channels for generation companies and the TCN to directly access the market under the prevailing government’s gas-to-power programme.

However, the new market routes under eligible customer regulation, captive power, embedded power and mini-grid programmes carry huge capital requirements in addition to field battles with existing discos over market concession rights.

Thus, the discos continue to dominate the market of the investment and operations relay in the gas-to-power programme.

 Engr. Ajiboye stated that the market players in the power sector have run the industry into huge liquidity crisis and limited the capacity of both the generation companies and grid operators.

He stated that the TCN faces ongoing challenges with Distribution Companies (DisCos) that often reject high volumes of electricity supply due to economic reasons. He stated that the discos blame reluctance of customers to pay for their resort to load rejection.

Despite grid simulations showing TCN can deliver up to 8,701MW to DisCos, actual uptake remains limited by payment issues from end users, he pointed out, adding that  TCN has no control of the discos as they are now privatized.

The bulk of the debt owed generating companies belong to the Niger Delta Power Holding Company (NDPHC) which operates the government’s power plants built under the National Integrated Power Programme (NIPP).

He stated that the industry was going full cycle privatization but clarified that efforts at privatizing the NIPP plants are dampened by investment apathy in the sector. He said the poor commercial outlook in the industry has affected to quality of bids for the NIPP plants.

For TCN alone, he said “the market owes us about N457 billion as of March, being to the market shortfall and legacy debts. We have traced N217b to the legacy debt, and we are in discussion with MOFI to pay us something out of it.”

According to him, bids thrown in by potential buyers have so far failed to match the government’s investment expectations in the affected plants, including the434MW Geregu II, 451MW Omotosho II, 750MW Olorunshogo II, 563MW Odukpani, and 451MW Benin-Ihovbor.

Sale of the plants wa earlier announced in 2023 to address the national budget deficit, but offers coming in could not meet the objectives of plugging fiscal gaps.

According to the TCN, Nigeria currently operates 23 power plants with a combined available capacity of 12,000MW. The company did not clarify if the plants include private generation solutions as well as interventions from clean energy players.

 However, it remains indubitable that critical part of the nation’s generation and transmission capacity  remains untapped due to ageing equipment affecting both generation and distribution.