Friday, 15 August 2014

The three musketeers of Nigeria’s power sector

Every electric power system is an assemblage of generation, transmission, distribution, communication and associated facilities which are physically linked and operated as a single unit under one control.

 Typically, the transmission and distribution lines together with the allied facilities are used to transmit electricity from its point of origin (the power generating plant) to the final consumer.

 Due to its physical characteristics, electricity flows uniformly along all available paths that offer the least resistance. As such, the flow of electricity must be closely monitored to ensure that sufficient generating capacity is available and on-call to satisfy the entire demand (load) for electricity placed on the power system.

In addition, for system standardization and reliability purposes, the flow is maintained at a specific frequency (in Nigeria, it is set at 50Hz). All equipment and apparatus connected directly or indirectly to the Grid must operate at the specified frequency mode (cycles per second).

The flow of electricity within the system is maintained and monitored by dispatch centres having control and security responsibilities. Typically, in evolving electricity markets, the dispatch centre prioritizes and inventorizes all generating capacity available to it, tracking transactions involving buying and selling of either electric power or capacity, monitoring current load and anticipated future load on the system.

In Nigeria, there have been challenges with the Nigerian electricity grid because for a long time, the state-owned electric monopoly; the National Electric Power Authority (NEPA), was characterized by poor operational performance which could be gleaned from various facts including the fact that only 426 out of the 774 local government councils in Nigeria were connected to the national grid.

The situation was such that, of the 426 local government councils (the “Councils”) connected to the national grid, only the headquarters of the Councils were connected and not the entirety of the residents in these local government areas.

Further, the situation was such that the last transmission line was built in 1987. In fact, a survey conducted in 2012 by TNS Research and Marketing Services, a leading global research organization, revealed that 51% of Nigerians do not have access to (grid) electric power supply, and the remaining 49% of Nigerians with access to electric power supply, admitted its epileptic and unreliable nature.

With the pathetic state of the electric power sector, the cost of doing business in Nigeria has been much higher than that of her neighbouring States, such that certain key businesses have relocated outside Nigeria. This has led to a drop in the volume of businesses that would ordinarily have been attracted into the country, because of the lack of quality and dependable grid power supply to the economy for industrial, commercial and socio-domestic activities.   

With the privatization of the power sector, a management contractor, Manitoba Hydro International (“MHI”), was selected to improve electricity transmission in Nigeria because without a strong grid system, an all-round success cannot be achieved in the sector. It is now expected that MHI would work towards the overall improvement of the Nigerian transmission infrastructure as much as possible.

Further, there is need to work towards having a SuperGrid which makes it possible to trade high volumes of electricity across great distances. A SuperGrid will normally connect electric power plants and major substations, while ensuring that electricity, of various forms and frequencies, generated in one place can be utilised by persons elsewhere. For a successful functioning of the SuperGrid in Nigeria, a major technology upgrade is required to guarantee its realistic operation and an assured benefit to its beneficiaries.

The SuperGrid concept has been in existence for a while but mostly known in more developed electricity markets. Recently, the Nigerian Government began to debate its introduction.  It is reasonably expected in Nigeria, that the development of the SuperGrid will positively influence investment decisions, change perception of market opportunities and also ensure coordination between governments, regulators and licensees.

The advantages of a SuperGrid, amongst others, are that it will influence investment decisions at a corporate level and encourage private participation in the power sector. The SuperGrid network will reduce wastage, as surplus energy not used but produced can be transmitted or transported to other areas where they can be utilised by other persons. Without a SuperGrid, it will not be possible to take advantage of the large amounts of energy that may be obtained from alternative sources of renewable energy such as wave farms, tidal lagoons and concentrated solar power. These sources of renewable energy, although they can be quite remote, can also be produced large scale and this will assist in a mass transmission of electrical power to more people who need to utilize such power.

Another issue deserving attention as far as electric power transmission is concerned, in Nigeria is the remote detection of problems or faults on the grid through the smart grid. The smart grid is a type of electrical grid that utilizes information and communication technology to collect and act on data, in a computerized fashion. This helps to improve the efficiency, reliability, economics and sustainability of the generation, transmission and distribution of electric power.

The writer understands that the Federal Government of Nigeria (FGN) is doing a lot to obtain funds to expand the grid and to make the grid more robust than it currently is. In this respect, therefore, the FGN is doing a lot to have a better national grid.

Efficient Regulation

Regulation is broadly defined to include the enactment and/or implementation of treaties, laws, decrees and other legal instruments. The chief regulator of the power sector in Nigeria- Nigerian Electricity Regulatory Commission (NERC) has performed quite well and needs to sustain the good work. There is need for a deliberate effort at providing responsive regulation as we move into the uncharted path of private sector participation in the whole value chain of electric power provision. Although, it is the writer’s view, that NERC is blazing the trail in efficiently regulating the electric power sector in Nigeria, but must not fall into the trap of over-regulating the sector by not duplicating the role of varying regulations or introducing ‘unworkable’ regulations.

There are also issues around the establishment of additional regulators; the FGN does need to think this through very well before further making it more difficult to do business in Nigeria, by having too many regulators performing the same or similar roles.
NERC also has to continuously ensure that thorough analyses are done and the pros and cons of every regulation, guideline or such other similar instruments are considered prior to issuing same. Additionally, sufficient public participation is recommended prior to issuing regulations in the power sector; particularly regulations that may be sensitive or likely to seem controversial. Although, NERC has been quite interactive with stakeholders; it does still needs to do much more in that regard.

If the modest success achieved so far in the NESI is to be sustainable, the tripod of gas availability, grid enhancement and efficient regulation should be given the priority they deserve. Government is currently doing a lot to improve gas availability through the consideration now given to the settlement of legacy indebtedness to gas producers, an improved gas price and government’s approach to developing a SuperGrid and smart grid.

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