PRESIDENCY REVIEWS ELECTRICITY ROADMAP

• 2013 tagged ‘make or break’ year for sector

• Privatisation to end in fourth quarter

FACED with the difficulties of meeting its 2012 target for the electricity sector, the Presidency has commenced the review of its “Power Sector Roadmap.”

As a mark of its determination to deliver on its promises in the electricity sector, the Presidency has described the year 2013 as “a make or break” year.

According to a review of the electricity sector in 2012 and projections for the future released at the weekend, the year 2013 is a “make or break year” for the electricity sector reform in Nigeria. Timely delivery of the 2013 milestones will guarantee a big pay-off from 2014 and beyond in terms of improved electricity supply, impact on the economy, and political dividends to this administration. Poor performance in 2013 will leave the reform very vulnerable and lead to gain reversals and market confusion.

President Goodluck Jonathan had on August 26, 2010 launched his government’s “Power Sector Roadmap”, a kind of contract with Nigerians for stable electricity supply.

The roadmap, which contains a number of policies and institutional reforms, was seen as having the capacity to expand electricity supply and access significantly.

In the project unveiled in 2010, government had promised the implementation of a super transmission network, generation of additional 5,000mw by international oil companies, active exploitation of hydro, nuclear and coal power, privatisation of PHCN generation and distribution network, a new gas pricing policy, constitution of two presidential committees on power and the reconstitution of the boards and membership of the Nigerian Electricity Regulatory Commission (NERC).

“In the medium term (up to December 2013), we can expect: A modest increase in the total power generation capacity of the existing PHCN power stations (which would bring the total to just under 4,500mw); the addition of 4,775mw from the NIPP plants; and a substantial (3,300mw) increase in power generation capacity from IPPs all by December 2013. As such, the medium term expectation is that 14,000mw of power generation capacity will be available by December 2013, “ the roadmap said.

Although certain aspects of the roadmap were said to have been accomplished by the close of the year 2012, key aspects like completion of the privation timetable, among others, were fraught with postponements and disappointments.

But in a detailed review of the electricity sector released at the weekend, the Presidential Task Force on Power (PTFP) stressed that a revised roadmap was being produced. The revised roadmap, according to the task force, would now aim to deliver the privatisation in full by the fourth quarter of 2013, and make projections for growth from various fuel and energy sources up to 2016.

Among other targets in the new roadmap expected to be ready before April, according to officials, are the commencement and conclusion of all labour settlements, severance, rationalisation and winding down of the Power Holding Company of Nigeria (PHCN).

The Chairman of the Presidential Task Force on Power, Beks Dagogo-Jack, in the review of the electricity sector, called for co-operation from all stakeholders to enable government meet its 2013 targets.

He said government would also this year position the Nigerian Electricity Liability Management Company (NELMCO) as a robust organisation to address post-handover fall-outs from creditors.

On the electricity sector in 2013, he stressed: “Along with our colleagues, we made good progress over the past year. The nation proudly witnessed the sector’s highest peak generation (4,517 megawatts) on December 21, 2012.  We also achieved the highest ever level of energy sent out per day in excess of 98,580 MWH on December 19, 2012. In addition to these achievements, we attained a record peak in gas production and supply to power.

“Since then, we have maintained close interaction with the system operator and the rest of the technical teams for daily performance monitoring. We have instituted new service protocols, which better integrate the roles of the gas supplier and the system operator for daily energy output optimisation. We are hopeful that these initiatives supported with the delivery of some critical transmission-distribution interface gap-closure projects will see us putting more power on the grid in the next coming months.”

He said the sector achieved between eight and 20 hours of steady daily supply in some parts of our major cities.

He went on: “By way of specific success stories, it is worth mentioning the successful implementation of the Multi-Year Tariff Order 2 (MYTO 2) on June 1, 2012.  This was a significant reform milestone, which forms the main enabling frame-work to attract private sector investments and set the stage for the full transition of the power sector to a self-sustaining market mode.

“Other success stories in 2012 include the additional 1,000 megawatts of new capacity contributed from the commissioning of some turbine units of the National Integration Power Projects (NIPP), the 79 bids received for the PHCN successor companies, the successful bids for the five generation companies and the 11 distribution companies.  The contributors to these key milestone successes – Nigeria Delta Power Holding Company (NDPHC), NERC, BPE and their teams all deserve commendation and appreciation.”

He described the year 2013 as bearing what he described as all the marks of the most critical year for the electricity reform “since we must kick in the Transitional Electricity Market this year marking the outset of a privatised Nigerian Electricity Supply Industry.”

He went on: “From Q3-2012 we commenced re-energizing the reform momentum.  Going forward there is a sound basis for cautious optimism which places a huge responsibility on the whole power team for vigilance and staying the course until we have crossed the finish line.

“I am also convinced that the first two quarters of the year will challenge us to deliver some critical path milestones without fail, such as clarity on transmission funding mechanism, conclusion of negotiations with the successful bidders, providing for labour settlement obligations, completion of the due National Integration Power Plant (NIPP) generation and transmission projects, market revenue and settlement profile improvement, securing a minimum transitional service delivery level through projects and process optimisation, and positioning a robust Nigerian Electricity Liability Management Company (NELMCO) to address post handover fall-outs from creditors.”

The review document stressed that completion and handover of the successor companies would occur in the fourth quarter of 2013 while the new owners would be expected to invest capital and provide technical and managerial expertise necessary to create a robust and dynamic power sector, as necessary for reviving the nation’s manufacturing sector, creating jobs, and improving quality of life.

According to the document, “2013 will witness the commencement and conclusion of payment of labour severance packages to former PHCN staff. There will be enhanced capacity of NBET to sign and execute PPAs for existing FGN assets and the first wave of new IPPs.  Bidders of privatised assets will complete full payment and handover of such assets will be completed. The capacity of NELMCO will be enhanced to deal with liabilities pre- and post-privatisation. The announcement of the commencement of the Transitional Electricity Market is expected in 2013.”

On funding, the PTFP said it would liaise with the Federal Ministry of Finance and Federal Ministry of Power to completely fund and operationalise NELMCO and NBET so as to conclude all credit enhancement provisions and allied market staging processes aimed at securitising the bulk trader’s activities and all processes to enable the earliest declaration of the Transitional Electricity Market (TEM) stage.

“The PTFP will also work with these ministries to ensure the timely release of the MYTO subsidy.  NERC will increase co-operation with other agencies and market participants at this critical stage of market development,” the document noted.

Source: Guiardian