FG signs $1bn MoU on 1,000MW plant

The Federal Government has signed a $1bn Memorandum of Understanding with Strancton Limited for the construction of a 1,000 megawatts power plant in Katsina State.

It also signed another MoU with Greenville Oil and Gas Limited for the supply of liquefied natural gas to the Kaduna power plant.

The Minister of Power, Prof. Chinedu Nebo, who signed the contracts on behalf of the government, said the proposed power project was highly innovative as its promoter, Strancton, working with Katsina State, would use gas from Niger Republic to fire the plant.

Nebo said the project was a call on Nigerians to take full advantage of gas reserves by building infrastructure for its utilisation, adding that gas alone could boost the country’s economy even without oil.

The minister, in a statement issued by the Deputy Director of Press, Federal Ministry of Power, Mr. Timothy Oyedeji, promised to support the project as it was another way to stabilise the nation’s grid system.

Nebo challenged other states to emulate the Katsina State’s initiative by investing in the sector.

The Minister of State, Mr. Mohammed Wakil, said the signing of the MoUs was a proof that the efforts of the government in wooing investors were yielding positive results.

He said the realisation of the project would bring Nigeria nearer to the target of 20,000MW by 2020 as contained in the vision 2020 document.

He observed that the project, which would run on gas from Niger Republic, would assist in bridging the gap of non-availability of gas, adding that “the planned supply of LNG to Kaduna Plant will give us a good footing.”

Speaking on behalf of the two companies, the Chief Executive Officer, Strancton Limited, Mr. Edozie Njoku, said the plant would be the first gas pipeline-fed electricity project in northern Nigeria.

He said the initial target for the first phase was 300MW with a 30-month construction period, adding that the plan was to move steadily to 1,000MW in years ahead.

The estimated $1bn project, according to Njoku, will lead to reduced energy cost, industrial development, creation of skilled jobs and improve the quality of livelihood in Nigeria.

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Yola power firm loses N150m monthly to insurgency

The Yola Electrical Distribution Company responsible for the distribution of electricity to Adamawa, Taraba, Yobe and Borno states has lamented the effect of insurgency on its operations.

The company said the displacement many of its customers in the zone by the activities of insurgents was responsible for its monthly revenue loss amounting to N150m.

The firm spoke on Wednesday through its Senior Corporate Communication Manager, Mr. Kingsley Nkemneme, while addressing journalists in Yola.

He said the firm had to close down six out of 15 business units covered by its operations.

He said “There are over 200,000 customers in these areas and over 50 per cent of our revenue has been lost as a result of the insecurity that has ravaged three out of the four states under our area of operations.”

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Electricity consumers to pay more from December –NERC

There are indications that consumers will pay more for electricity from December 1, 2014 when the new price of gas for generating power takes effect.

The Nigerian Electricity Regulatory Commission confirmed the development on Thursday in Abuja, noting that the $1 increase in gas price to power plants would become effective on December 1. The regulated price of gas for 2014 was $1.8 per million British thermal unit.

The commission stated this during its presentation during a meeting with industry stakeholders on the bi-annual minor review of the Multi Year Tariff Order-2.

Aside from the price of gas, NERC stated that other factors being considered before undertaking the tariff review included inflation, foreign exchange rate and power generation capacity.

The Vice Chairman, NERC, Mr. Mohammed Bello, said the upward review was necessary although Nigeria’s power situation had yet to improve.

He said, “From what I have seen in the initial report, not much has changed. The tariff review is a sensitive issue to the consumer who considers paying higher and not seeing improvement in electricity supply. But there is a general consensus that this is the way to go. By paying what is due this is how the power will begin to improve.”

Industry analysts and operators of power distribution and generation companies also stated that the increase in gas price by $1/mmbtu would warrant a rise in electricity bills.

According to them, the gas component in the power value chain is a major factor that cannot be ignored.

“I doubt if a rise in gas price by about 40 per cent per mmbtu won’t warrant a corresponding increase in tariffs considering the significance of gas to power plants in Nigeria. This is because most power plants in Nigeria today are gas-fired,” a chief executive with one of the Discos, who did not want his name published, said.

Explaining the rise in gas price while giving the presentation at the commission’s head office, Mr. Roland Achor from Tariffs and Rates, NERC, said gas prices had been regulated since the adoption of the MYTO in 2008.

He noted that the regulated prices were applied in the 2012-2016 price regime.

“However, the Federal Ministry of Petroleum Resources in collaboration with NERC has agreed to a gas price of $2.5/mmbtu and transport cost of $0.8 effective December 2014,” Achor added.

On the rate of inflation, he stated that what the commission received from the Central Bank of Nigeria showed a figure of 8.3 per cent as of September 30, 2014 while the inflation rate at last minor review was 7.8 per cent.

“However, MYTO-2 had an assumption of 13 per cent inflation rate and the effective rate is now 8.3 per cent,” he said.

Achor noted that the data received from the CBN and the Nigeria Bureau of Statistics showed an exchange rate of N154.75 to $1 as of September 30, 2014 while the figure for the last minor review was N158.57.

He said, “MYTO-2 was benchmarked at N178 to $1. It is however important to note that MYTO-2 also allows a charge of one per cent above the CBN rate to cover letter of credit and other bank charges. The effective exchange rate is now N156.29 to $1 over the next six months.”

The NERC official stated that data from the Systems Operations of the Transmission Company of Nigeria showed available generation on six months average ending September 30, 2014 was 3,675.41 megawatts.

He noted that the gross capacity was therefore estimated to be 5,556MW but the last available generation capacity was 3,424MW.

“Throughout the period from December 1, 2014 to May 31, 2015, the retail tariff will be based on generation of 3,675MW,” Achor said.

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NERC accuses electricity firms of inflating bills

Electricity distribution companies in the country are enriching themselves corruptly through the issuance of estimated bills to consumers, according to the Nigerian Electricity Regulatory Commission.

This is following complaints by consumers who decried the over 100 per cent rise in their bills for the month of October, a development which was not commensurate with the actual supply of electricity.

Reacting to consumers’ concerns during a radio call-in programme monitored by our correspondent in Abuja on Wednesday morning, the Chairman/Chief Executive Officer, NERC, Dr. Sam Amadi, said the distribution companies were being mischievous by not metering customers but extorting them.

Asked to explain why the October bill increased by over 100 per cent, Amadi said, “We talk about estimated billing, which has now become a synonym for corruption among the Discos, the truth of the matter is that some distribution companies are still indiscriminately inflating the bills of consumers and that is part of what we are tackling.

“Because they’ve not metered these consumers, they use the opportunity to extort their customers. The bill for last month increased and there has not been significant improvement between the power supply of last month and that of this month. Also, NERC has not increased tariffs; so, clearly, something is happening.

“What is happening is that the Discos are now moving higher to make more revenue by overcharging unmetered consumers and that is one area we are going to be tackling them. It is not going to be easy because we don’t have an empirical formula of knowing who has been exploited, but we will find a way. That is why we say consumers should complain to us through our forum offices for we are ready to get to the heart of this.”

Reacting to the claims that there were enough meters in the country and that the Discos had refused to buy them because of their desire to extort consumers through estimated billing, Amadi said it was not NERC’s responsibility to prescribe meters to operators.

He said, “NERC is supposed to provide certification to importers, manufacturers and installers of meters across the country. We’ve put out a very transparent process by asking those who have meters to get them certified. So, there’s a procedure for certification and we have Nigerian companies that have also been certified as well as those who are importers.

“And we’ve published in the newspapers a full list of all the companies, including those that manufacture, import and install. And we also gave to every Disco the full list of companies that have been certified.

“It is right to say that there are meters in Nigeria and it is the responsibility of the Discos to ensure that the meters are certified by NERC; and if they are functional, the Discos should use them and meter customers. We are the regulator, we don’t prescribe to the operators.”

On whether there were reasons why a distribution company would choose not to use meters produced in the country, Amadi said there were complaints that they were easily being bypassed by consumers.

He said, “There are about three or four meter manufacturers in Nigeria. But let me say that under our local content regulation that is about to start, we indicated that we should use Nigerian meters as long as they are compliant with the rules.

“Now, see what is happening! Some companies like Eko Disco have come to us to say that consumers are bypassing some of the meters because of their degree of smartness. This is because meters have different levels of smartness and truly, some consumers bypass meters and disrupt their functionality. So, they said they would like to get smart meters.”

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The target to generate 5,000 megawatts of electricity has been moved to January 2015 by the Federal Government.

The Minister of Power, Prof. Chinedu Nebo, said the inauguration of Gbarian Power Plant, Alaoji Power Plant and Omoku Power Plant would not exceed January 2015 and promised the plants would be provided with enough gas for the generation of 5,000MW.

Government had earlier this year announced plans to generate 5,000MW power before the end of the year.

Nebo, who spoke in Abuja on Monday at the 2014 Ministerial Platform, noted that plans to accomplish the target remained unchanged.

He said, “Some people are asking about the completion of the National Integrated Power Project. I have mentioned about Alaoji, Gbarian and Omoku. I don’t think they will spill beyond January for achieving the 5,000MW because the gas is already available.”

Nebo said the ministry might declare the Transition Electricity Market in six weeks time.

He said stakeholders would meet this week “to see if it is feasible to declare TEM in the next six weeks.”

The minister further revealed that the Federal Government was in talks with different IPPs to produce additional 3,146 megawatts of electricity for Nigeria.

Nigeria currently generates less than 4,000MW of electricity for its over 160 million citizens.

Nebo said discussions were ongoing with front runner IPPs such as Zuma Energy for the generation of 1200MW from coal in Kogi State; 400MW gas-fired plant in Egbema, Imo State; 495MW gas-fired plant by Century Power in Okija, Anambra State; and Exxon/MPN to build a 100MW wind plant in Plateau State.

Others are a 100MW solar plant in Bauchi by Nigeria Solar Capital Partners; Bresson A.S’ 60MW gas-fired plant in Magboro, Ogun State; Proton Energy’s 150MW gas-fired plant in Sapele, Delta State; KVK Power Nigeria PVT Limited’s 50MW solar plant in Sokoto; and Ikot Abasi’s 250MW gas-fired power plant in Akwa Ibom, among others.

The minister said the government had identified companies that were willing to generate power, stressing that about 341.5MW of stranded power from such companies would be wheeled to the grid.

He said an action plan had been concluded to ensure steady gas supply to all NIPP plants across the country.

“This is expected to address the issues of insufficient power generation and excessive gas flaring from oil exploration in the Niger Delta region, as the 10 NIPP power plants have combined generating capacity of 5,280MW,” he said.

Nebo also disclosed government’s plan to build about 10 hydro power plants and noted that “enough work is being done to ensure that by the end of 2015, all the NIPPs and the IPPs will have enough gas.”

He reaffirmed the need for the Electricity Management Services Limited to check all electrical materials and goods at the point of delivery so as to curb the entry of sub-standard equipment.

Nebo stated that the Federal Government had tightened the process for obtaining licence for coal to power plants in order to prevent issuance of licence to unserious business concerns.

He observed that government was currently developing bankable project documents for the purpose of facilitating investment in coal to power and gave the coal blocks under consideration as Amansiodo, Okpara, Abocho, Gombe, Onyeama, Inyi and Makurdi.

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Urgency of renewable energy

The challenges confronting our nation especially in matters of development are surmountable. They present opportunities for innovative thinking, for solutions that not only solve existing problems but lead to new thought processes. New thought processes challenge the “givens”; they question the received knowledge that has been repeated over the years and are almost equated with the scriptural commandments like “Thou shall not steal”. It is an aphorism that extant challenges, which have literally defied extant solution, cannot be solved by the old way of doing things. Repeating experiments that have failed and expecting them to succeed without altering the conditions is a mere exercise in futility. There is the challenge of thinking out of the box for innovation. But it appears that in matters of energy provisioning, we have not exhausted the solutions within the box; we have not expanded and expounded the frontiers of the box for solutions to our ever growing energy challenges.

Ways, means and methods of solving existential challenges are not just neutral without implications and complications. There are developmental pathways that cost more than others in the short, medium to the long terms. Cost includes not just the immediate financial projections, balancing budgets and the “financialisation” of development but an approach that takes the whole concept of sustainability into context. We live in a Nigeria where talking and postulating for big projects seem to be in vogue. A Nigeria that describes itself in superlatives such as, the giant of Africa, one fifth of the black race, biggest GDP in Africa, etc. However, we are not able to match the competitiveness and standard of living of relatively poorer countries that do not have such superlative accolades.

The case of the Nigerian electricity sector is a clear example of how big thinking and planning in the air have stultified our development. With a population of about 170 million, we are still distributing less than 5,000MW of electricity. Since 1999, over $20bn has been spent on all manner of electricity projects and the result is all manner of excuses, apologies, blackouts and absence of value for money. Sadly, the excuses are getting longer by the day. The idea of big gas-fired plants is an inbox solution which other relatively less endowed countries have been able to implement. It is not rocket science and does not require special preparations beyond proper planning, financial and human resources. We started building gas-fired power plants without thinking of where to source the gas from. We were mid-way into the constructions before we remembered the need to start gas collection and distribution infrastructure. Indeed, 12 of such plants have been completed and cannot operate because of lack of access to the gas feedstock.

We flare gas in Nigeria; indeed the second highest in the world after Russia and we still do not have enough gas for our electricity plants. Any reasonable person will be troubled by this contradiction. Low penalties for gas flaring make it cheaper to flare gas than to invest in gas gathering and utilisation. At the end of the day, Nigeria loses the gas resources while at the same time polluting the environment. This challenge did not become public knowledge yesterday. It has been part of the development discourse for over two decades now. Yet, nothing concrete has been done to stop the flares. Yes, we have a new gas agenda and meetings upon meetings of “experts” on the issue but the improvements have not been substantial enough to scratch the surface of the challenges we face. The reforms and transformation are rather too slow and are not yielding enough value for money. Too much talk, too little results.

We still have a national power transmission grid with a very limited capacity of less than 6,000MW. The current transmission capacity cannot wheel the electricity expected from all the gas-fired power plants under construction in the event they have enough gas to come on stream. The implication is that billions of dollars are still required in new investment for large improvement in electric power service delivery. Essentially, for a majority of Nigerians to have electricity in their homes, offices and business, big ticket investments are still required. And we have been told that the finances for the investments are not available within the local domain. We need foreign investors and the intervention of volatile international capital to solve a local developmental challenge.

But the simple, quick-win and sustainable solutions that involve the people have been relegated to the background. Yes, while planning big, it makes no sense to forget those smaller projects that can add value to the system, deliver electricity almost on demand and create other value chain advantages. This is the case of renewable energy obtainable from solar, wind, small hydro and biomass. Nigeria’s poorly developed energy infrastructure, although a drawback, is also an opportunity for us to choose an energy development trajectory that leapfrogs the old ways of heavy emissions and deep carbon footprints by building a modern green energy sector. We have a clean slate to write on and we are in a position to decide what to write. It is not about any fad or new thinking in international development discourse but a way that has been proved to get energy to the homes and offices in a sustainable manner; creating new jobs, empowering the people and giving communities the opportunities to control their progress.

Do we need to repeat the mistakes of other countries with heavy carbon footprints and emission of green house gases in our quest for economic development and survival? The answer is a big and resounding No. The knowledge on climate change and ecology available today was not available when these nations started their industrial development and the world is under greater threat today that it was 100 years ago. For Nigeria, it is even a very practical challenge, not just what has been written in development literature. We face challenges with desertification in the northern parts leading to poor harvest, soil wastage and migration of whole communities with its potentials for conflict; rising sea levels in the coastal regions, erosion, acid rains, etc. Whether we see climate change as a threat, challenge or opportunity, is dependent on our mindset and our ability to adapt and evolve as the world changes. If Nigeria is unable to move and adapt, then, we face the challenge that made dinosaurs extinct; not in the sense of our dying out immediately but we face increasing poverty, destitution, crime and a hostile living environment which may ultimately make our country a wasteland.

Considering the challenges of the grid and gas gathering, there is the need for off-grid and renewable energy solutions if millions of Nigerians are to get access to electricity. But this has to be done in a conducive and favourable environment created by government legislation and policy frameworks and a populace educated on the benefits of renewable energy. The renewable energy potential of Nigeria are intimidating. According to the Energy Commission of Nigeria, large hydro power can generate 11,250MW; small hydropower-3,500MW; fuel wood – 13,071,464ha; animal waste – 61million tons/year; crop residue – 83million tonnes/year. The solar radiation is 3.5-7kmh/m2/day with the Revised Renewable Energy Master Plan projecting that solar sources can provide up to 30,000MW of electricity in the next 15 years. Wind coverage at 10 metres height is 2-4m2 annually.

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Power sector filled with old, weak workers – FG

The abysmal performance of the power sector is due to its large number of incapacitated workers, the Federal Government has said.

It noted that prior to the privatisation of the sector, no engineer was employed for over 16 years, while its technical arms were manned by workers who were not equipped technologically to run the industry.

The Minster of Power, Prof. Chinedu Nebo, said these in Abuja on Wednesday during the commencement of the training of 7,400 craftsmen, linesmen and electricity artisans under the National Power Sector Apprentice Scheme.

President Goodluck Jonathan is expected inaugurate the scheme today (Thursday) at the Presidential Villa.

Nebo said when he assumed duty as the Power minister, he discovered a near hopeless situation in the technical side of the sector “with over 16 years of non-engagement of engineers, dying, sick and incapacitated workers that existed in the sector, with no hope of being replaced by competent hands.”

He said the NAPSAS was conceived as a matter of necessity, stressing that the scheme would help bridge the technical gap in the sector’s workforce.

Nebo said, “The implication of this ugly development is that we will be handing over to the private sector a totally deficient and incapacitated workforce that cannot deliver on the mandate handed down to us by Mr. President for us to ensure uninterrupted power supply nationwide.

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