Federal Minister of Power, Works and Housing

The federal government has accused electricity distribution companies (Discos) and the Transmission Company of Nigeria (TCN) of using substandard equipment to execute power projects.

The Minister of State for Power, Works and Housing, Mr. Baba Shehuri, who made the accusation, said such substandard equipment also contribute to electrical accidents in the country.

Shehuri, who spoke at a function organised by the Nigerian Electricity Management Service Agency (NEMSA), alleged that the Discos and TCN now predominantly use substandard equipment in their networks, adding that the practice was hurting the sector.

He said, “The quality of electrical appliances which we all use both domestically in our houses and in our offices, in our business places, in industries, but today, if we see the quality of what we use either as electrical appliances at home, they are very low standards.

“We are not only talking about meters, we are talking of transformers that are used by the Discos, transformers used by TCN.”

He suggested that NEMSA should be stationed at ports of entry into Nigeria, saying, “I see a future where NEMSA should have offices at the ports or airports. That should be the future of the agency.”

Meanwhile, the federal government has begun the disbursement of about N1.9 billion accumulated in the Rural Electrification Fund (REF) to contractors whose bids to provide electricity in the form of solar home systems (SHS) and mini grid developers were selected in the first call for funding of rural electricity projects under the Fund.

The disbursement, according to the Managing Director of the Rural Electrification Agency (REA), Mrs. Damilola Ogunbiyi, at a ceremony where 12 mini grid developers and 14 SHS developers signed award grants from the REF in Abuja, came after about 10 years of the REA trying to disburse same unsuccessfully.

Speaking at the REF grant disbursement, Ogunbiyi, explained that nominated projects of the awardees would be funded to the tune of 25 and 30 per cent by the REF.

She noted that a funds’ manager was appointed by the REA to manage the REF after the agency was reconstituted.

“One of the rules set out by the government was to make sure we have a trust fund manager that is dependent on the REA and also independent of the grantees to be able to look at what we are doing, monitor it and give us the check and balances we need.”

She added: “It is very important because while we are using public funds, we must make sure we use public funds well and in a sustainable manner. This is one of the many grant-enabled projects that we have to make sure that our underserved areas and unconnected people have power.

“It has taken us 20 months which makes a lot of difference from the 10 years we had waited,” Ogunbiyi said.

According to the REA, the REF which is backed by Section 91 of the Electric Power Sector Reform Act (EPSRA) 2005, and implemented by it is funded by the federal government and international donors.

It explained in the fact sheet for the REF that N995 million was disbursed to 14 indigenous SHS contractors to install 19,130 units of SHS, while N956 million was disbursed to 12 indigenous mini grids for the development of 12 mini grid projects.

The projects are expected to power 43,000 households and businesses, and reduce carbon emission by over 5,000 metric tonnes.

In another development, the Nigerian Electricity Regulatory Commission (NERC) said in its third quarter (Q3) 2018 regulatory report on the workings of the power sector, that the growing financial illiquidity of the market had become extremely dangerous to its sustainability.

Equally, the NERC in its Q3-2108 report, stated that the country’s power sector was still doing badly with regards to its financial status.

The regulatory commission said debts or financial deficits in the sector were still a threat to its sustainability.

It said during the third quarter of 2018, the total electric energy generated was 8,077,483 megawatts hour (MWh), representing 3.3 per cent less than the level of generation in the second quarter of 2018.

It said, “The industry recorded a highest daily peak generation of 5,053MW on the 19th day of September 2018. The available plant generation units rose to 81 from the daily average of 79 recorded in the second quarter.

“However, despite the increase in the available generation units in the third quarter, the utilisation of the total available generation capacity declined by 4.2 per cent due to insufficient gas supply, limited distribution networks, water management at the hydro power stations and limited transmission line capacity and associated infrastructure.

“The financial viability of the NESI remains as the most significant challenge threatening the sustainability of the power industry. As reported in the preceding quarterly report, the liquidity challenge is partly attributed to the non-implementation of cost-reflective tariffs, high technical and commercial losses exacerbated by energy theft, and consumers’ apathy to payments under the widely prevailing practice of estimated billing.

“The total billing to electricity consumers by the 11 Discos was N172.9 billion in the third quarter of 2018 but only a total collection of N106.7 billion representing 65.5 per cent collection efficiency.

“The collection efficiency indices indicate that a sum of N3.45 out of every N10 worth of electricity sold during the third quarter remains uncollected as and when due.”

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