Power Grid

13 Jan 2022

Approved Power Projects in Nigeria do not Make a Dent in Power Problem

13 Jan 2022   

A recent review shows that 43 power projects approved by the Nigerian Electricity Regulatory Commission (NERC) have not made a dent in alleviating the electricity crisis in Nigeria.

Despite the approval of licences, renewal of new ones and granting of permits covering about 43 power generation projects, amounting to over 2,000MW, in the last year, not much improvements have been recorded in the electricity generation and supply, a THISDAY review has shown.

An analysis of data released by NERC shows that between the four quarters spanning June 2020 to June 2021, the industry regulator granted the approvals, which cover both grid and off-grid power as well as renewable sources of energy.

It also includes new registration for minigrid projects to be carried out by power generation firms, high-energy demand companies, which require constant electricity to function.

In line with section 32 (2) (d) of the Electric Power Sector Reform Act (EPSR) Act, the Commission issues licences to entities that wish to engage in the business of electricity generation, transmission, system operation, distribution or trading in electricity.

In addition, the commission issues permits for captive generation, in other words, electricity generated for consumption by the generating entity and not sold to a third party.

However, its purview does not include entities that generate 1MW and below of electricity or a distribution network of 100KW or below.

A review of the NERC data indicated that some of the companies, which requested and were granted permits to generate their own electricity operate in the petrochemicals space, mining, footwear and foods industry.

A list of licences and permits issued or renewed within the period showed that Afam power plc located in Okoloma, Rivers, took the lion’s share of the expected power generation with 726MW.

Some of the other high power generating companies granted approvals include Obax Benin Power and Petrochemicals Company, Afam Three Fast Power, Central Electric and Utilities in Ogun, Proton Energy in Delta state as well as Enerlog in Abuja as well as Alausa Power Limited, Lagos.

If the 2,000MW were to be added to the current approximately 4,500MW it would significantly boost power supply, although transmission for the on-grid supply system remains a problem due to deteriorating infrastructure.

With the off-grid permits, specially requested by high energy consuming industrial concerns, meant to take the pressure off the national grid system, that objective has not been achieved.

In addition a number of the mini-grid operators granted registered, ranging from a capacity of 23 to 234kW included GVE projects limited, Cloud Energy, Zylab technologies, among others.

NERC’s approval of power projects provides no reprieve for Nigeria

In recent years, it is estimated that although a total of 124 licences have been issued to investors for the generation of over 30,000MW of electricity, they have largely remained dormant due to the poor performance of the sector.

Only about 25 licensees, with installed capacity of about 11,000MW, currently generate power to the national grid, while 124 have been inactive for years, according to prior information from the industry regulator.

Of the 162 licences covering power generation, transmission or distribution, 149 were solely for the generation of electricity.

Many investors are hesitant to venture into the sector as a result of risks associated with it, including “low” tariffs and incessant government interferences.

Last week, President Muhammadu Buhari accused his predecessors of mortgaging the sector by selling off the country’s power assets to their cronies who neither had the financial muscles nor the technical know-how to revamp the sector.

According to him, Nigerians are facing epileptic power supply because those who bought the various electricity distribution companies got them based on political favouritism and geopolitical consideration rather than on merit.

He argued that those who bought the discos were not electrical engineers neither did they have the financial muscle, and thus, could not understand the intricacies of the power system in the country.

“The owners of discos bought them based on geopolitical zones rather than merit. The people that own them, who are they? They are not electrical engineers, they don’t have money, it is just a political favour,” he argued.

At its peak, Nigeria’s power sector is only able to generate just about 15% of the total projected national daily requirement of 28,880MW, a recent check by THISDAY showed.

A trend analysis of data released by the system operator, indicated that despite the various financial interventions by the federal government in the last six to seven years, only a paltry average of 4,500MW is actually generated every day.

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