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| Minister of Power, Prof. Chinedu Nebo |
The Minister of Power, Prof. Chinedu Nebo, in this interview with OKECHUKWU NNODIM, admits that electricity supply across Nigeria has been erratic lately, and explains the reasons behind this and how the government is tackling it
Expectations are high and people seem disappointed two months after the privatisation of the Power Holding Company of Nigeria. Are you not bothered about this?
It is not wrong for people to have expectations. But sometimes those expectations could be too high, too ambitious or not quite realistic. Two months is not enough by any standard anywhere in the world to correct an anomaly that has been existing for decades. It is not possible for the private sector to correct these things overnight.
There were issues on hand when the private sector took over the generation and the distribution companies. One of such is the problem of getting enough gas supply. If you don’t generate enough gas supply, you cannot generate enough electricity. If you don’t have enough electricity, you can’t transmit enough electricity to the distribution companies, who find it difficult to meet the demands of those at the supply end.
Very thankfully, it is likely that next week, the repair of the Western Axis gas pipelines that were burst in over 23 places by dynamites would have been concluded. If this happens, gas would be infused into the system to build up the pressure to supply more gas to the generating companies and some of the NIPPs (National Integrated Power Projects) that are ready for commissioning. So, we are hoping that would be taken care of shortly.
Another issue is that the decision to lay off many of the workers that were already in the business of collecting payments from customers might not have been the right thing to do. This is because the distribution companies are now finding it difficult to collect all the money they need from consumers and at the end of the month, they really don’t have enough money. But I think some of them are beginning to address these issues through metering.
There seems to be confusion about metering in terms of availability, cost and acceptance by the new power investors. What is the government doing about this?
Well, I think it would be important to visit the Nigerian Electricity Regulatory Commission on this. This is because it is mandatory that these new investors provide metres for their customers. Most sharp practices go on when people don’t have meters.
For instance, familiarity of customers with some PHCN officials marred the billing method. To prevent this from happening again, the use of meter is important. I believe the metering system would also reduce losses.
Part of the losses incurred can be recovered through metering. We have some meter-manufacturing companies in Nigeria right now and they are producing tens of thousands of meters. But the problem they have is that the defunct PHCN bought tens of thousands of meters from them without paying.
They are being owed billions of naira and we are hoping that the new investors will patronise Nigerian-made smart meter first before importing any other meter to fill the gap. And I must state that the Nigerian-made meters are world-class by any standard.
The metering gap is so huge. We have about 2.7 million metering gap in Nigeria and no single company can manufacture that within a year. It is not possible. NERC has to enforce this rule so that people get to pay accurately. Without using meters, incidence of crazy billing will continue to rise which is not right. That is why we are working very hard to make sure that meters are available.
Gas supply has been a major constraint to power generation. What are the real issues causing this and what is the government doing to address the situation?
Let’s be very factual about these things. Number one, the issue of sabotage is there and people who were getting gas before are no longer getting it. But that will be resolved in a matter of weeks. Number two, gas production takes time and people need incentives. Gas is not something you just go and start producing, because you can’t store it. It has to be used.
There must be end users who will sign contracts with the gas companies so that they can go and manufacture gas. It is not a commodity that can be stored.
Next, gas prices, especially for the power sector, do not encourage producers of gas. Under the government, the gas companies were owed billions of naira. PHCN owed billions of naira. Even when the government made provision for some of the debts, there was a lot of mismanagement, misappropriation of funds and other problems.
So when the gas companies were not getting their money, they gave the product to those who would not only pay them but would pay them more. Therefore what we are trying to do now is to find a balance in the gas supply regime such that there will be incentive for gas producers to supply gas to the power sector.
We will try to find a kind of parity between the industrial cost of gas and the power cost of gas so that the suppliers can now supply to the power sector. But a situation where there is a dichotomy in prices and difficulty even in paying, the gas suppliers won’t be happy. These are the real situations on ground and we are trying to address them.
With five months to go, how realistic is the ultimatum by the President to private investors to ensure substantial improvement in power supply by June?
The government is not retracting its ultimatum in any way. However, the President never said there would be stable power supply for 24 hours. A neophyte wouldn’t say that, let alone a very knowledgeable and deeply committed President. What he said was substantial improvement in supply and stability. It is possible. And we are going to see that happen.
The government is investing a lot of resources in the sector, aside external funding. For instance, thousands of transformers are available all over the country, funded by the World Bank. This is being worked on by the Project Monitoring Unit of the Transmission Company of Nigeria.
There will be a noticeable improvement by June; then by December, it would have been substantial.
Nigeria is blessed with enough water resources. Why is the government not exploiting ‘hydro’ as a source of power generation?
Hydros are critical to our national power development policy. You know that Kainji (hydro power plant) came to save Nigeria at a time the country was having so many problems. The machines are old, dilapidated and are undergoing overhauling at the moment. Shiroro (hydro power plant) also came in when Kainji was almost going down and Shiroro is doing very well now.
You can see that the present government is full of insights. Now look at Zungeru; this is a great place for another hydro power plant and it had been in the design for over 40 years. Only under President Jonathan has this design been perfected, the financing has been arranged, the project has kicked off and construction has started. That plant will give Nigeria 700 megawatts of electricity.
Mambila (hydro power plant) will soon be inaugurated too and this will give Nigeria another 3,050MW. So you can see that the current government is addressing these issues. The Ministry of Power has done a lot of work already on Mambila and it is at the final stage. We are now trying to perfect financing and make sure that the contract is awarded.
In addition to that, the government has done feasibility studies of more than 24 small hydro potential power sources in Nigeria. So the government is not sleeping at all.
But remember that when you talk about hydros, the terrains and the topographies matter a lot. For instance, if you look at Rivers Niger and Benue, you may ask why we can’t build hydros there.
But the truth is that most of these areas are flat and you can’t do much hydro work there. There has to be a gradient in order for that to be feasible. So in order to convert them to hydro sources, the amount of money that will go into reconstruction and re-diversion of the rivers will be too much. That is why we have to be very careful because you may have water everywhere but not good enough to drink.
What is the actual amount of money that has been invested in the Nigeria’s transmission infrastructure?
I can’t really tell you that this is the actual amount that has been spent because much of this is still in the pipeline. The resources are being made available but they have not been spent yet, because for transmission, you have to do quality engineering designs. You have to do the feasibility studies, survey, engineering design and so on, closing some loops of the national grid and then moving from a radial system to a real super-grid for the whole country, these take years.
So when you think about the $1.6bn which hasn’t come yet, but will come from the sale of the 10 NIPP plants, you will know that we haven’t spent that money.
We have earmarked it but we have to see it first before we can spend it. We are designing and the design is essentially ready for what the money will be used for. The same goes for the $700m World Bank fund and the $150m African Development Bank fund. That of the AfDB is ongoing because TCB has awarded contracts for $100m. The $135m from the Eurobond is already concurrent; it is already fully designed and already targeted. Some of the money is already committed. The Islamic Development Bank is also giving us over $150m whereas the French Development Bank is giving Nigeria $170m. These things are still being designed and worked on to make sure that in the next few years, we will be able to wheel out all the energy or power that will be generated by these IPPs or the legacy companies of the defunct PHCN.
You recently said government was not satisfied with the operations of Manitoba Hydro International in managing the country’s transmission infrastructure. Are you now satisfied with their services?
Well, it is important to note that we are not fully satisfied. We don’t think Manitoba is delivering to capacity and expectation. Manitoba has done some work but we want to see more work. Just like Nigerians have expectations of us, we have expectations of Manitoba. So if Manitoba fails us, we fail Nigerians. You can see that it is a chain.
Wherever there is a weak link in that chain, it can snap. That is why we keep saying that we want to see Manitoba do more, because we’ve had so many system collapses very recently than we’ve had in the power sector in the past. So we think more work can be done by Manitoba.
Some power distribution companies complain of low electricity allocation as stipulated by the Multi Year Tariff Order. What is the government doing about this?
That will improve. You know when there is a general shortage of power, you can only give what you have. Power supply came down because there wasn’t enough gas and now everybody has to tighten their belts.
But that is going to improve and you can now see why it is important for Nigerians to appreciate what the President is doing. If Zungeru comes on board and a few years later, Mambila also comes on board, we will see a huge amount of power generation that has never happened before.
So I will say that Kano and other places should not cry too much because very soon, there will be an improvement.
The post-privatisation power drop is beginning to make people doubt the financial capabilities of the investors who bought PHCN assets. Are these investors truly capable?
Well, it is difficult for me, as Minister of Power, to answer that question. However, I think that on paper, yes they are capable. It will now be left for NERC who regulates them to make sure that what they had shown us on paper that made the government cede these distribution companies to them are true.
This is because it is one thing to see something on paper and it is another thing to see it in reality. So I can’t answer that question other than they had shown us a beautiful picture on paper and we believed them. The NERC is there to monitor them and make sure they deliver; otherwise their licences will be withdrawn.
There are claims that generator importers do bribe some government officials so that power supply would never improve. Is this true?
I don’t think so. But the fact is that people need to take care of themselves because if there is not enough power supply, everybody becomes his or her independent power producer.
And so everybody now becomes a power supplier and that is because there is no enough power in the country coming from the mains. So I don’t think that they (generator dealers) are the cause per se. I only think that people have to use defensive mechanisms to defend themselves.
But it is also likely that as power gets more abundant and reaches more people, there will be a problem for the generator dealers because they will be out of business. Let me assure Nigerians, generator companies and importers will soon be out of business. They have to look for alternative businesses now.
If everything the President, the power ministry and the power sector are working on comes to reality, Nigerians will not need generators anymore. Very few might be needed, like in the US where people keep them just in case hurricanes or tornadoes knock off power supply.
As a minister of power, I don’t have a generator in my house. If I have a generator, how can I tell people that one day they won’t need it? So I believe that they (generator dealers) can’t influence us and very soon we will give Nigerians enough power that they won’t need to patronise them again. That is why I keep telling them to start looking for other businesses to do so that it doesn’t take them by surprise. Once we double our capacity to produce power to Nigerians and we are able to roll it out, most of the people in the towns are not going to need generators anymore.
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