Power sector: 2021’s tariff flops, minister’s sack and more

The Nigerian power sector in 2021 witnessed some intricate events that would shape what it would be in the coming year.

From electricity tariff issues, non-inauguration of a board for the Transmission Company of Nigeria (TCN), through to the sack of Minister of Power, Engr. Sale Mamman and the extension of three-year licence for the Nigerian Bulk Electricity Trading (NBET), and the crisis at the Abuja Electricity Distribution Company (AEDC), the sector had so much activity in 2021.

When the year began, stakeholders in the power sector had various expectations towards improving the supply of electricity. In this regard, there were positive indicators as reports by the Independent System Operations (ISO) at TCN showed multiple all-time peaks in the first quarter of the year.

On January 6, the national power grid recorded 5,552 megawatts (MW) all-time peak which then rose to 5,593.40MW on February 25.

By February 28, it had reached 5,615.40MW and by March 1, the fourth peak of 5,801.60MW was recorded. However, going forward, peak electricity never crossed this milestone again.

As of early December, records from the ISO indicate that the national grid had recorded system collapses 10 times this year comprising eight partial collapses and two total collapses. This figure was higher than the four collapses recorded in 2020 and is the same as the 10 system collapses recorded in 2019, the comparative figures showed.

Away from the power system growth and its collapses, the Nigerian Electricity Market (NEM) was in confusion when in the early part of the year, there were indications that the Nigerian Electricity Regulatory Commission (NERC) had approved electricity tariff increase for the 11 Distribution Companies (DisCos). 

Despite the order by the former Minister of Power, Engr. Sale Mamman that the tariff increased be reversed, consumers still noted paying increased bills. So far, bills have risen by N2 per kilowatt-hour (kwh) along with a 7.5 per cent implementation in the tariff.

NERC in November began the second tariff review process this year as it is expected to review the tariff twice in a year. It uses the figures of inflation, foreign exchange rate, available power generation and gas pricing to review the tariff and if these indices are on the high side, then tariff may rise. 

The power sector regulator is expected to approve the latest tariff rate for the DisCos by 31st December 2021 which will then be implemented by the DisCos on 1st January 2022.

Another issue that brought up discourse in the power sector earlier in the year was the constitution of the board of TCN. The board was, however, not inaugurated as crisis dogged the process with the appointment letters of the officials said to be missing. This would be partly responsible, according to insiders, for the sack of the Minister of Power, Engr. Sale Mamman in August. 

Engr. Abubakar Aliyu was drafted from the Ministry of Works and Housing where he deputised Babatunde Fashola to become the current Minister of Power from September.

On metering, in 2013, there were 4.5 million unmetered customers when the estimated registered customer number was 6 million, but that has grown to over 6 million unmetered customers of the 11 DisCos at a time the captured customer figure has reached over 10 million. 

Current records show that the phase-zero of the National Mass Metering Programme (NMMP) was completed with over one million ‘free’ meters delivered to customers since October 2020. NERC then reviewed the NMMP and the Meter Assets Provider (MAP) regulation. 

By November, the MAP was renamed Meter Assets Provider Scheme (MAP) now allowing customers of the 11 DisCos to pay for meters to have them installed for them while they await the ‘free’ meters under the NMMP Phase One which the DisCos are procuring and will commence next year.

The next point was the Siemens Presidential Power Deal which began in 2019. The deal had targeted revamping the DisCos and TCN networks such that Nigeria can attain on-grid energy of 7,000MW shortly and 25,000MW in five years. 

However, minister Aliyu in his 50 day’s score-card gave an update on the project. “This first phase started in earnest this year, with the ongoing pre-engineering phase. The selected EPC contractors will soon be contracted officially so work on the project implementation can commence.”

In terms of other projects’ delivery, the year wasn’t a good one as none of such major plants came on board. For instance, the federal government had said the 700MW Zungeru power plant in Niger State would be ready this month. However, just recently, the minister shifted the timeline to the first quarter of next year.

Equally, the 10MW Katsina Windmill was scheduled for commissioning this year, but that too did not happen as at date. 

The controversial ‘3050MW’ Mambilla hydropower plant in Taraba State had hiccups and also good news. Under former minister Mamman, the survey works were done but the capacity on paper was downgraded to 1,500MW at the request of the financier, China EXIM Bank after they inspected the site. 

The court action stalling the take-off of the project instituted by Sunrise Power was also withdrawn, the Office of the Attorney General of the Federation announced last month.

For the intermediary trader in the electricity market, NBET, its 10-year licence expired in November. It was to act as a buffer between the GenCos and DisCos, guaranteeing that whatever energy was generated, the DisCos would be able to pay for it. However, that has not happened as most times, DisCos could only pay less than 40% of the energy supplied to them. Despite this shortcoming, NERC approved a three-year licence for NBET which has started running already.

In what seems like the crown of the crises, AEDC workers went on strike last month, resulting in multiple actions: first, the AEDC management was removed and a new one constituted. The core investor – KANN Utility – had gone to court to challenge this process just as the minister of power, Abubakar Aliyu, NERC and the Bureau of Public Enterprises (BPE) said the failure to meet loan obligations by KANN, led UBA (the lender) to take over the DisCo to recover its loan. 

As of Monday, a Federal High Court sitting in Abuja has declared that all parties maintain the status quo as it were before the workers strike. 

Already, the new board and management led by the chairman, Victor Osadolor of UBA and the Interim MD, Bada Akinwumi, have assumed duty.

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