The federal government may have finally decided on what to do to
strengthen the capacity of Nigeria’s transmission network to enable it
evacuate more electricity to distribution networks across the country,
with a disclosure on Wednesday by the Permanent Secretary in the
Ministry of Power, Godknows Igali, that a concession arrangement for the
transmission network might be in the offing.
Igali said at the resumed hearing of the senate ad hoc committee set up
to investigate past expenditures made by previous governments in the
country’s power sector that the federal government will not privatise
but concession the transmission network to private investors in
segments.
The resumed session in Abuja had in attendance the Nigerian Electricity
Regulatory Commission (NERC), Bureau of Public Enterprises (BPE),
representatives of electricity generation companies (Gencos) and
distribution companies (Discos).
He explained this in response to a question asked by the committee
which is led by Senator Abubakar Kyari (Bornu North), as to why the
power privatisation exercise excluded the sale or privatisation of the
Transmission Company of Nigeria (TCN) to, as part of the overall
principle of the exercise, inject efficiency and accountability in its
operations.
The committee had, among other issues, raised concerns about the
seeming inability of the TCN to support the growing electricity
generation trajectory in the sector, adding that industry operators had
described the TCN as the weakest link in the power value chain.
But Igali who stated that the government has not considered privatising
the transmission network as a premium policy option, explained that a
concession arrangement is currently being discussed and could be
implemented.
According to him, the concession could involve the invitation of private investors to bid, invest and manage segments of the transmission network as the case may be, without any of them getting any payment for such from the government.
According to him, the concession could involve the invitation of private investors to bid, invest and manage segments of the transmission network as the case may be, without any of them getting any payment for such from the government.
The arrangement, Igali further clarified, will ensure that such private
concessionaires who will run the network according to segments allotted
to them, earn returns for their operations from the market.
“I want to speak about the TCN and the issue of its privatisation.
Government is not planning to privatise the TCN, at least, not to my
knowledge as the permanent secretary in the ministry of power.
What we want to do is to have these private managers as participants in
the market, what that means is that at the end of the month, he gets
paid not from the government but from the market. We want to start and
we are still at the level of formulating that policy because it is not
going to be privatisation,” Igali said.
Igali who also stated that past investments in the sector had gone into
building more power plants, transmission lines and other critical
aspects of the sector, noted that the current challenges of the sector
can be described as part of its initial teething troubles, he thus asked
the senators to lend support to the growth of the sector.
Notwithstanding, the Managing Director of Transcorp Ughelli Power,
Adeoye Fadeyebi, in his presentation to the committee, stated that the
debt owed to electricity generation companies by the market now stood at
N68.5 billion.
Fadeyebi explained that the N68.5 billion outstanding receivables were
as at the end of July this year. He added that the money which
represents debts for power generated and supplied were scattered amongst
the Market Operator, and Nigeria Bulk Electricity Trading (NBET) Plc
amongst others.
He also noted that about three electricity distribution companies
(Discos) were yet to activate their Power Purchase Agreements (PPAs)
with the NBET and subsequently post Letters of Credit (LC) as expected.
While speaking on behalf of the generation companies in the sector,
Fadeyebi explained that cases of system collapse, Discos rejection of
load, fluctuations in foreign exchange, as well as challenges with power
evacuation are some of their challenges in the sector.
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