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Why Energy Crises May Linger Longer — Industry Stakeholders

There are indications that the energy crises pervading Nigeria may linger longer as regulators and operators list more constraints they are facing in resolving the difficulties in the sector.

This is coming as petrol queues return in some parts of Lagos, Abuja and few other cities yesterday, while regulatory authorities battle to stabilise electricity generation constraints that have thrown the country into prolonged power outages.

Meanwhile, the Chairman of Nigerian Electricity Regulatory Commission (NERC), Mr. Sanusi Garba, admitted that there has been an increase in electricity tariff amid the energy crises last month, saying that the increase was normal.

The energy crisis seems to have been compounded by the rising cost of diesel with the product selling at N750 per litre yesterday.

Speaking on the resurgence of queues, Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Clement Isong expressed surprise, saying there was petrol in Lagos and Suleja depots.

Isong, however, admitted that there were challenges with transportation to some parts of the country due to high cost of diesel, but he said operators were working to ensure that the Nigerian Association of Road Transport Owners (NARTO) have enough margins to continue operations.

He stated: “NNPC is bringing products to Lagos but we are still trying to work with transporters because of the high cost of diesel. It is not easy for the trucks to go the north for a product that the price is capped. It is not easy for them (NARTO) to manage the amount that is allocated to them for bridging products to the north.

“Some of them have dropped out and we are trying to get them back to the business. Some of them are back but it will take a few days, I imagine but there is product in Lagos and it is moving up. There is product in Suleja but we need to sort out how to do business more efficiently”.

On the daily increase in the price of diesel, he said: “Because diesel is imported and it is deregulated, and as far as the prices continue to go up worldwide, then the price in Nigeria will also go up.

“But I think it is caused by the war in Ukraine, that volatility is what the problem is. I am very hopeful that once refineries in Nigeria start to work, the volatility will be managed better”.

With most truck owners switching to the transportation of dry cargoes rather than transporting petrol, Mr. Isong pointed out that biggest problem was the fixed rate for transporting petroleum products.

“The reason why they left moving PMS and started transporting dry cargoes and other products like diesel and DPK is because they can adjust their rates but if they carry PMS, the rates are fixed. That is the problem with PMS and as long as that is the case they are unable to take on board the increases in their cost.

“It is the same thing with the airlines; the airlines have a problem because they cannot transfer the increased cost of APK to the passengers. What we need to work on is how we remove the volatility from the market”.

He explained that when refining takes place in-country then the market can adopt an average pricing method using prices at Platt as benchmark.

“So, instead of taking Platt on a daily basis, you take Platt based on two or three months and that makes prices go up gently but also make it come down gently”, he added.

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Similarly, Chief Executive Officer, 11 Plc, Mr. Tunji Oyebanji, blamed the weighty load of subsidy to challenges confronting the industry.

According to him, “Forex is not easily available and that presents some problem to start with. Not everybody has access to it. NNPC that could have helped the weight of forex is burdened with subsidy payment.

“The important thing is that people should pay for what they should and stop the lingering subsidy payment.”

On way forward, he stated that “There is an urgent need for us to improve and increase our refining capacity and pay appropriate price for all our services.”

‘Vandalism, shortage of gas responsible for power outage’

Meanwhile addressing the recent wide-spread electricity blackout, the Minister of Power, Abubakar Aliyu, yesterday said that many factors were responsible.

Aliyu who briefed State House correspondents after the Federal Executive Council, FEC meeting presided over by Vice President Yemi Osinbajo at the Council Chamber, Presidential Villa, Abuja, said the current power situation in the country was caused by vandalism of pipelines and shortage of gas.

He further stated that efforts were being made to address the situation, adding that Nigeria had the capacity of 8,000 mega watts on the grid, embedded and captive.

Aliyu, who was flanked by the Minister of State for Power, Prince Jeddy Agba said, “The issue we’re currently facing now, just like I told you, when I came for the press briefing about two weeks ago was not actually only as a result of the drop in the level of water.

“That is far from it. It’s not much from that angle.

The more reason we are facing this situation now is as a result of the shortage of gas and some of the generators have to go to maintenance.

“It is a scheduled maintenance and it is supposed to be scheduled outage but we have not envisaged that we will have issues around vandalization of pipelines which the NNPC has addressed as you can see evidently everywhere, aviation fuel, and queue for petrol in the filling stations.”

National grid back but generation remains low

After witnessing two collapses in two days that left the country in total blackout, the electricity national grid again began a slow recovery yesterday.

Check on the grid performance by Vanguard showed that as at 3pm yesterday seven power plants were generating a total of 1,365.00 megawatts. The output hit zero megawatts after system collapses recorded Tuesday night.

Kainji Hydro topped with 391MW, followed by Jebba Hydro with 337MW while Geregu (Gas)    had 267MW; Afam VI (gas and steam) 131MW; Omotosho NIPP (gas) 102.70MW; Olorunsogo (gas) 75.13MW; and Omotosho (gas) 61MW.

Speaking to journalists in Abuja yesterday, the NERC boss said the minor review was conducted in line with Multi-Year Tariff Order (MYTO) that mandates tariff review every six months.

Garba said it was the duty of the electricity distribution companies (DisCos) to inform their customers of such tariff review outcome and how the cost of electricity would be.

He blamed the continuing poor electricity supply and frequent grid collapses on vandalism of gas pipelines to power plants, plants maintenance and a trip on the 330KV line bringing power from Ughelli Power Plant.

According to him, “What happened on February 1 is a minor review of tariff. It is very clear on our website and in all our communications that every six months we will adjust rates to take care of the foreign exchange component of cost and also for inflation.

“This is absolutely a straight forward thing but even at that we do publish in newspapers that NERC is about to embark on a minor review to adjust some parameters and when the computation is done it goes into rates which we put on our website and the distribution companies have a responsibility to put it out to consumers”.

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He said the government was working with operators to bring more generators on grid to fill the vacuum created by water shortage at the hydro plants.

Nigeria households to experience more blackouts  —Ex-NERC Chairman

Meanwhile, most parts of Nigeria will remain without light for longer days as the power generation, transmission and distribution capacity face multiple constraints ranging from systems management capacity, debts amongst others, an expert said.

Vanguard gathered that despite the Transmission Company of Nigeria, TCN, installation of Supervisory Control and Data Acquisition, SCADA, alternative, stop-gap solution, an integrated technology, the national grid collapsed three times in six hours on Tuesday, thus forcing the entire nation into darkness.

A former Chairman of Nigerian Electricity Regulatory Commission, NERC, Sam Amadi, attributed the development to the federal government’s failure to engage the right personnel in the sector.

He noted that the situation would linger and Nigerian households will witness more blackouts until the leadership at the various levels of the value chain is addressed.

Amadi, in a chat with Vanguard, stated that, “Nigeria’s electricity problem has not been dealt with properly, the system is frail.

“NBET (Nigerian Bulk Electricity Trading) is fighting with GENCOs, while gas suppliers are not happy over non-payment for gas supplied to the GENCOs. This is happening because we have not removed the weaknesses in the sector.

“We have not been able to create a framework that would allow the sector have sustainable improvement. Also, there is the issue of remittances.

“The energy crisis we are experiencing in the country is bound to occur, as leadership failure have compounded it with weak distribution network that is not able to account for power received and distributed.

“We also have GENCOs that are almost insolvent and not able to maintain their plants so they can deliver power, and they cannot pay gas suppliers for gas.

“TCN have refused constitute an independent technical management that is not based on politics. These are consequential outcome of failure. It is obvious that we do not have the right investors in the sector, but the question now will be, what is the federal government doing to strengthen them?”

JAF blames electricity crisis on privatisation

Meanwhile, the umbrella body for Pro-labour civil society organisations, the Joint Action Front, JAF, has blamed the privatization of the sector for the electricity supply crisis bedeviling the country.

Its Secretary, Abiodun Aremu, said “The current collapse of electricity supply across the country in March 2022 has further exposed the failure of the decade of forced privatisation of the electricity sector that was imposed in November 2011.

“JAF has always maintained a position of public ownership and control of Electricity and an alternative management measure that consists of the workers, consumers and professionals in order to ensure access and affordability of Electricity to all.

“Understanding the crisis of production, transmission and distribution of electricity would require the necessity to reverse of the privatisation of the electricity sector. That electricity is a fundamental human rights that Nigerians should enjoy is not negotiable, hence the need to insist that government has the responsibility to ensure affordable and adequate access to electricity supply to all homes, institutions, commercial and industrial establishments, infrastructure, recreational and spiritual locations.

Source: Vanguard

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