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Manitoba Hydro expresses frustration over TCN management —Says company is insolvent

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By Joseph BAMIDELE

ABUJA – The management contractor for the Transmission Company of Nigeria, Manitoba Hydro International of Canada has regretted the challenges which have led to delays in its takeover of operations of the company.
The Chief Executive Officer of Manitoba Hydro, Mr. Don Priestman, who spoke in an interview to journalists at the background of the 7th General Assembly of the West Africa Power Pool, WAPP, in Abuja, noted that they are still waiting for the government to put in place the schedule for delegated authority.
According to Priestman, the first month, August was a transition month and according to the contract starting the September 1, 2012 the schedule of delegated authority should have been issued, which would have given Manitoba Hydro full authority for running TCN.
“That has not happened. It is unfortunate; I think you will have to ask the authorities why not. We are ready and keen to proceed. We have the people and resources here to do the work and we know what to do. Note that we have done something similar in other countries with great success.
“So, we hope there won’t be much more delay before we can start doing what we came here to do. We have been working with our counterparts we have been getting to know all of the players. We now understand all of the issues much better and there are many, many challenges so it hasn’t been entirely wasted time that’s for sure. However, we came here to do a job and its difficult to do a job when you are not in charge,” he stated.
He added that, “Right now we are working closely with the government and we are observing. We are making suggestions but we are not in control. We have been working closely with the government but we want to get a different paradigm in terms of running the company.
“We want to start working longer term. We want to get the government support so we can have better funding rather than worrying where the next amount of money is going to come from. The market funds that we have right now have to serve all of the players in the power sector. There is not very much money coming in there is a lot of demand on that fund so it’s a challenge.”
Priestman stressed that the TCN as presently constituted was beset with a lot of challenges, notably that of insolvency and poor maintenance of infrastructure.
According to him, “TCN is insolvent. So the whole approach to running the company is going to have to change fundamentally. At present the amount of money TCN gets is not at all certain. We are operating under what is called a minimum operating budget allocation. So we are living from hand to mouth. We can’t plan ahead. In terms of projects its very short term focused.
“What we want to do is completely change that approach and have a more professional best practices approach where we make long term plans, that way we get consistency between the engineering plans and the financial plans so we know what we can afford. We issue budgets accordingly and then we get but in from all sides. And then we know where we are going and how much we will have to do the job.”
He added that, at present the company “doesn’t know how much we are to be getting and that means maintenance has been a serious problem. You can see what’s been happening with the outages. That is something that cannot be changed really quickly. It is a problem that has evolved over quite a long period of time it would take time to fix.”
He expressed the hope that the contract date would shift to whatever eventual the government decides to put the schedule in place, noting that, “It is definitely what we hope that this is a transition where decisions are being made. Everybody has to buy in to the idea but we are here and we are ready but the decision is out of our hands.”
Reacting to the comments by the Manitoba Hydro CEO, the Permanent Secretary in Ministry of Power, Dr. Dere Awosika noted that the delay was as a result of the need by government to tweak aspects of the terms of agreement and ensure there is transparency in the process.
She argued that government was not placing obstacles in the take-off of the schedule of delegated authority, adding that, “Why do you think they (Manitoba) are in this meeting? They are already working.  If you have a contract and your  contract is not suitable would you start?
When he introduced himself he said Manitoba/TCN, did I speak for him?
 
It’s a very transparent issue. There is nothing to be worried about really. You want us to just throw out the issue without smoothing ends. When you sign a contract you get bonded to the issue. They signed a contract now they are going to give them terms of the working.
“It is in our interest that is why we put it in the road map. They did not do the roadmap for us. In the roadmap we have management contract and management contract is necessary and will always be used going forward,” Awosika added.
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Power

Nigeria To Face Increase In Electricity Tariffs From July

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According to reports, Nigeria’s population may face more challenging times ahead as electricity tariffs are projected to increase by over 40 percent in the near future.

 

This rise in tariffs could ultimately result in the elimination of all energy subsidies in the country.

 

Currently, the electricity sector relies on a monthly subsidy of approximately N50 billion, stemming from a shortfall in revenue.

 

The tariff hike, scheduled to take effect from July 1, will pose another significant test for President Bola Ahmed Tinubu’s administration and its ongoing market reforms.

 

The government has already taken steps to remove subsidies on Premium Motor Spirit (PMS) and implemented a floating exchange rate for the national currency.

 

These decisions have added complexity to the price-setting process of the Nigerian Electricity Regulatory Commission (NERC) and its 2022 Multi-Year Tariff Order (MYTO).

 

Despite power sector players failing to meet the target of supplying a minimum of 5,000 megawatts, even after signing contracts with the Nigerian Electricity Regulatory Commission (NERC), the current Service Based Tariff (SBT) is based on an exchange rate of N441/$ and an inflation rate of 16.97 percent.

 

According to NERC’s directives in 2015, the average tariff for distribution companies (DisCos) and different categories of end-users was N25 per kilowatt, as per Order 198/2020, which came into effect on September 1, 2020.

 

However, in the MYTO for 2022, the average tariff increased to N60 per kilowatt across all customer categories, and in the most recent update, it stands at N64 per kilowatt.

 

The determination of the 2015 tariff relied on a foreign exchange rate of N198.97/$, which increased to N383.80/$ in 2020 and further to N441.78/$ in 2022. In terms of inflation, the 2015 MYTO utilized an 8.3 percent rate, which rose to 12 percent in 2020 and reached 16.97 percent in 2022.

 

Currently, the inflation rate stands at 22.41 percent, and experts predict it could reach 30 percent by the end of June, considering the floating of the naira and the removal of subsidies on Premium Motor Spirit (PMS).

 

The tariff determination process takes into account various factors, including the significant metering gap of over seven million, gas prices, losses within the system, and the actual generation capacity. These elements play a role in determining the final tariff.

 

As anticipated, NERC had projected that the tariff for July 2023 would eliminate subsidies and introduce increases to the previously frozen tariff bands D and E.

 

These adjustments were intended to raise the bands from N54.59/kilowatt to N62.16 for band D and from N48.37/kilowatt to N61.16 on average. Moreover, the average increase across all bands was expected to reach N67/kilowatt.

 

However, due to the ongoing floating of the naira and the significant inflationary pressures, it is now projected that the new average tariff will need to be approximately N88/kilowatt for the power sector to recover its costs.

 

According to energy lawyer Madaki Ameh, the continuous and frequent increases in power tariffs are akin to a form of blackmail against electricity consumers.

 

Amen said “Indexing the cost of electricity on the dollar is a huge mistake because most of the inputs for electricity supply are local. The DisCos are also holding Nigerians to ransom by failing to increase the supply base, thereby spreading the tariffs across a broader spectrum of consumers to reduce the unit cost of electricity.”

 

He insisted that as long as there remain many unmetered consumers and many others not connected to the grid at all, the few consumers on the grid would continue to be subjected to unjust tariffs, which are not reflective of the quality of service delivered.

 

Ameh hoped that the signing into law of the new Electricity Act would mark “the beginning of light at the end of the long tunnel of inefficient and epileptic power supply in Nigeria.”

 

Segun Ajibola, the former President of the Chartered Institute of Bankers of Nigeria (CIBN) and a professor of Economics at Babcock University, highlighted that there remains a gap between the cost of electricity and the value it provides in exchange.

 

“Nigerians are still struggling to keep pace with the cost of energy for business and household use. If the electricity tariff goes up as envisaged, the question remains if there will be value for the quantum of electricity so paid for.

 

“The truth remains that if electricity supply is constant, of the right quantity and quality, the envisaged upward review in the tariff will be gladly absorbed by the populace,” he said.

 

Lanre Elatuyi, an Electricity Market Analyst, expressed that the recently implemented tariff rate would have significant implications. He emphasized that the devaluation of the Nigerian currency poses a major challenge for companies with dollar-denominated loans to repay.

 

He said “They will need more naira today to buy a dollar. They need to manage their exposure to foreign exchange risk. Even operators of hydro plants pay their concession fees in dollars. So, wholesale electricity price will be adjusted upward and this will get to the end users’ tariffs too.”

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Power

Buhari’s Gov, State Governors Secretly Sold 5 Power Plants – Shehu Sani

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Senator Shehu Sani, a prominent Nigerian lawmaker has accused President Muhammadu Buhari’s government and state governors of secretly selling five power generating plants without disclosing the utilization of the funds received.

 

He disclosed this in his Twitter handle on Monday.

 

Senator Sani, known for his outspoken nature and activism expresses his concerns over the alleged undisclosed sale of the power plants.

 

He claimed that the government, in collaboration with state governors, had carried out the transactions without informing the Nigerian public about the purpose of the funds acquired from the sale.

 

The post reads “Buhari’s Government in collaboration with the State Governors quietly sold the five power generating plants without telling the country what the money was used for.

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Power

Nigeria’s VP Inaugurates 240MW Afam 3 Fast Power Project

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The Vice President of Nigeria, Prof. Yemi Osinbajo, has inaugurated the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.

 

The project, which is a subsidiary of the Transcorp Group located in Oyigbo, on the outskirts of Port Harcourt in the state, was unveiled during a ceremony that took place on Tuesday.

 

The event, which was attended by several dignitaries, including the Chairman of Transcorp Group, Tony Elumelu, and other top officials, saw the Vice President arriving at the venue in a chopper at exactly 11:35 am.

 

Upon his arrival, he was escorted into the premises where he officially inaugurated the project.

 

During his speech at the event, he disclosed that the acquisition of the project was approved by the National Council on Privatisation (NCP) and the acquisition cost was ₦105.3 trillion.

 

Osinbajo further emphasized that the successful completion of the project is a significant breakthrough in Nigeria’s power sector.

 

In his address, Osinbajo said, “In 2020, electricity subsidies reached N584 billion, but service-based tariffs have led to a doubling of collection in the Nigeria Electricity Supply Industry from N40 billion in 2020 to N80 billion in the first quarter of 2023.

 

“If this trajectory continues, the Nigeria Electricity Supply Industry will be able to pay for itself. Our administration has also created programs for off-grid for electrification. Rural Electrification Agency now has the capacity to provide electricity supply on a first-class basis.

 

“We are on track to electrify all Nigerians in the next decade. However, we will not make progress if our gas supply does not improve. The gas supply challenges are hampering improvements.”

 

He further lauded General Electric, the National Council on Privatization (NCP), and the host communities for their contribution to the completion of the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.

 

Osinbajo highlighted that the successful completion of the project will significantly increase the country’s power supply capacity, leading to a better quality of life for Nigerians.

 

In November 2020, the federal government and the Transcorp Power Consortium signed a share sale and purchase agreement in relation to Afam Power Plc and Afam 3 Fast Power Limited.

 

The National Council on Privatization approved the privatization of the Afam Power Plant back in August 2017, which triggered a competitive bidding process involving 12 prospective investors.

 

After careful consideration, Transcorp Power Consortium emerged as the preferred bidder with a combined offer of N105 billion.

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