Power
NDPHC hands over Nigeria’s largest power transmission plant to TCN
LAGOS – The Niger Delta Power Holding Company (NDPHC) has announced that the newly built largest power transmission plant in Nigeria has finally been handed over to the Transmission Company of Nigeria (TCN) the operator of Nigeria’s power transmission sub-sector.
NDPHC, the operator, of the NIPP projects had commissioned the plant located in Oke-Aro community of Ogun State, south west Nigeria last year, but completely handed over the plant to TCN a within the month having completed the provisions of the contract.
The TCN is therefore expected to fully utilize the state-of-the-art facility to improve power supply to Nigerians.
The Deputy General Manager, Civil Field Operations, NDPHC/NIPP, Claudius Ogunrinde, said: “The project has been completed and commissioned, and the company has been running it under the provisions of the contractual terms. Today marks the proper and complete handover of the facility to the TCN.
“We are here to examine the effectiveness of what we have done about a year ago and some of the factors listed to be improved upon, and we have seen that most of them have been done and the job is excellently executed to the RFP specified standard, he said.
He explained that the TCN was allowed to take partial control of the facility since last year with a clause in other to acquaint them with the technology and ensure that the plant start serving Nigerians.
“The clause was that in case any of the equipment has problem, they have a warrantee for one year, the contractor that did the job (EPC,) should also be around to help solve the problem and guide the staff on how to run the station without problems, so the warranty is over today and it becomes the baby of TCN completely,” he said.
To aid electricity consumption by Nigerians, the transmission plant is meant to step down power from 330kva to 132kva and then to 33kva. The 33kva is where the Discos and consumers are getting supply from. The facility now has four feeders radiating on 33kva and two of them have been in service for about six months while another two has been added, waiting to be commissioned in the next three weeks.
TCN Boss, Engr Adeoye, assured that the station would boost power supply to Lagos and Ogun states significantly and ease off the load on Ikeja West transmission station at Ayobo, Lagos.
He said: “The quality of the job done on the station is perfect. It’s one of the best stations we are inheriting, and I hope it will serve us properly in Lagos.
“The station is going to relieve Lagos region, because the bulk of power we consume in Lagos is around Ikeja Industrial Area, and we all share the power from Ikeja West. Now that we have this, Ikeja area is going to be satisfied aboundantly, which means there will be relieve in the other parts of Lagos. So, it will have effect on the whole of Lagos.
On the maintenance structure, he said the TCN has their qualified teams which are on standby to carry out the back up maintenance of the station frequently. “So, I can assure you that it is in good hands,”
The station is yet to operate at full capacity, but Adeoye said plans are at advanced stage to upgrade some facilities that that would aid its service delivery.
“There are attempts to load the station fully, the product is ready now and their district colleague would take supply on 33kva, and there is also an intention for us to have 33x2kv line radiating from here in Oke Aro, so that is our next plan, “he said.
Giving details of the plant, Adeoye said: “This station is 330/132/33kva. For the consumers that are close to the plant, they will get relief on the 33kv feeders, others at around Oworonshoki, Gbagada, Somolu and environs will get supply on 132kva from here. Prior to that, the consumers from OworonshokI take supply from Ajah which is now overloaded.”
Project Consultant and Site Manager, Philip Oglla, said: “Our work is to check the quality of work on site to make sure that the execution of work is in line with the technical specification of Request for Proposal (RFP). The project has been conceited since 2010 and we can guarantee you that everything is perfect, the mechanical and electrical works are done in line with the standards of execution.”
He disclosed that the company has completed the staff quarters for the workers on site. Ogalla also assured that the facility was built in consideration for safety standards.
According to him, the company has discovered some defects on site which have been corrected by the EPC contractor, Energo Nigeria Limited. “It’s a minor defect, and everything has been taken care of”.
He urged the TCN to maintain the standard of the station and ensure that every electrical aspect of transmission is done perfectly.
The plant was having issues with its right-of-way at inception, the NDPHC boss said the issues have been resolved and alternative routes have been fixed.
“We have identified a corridor for the lines, and the other 132 kva lines expected to link Oke-Aro with Alausa, a corridor has been identified and we are working on that. You know it is passing through a heavily built up area and that has been our headache, so we tried to minimize damages to properties and cost of compensation, so we have identified a rout and we have started works,” he said.
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.”
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.
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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