BusinessDay 24 May 2017
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Wednesday <strong>24</strong> <strong>May</strong> <strong>2017</strong><br />
government&policies<br />
C002D5556<br />
BUSINESS DAY<br />
05<br />
WEST AFRICA ENERGY<br />
Policy shift, new investments set to<br />
catalyze Nigeria’s electricity market<br />
ISAAC ANYAOGU<br />
Nigeria’s electricity<br />
market is set<br />
to see a boost that<br />
will help resolve<br />
its liquidity constraints<br />
following a directive by<br />
the by the Federal Government<br />
through the Nigerian Electricity<br />
Regulatory Commission<br />
(NERC) that electricity generation<br />
companies can now sell<br />
power directly to customers.<br />
On <strong>May</strong> 15, Babatunde Raji<br />
Fashola, minister of Power,<br />
Works & Housing, long frustrated<br />
with the antics of the<br />
electricity distribution companies<br />
who have failed to invest to<br />
reduce ATC&C losses, improve<br />
distribution infrastructure<br />
and improve collections, announced<br />
that generation companies<br />
(Gencos) could now sell<br />
power directly to eligible customers.<br />
The eligible customers<br />
comprises of a group of endusers<br />
registered with the Commission<br />
whose consumption<br />
is no less than 2MWhr/h and<br />
connected to a metered 11kV<br />
or 33kV delivery point on<br />
the distribution network and<br />
subject to a distribution use<br />
of system agreement for the<br />
delivery of electrical energy.<br />
The next category are those<br />
connected to a metered 132kV<br />
or 330kV delivery point on the<br />
transmission network under<br />
a transmission use of system<br />
agreement for connection and<br />
delivery of energy.<br />
The other category includes<br />
those with consumption in excess<br />
of 2MWhr/h on monthly<br />
basis and connected directly to<br />
a metered 33kV delivery point<br />
on the transmission network<br />
under a transmission use of system<br />
agreement.<br />
The last category are eligible<br />
customers whose minimum<br />
consumption is more than<br />
2MWhr/h over a period of one<br />
month and directly connected<br />
Snapshot<br />
60%<br />
Estimated<br />
losses to DISCOs<br />
from the new<br />
policy should<br />
GENCOs start<br />
selling power<br />
to categories of<br />
customers<br />
to the metering facility of a<br />
generation company, and has<br />
entered into a bilateral agreement<br />
for the construction and<br />
operation of a distribution line<br />
with the distribution licensee<br />
licensed to operate in the location.<br />
This directive is however<br />
in line with Section 27 of the<br />
Electric Power Sector Reform<br />
Act 2005 which permits eligible<br />
customers to buy power from a<br />
licensee other than electricity<br />
distribution companies<br />
Interestingly, investors are<br />
entering into negotiations with<br />
industrial clusters to provide<br />
them power through embedded<br />
generation that are to be<br />
powered by independent power<br />
plants.<br />
A recent example is a new<br />
investment by Geogrid LighTec<br />
Ltd who recently unveiled<br />
plans for a 30 megaatts hybrid<br />
power plant to be sited on a<br />
4,500 square-meter space inside<br />
Cadbury Nigeria property<br />
in Ikeja Industrial cluster and is<br />
partnering with Manufacturers<br />
Power Development Company<br />
to achieve the buy-in of manufacturers.<br />
At the cost of $25million, the<br />
proposed plant is billed to run<br />
70 percent on gas and 30 percent<br />
on diesel. To ensure that<br />
there is no down time; the company<br />
said the engines would be<br />
maintained at different times.<br />
Geogrid has secured a license<br />
from the Nigerian Electricity<br />
Regulatory Commission<br />
(NERC) for 30MW of power for<br />
10 years, the Environmental<br />
Impact Assessment (EIA) has<br />
been carried out, and the Lagos<br />
state government is partnering<br />
with the company on the right<br />
of way.<br />
The proposed plant would<br />
deliver power either at 11KVA<br />
or 33KVA lines depending on<br />
transformers available to the<br />
customers. Geogrid’s value<br />
proposition is that customers<br />
would have the option of take<br />
and pay rather than the take or<br />
pay option. Both options are<br />
industry speak for paying for<br />
subscribed power whether you<br />
use it or not, or pay as you use,<br />
respectively.<br />
Oweh Mba-Sam, coordinator<br />
of the Manufacturers Power Development<br />
Company (MPDC)<br />
speaking on the launch of the<br />
investment said that manufacturers<br />
already have about six<br />
similar projects running in different<br />
industrial clusters in Nigeria.<br />
Manufacturers in Nigeria<br />
say that 40 percent of their cost<br />
goes to providing power.<br />
The sum of this situation is<br />
that it is ramping competition<br />
in the electricity market as monopoly<br />
granted the DisCos is<br />
being removed. Some experts<br />
say the losses to the Discos<br />
could be as high as 60 percent<br />
but competition will improve liquidity<br />
in the electricity market.
Change language