Funding, main challenge of power sector – Eko Disco boss

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THE Vanguard Power Series publication has been focusing on electricity supply to final consumers from the Distribution Companies (DISCOs). 

We had noted that the electricity sector has been bedeviled with so many challenges as indicated in yesterday’s published interview with the CEO of Eko Electricity Distribution Company, Mr. Oladele Amoda. In this concluding part of the interview, he gave more insight into the situation as well as the operations and services of Eko DISCO.  Excerpt.

By Emeka Anaeto, Sebastine Obasi, Ediri Ejor & Prince Okafor

THERE appears to be inadequate transformers in your network. For example, a lot of streets today share one transformer which leads to load shedding? What are you doing to provide enough transformers?

Well, it depends on the capacity of the transformers. Regardless of the number of  streets, some transformers can serve them especially those communities that do not consume much energy. There could be one transformer supplying two or more streets.

However, with the current exchange rate, the purchase of transformers has slowed down. But last December, we went to Zenith Bank to get an advance of N600million because we didn’t want those customers whose transformers were faulty to spend the festive season in darkness.

MD/CEO, EKEDC, Oladele Amoda

Shedding on cable lines

We went to get 73 transformers at N4billion and when you add the cost of installing them, it will cost an additional N1billion. The rate at which development is going on in some locality, it is so alarming that we don’t have that funding to cope with the rate at which these transformers are used. But we have plans. Those transformers that were engaged in load shedding have been worked on and as soon as we are buoyant, we will address those challenges.

However, it is not only transformers that we do load shedding on but we also do shedding on cable lines. We have plans for them as we need feeders, transformers and so on.

TCN (Transmission Company of Nigeria), sometime ago stated: ‘DISCOs need to improve their monthly remittances failure which their accounts could be escrowed and their security deposits called up in the event of any default.’ How do you react to this?

The entire DISCOs’ wish is for them to wheel power from generation companies to the DISCOs effectively and efficiently. TCN has several challenges that they are grappling with at the moment. One is paucity of fund. They are not getting enough funds from appropriation. You know they wait for government for appropriation and that has gone on for several years.

They have over 200 projects on ground in various stages of completion because of lack of fund to complete them. Until this year, what has been earmarked for power sector is N1billion for the entire power sector before privitisation.

It has improved from the last budget, simply because government has realized that there is need to invest in the TCN. By the time they finish their expansion, they will be able to grow their receivables from what they have now. Right now, the capacity of TCN is about 6000MW. And the installed capacity of all the generation companies as at today is about 12,000MW. But then the GENCOs have problem with gas today. But conveniently, TCN can wheel between 5,500MW to 6000MW.

Expanding transmission

However, there is an ambitious expansion programme to complete some of the projects, and they are not only relying on appropriation, they have some other international agencies that are going to inject fund.

Some of the fundings are from Japan and others. That transmission power will be expanded, and government is also doing a lot to that effect, because without expanding transmission, whatever is generated can only be evacuated to the limit of their capacity at TCN.

Nobody is blaming anybody for liquidity issues. There are challenges everywhere ranging from DISCOs, TCN, and GENCOs. The most critical challenge is funding. The DISCOs are not collecting enough from the customers because of some of the challenges we had identified earlier in our discussion. So not much can be remitted back to the market (GENCOs, TCN and other agents).

All these issues were brought to the fore at our meetings. This is because they want to produce a genuine solution to the challenges in the power sector, rather than blame games. Part of what was mentioned by the Senate President is that there should not be blamed games but rather to find solutions to them.

We had been advised to pay enough for what is generated. But for us in EKEDC, we pay 100 percent. We pay to NBET (Nigerian Bulk Electricity Trading Company) and market operators (agencies that are wheeling power to us like TCN, NERC etc). It is an administrative cost.  We cannot warehouse money. CBN has an account and they have strings on the account.

We cannot go into the account without the CBN. So everybody has an oversight and there is nowhere to warehouse any money.

How many percentage of consumption from the grid?

We are entitled to 11percent of whatever is generated. When we get the 11 percent, in most cases take the average of 250MW to 300mw and we try to allocate based on that.

What is your distribution capacity? What do you require in terms of transmission from TCN?

We can wheel 1000MW. That means we do less than 30 percent.

Constraints on transmission

The ones that have advantage over us are those close to the power stations. Because of constraints on transmission lines. In the eastern circle, they seem to get more, or more than their allocations. Some of the transformers and other facilities at the TCN are as old as Nigeria. Some are over 40 to 50 years and they can’t be efficient. It is a matter of time and Nigerians should bear with us.

On the issue of tariff: If there is no cost reflective tariff, there will be no improvement in power distributed to the people.  Our own is to say this is what it costs to be able to continue this business. Usually, in other countries, NERC is fully independent as the regulatory commission for tariff. Moreover we have the multi-year tariff order (MYTO) and it is there to guide us. Every month, we are expected to go for a minor tariff review and then the major.

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