To Transmission Company of Nigeria (TCN) Managing Director, Mr. Mohammed Gur Usman, the commission has achieved stability in power transmission. But distribution has been epileptic, according to him, because distribution companies (Discos) were sold to inexperienced operators. He speaks with John Ofikhenua and Moses Emorinken on this and many other issues.
Can you give us an update on the affairs of the West African Power Pool (WAPP) after your meeting in Abuja last month?
I am the Chairman of the West African Power Pool (WAPP). I believe the last meeting we had in Abuja was on the frequency control because the Transmission Company of Nigeria (TCN) wrote to WAPP and asked for the synchronisation of the network so that power can flow in these three islands. We have three islands now where the power are landed because of the problem of frequency, and that was why we wrote to WAPP and asked them to synchronise. WAPP sought and got the support of the World Bank to finance a committee that would do the synchronisation programme. They organised series of workshops. One of the workshops was what took place here in Abuja. It was sometime in December. At that workshop we took a decision to take all the steps that we needed to ensure that we have a synchronised grid. That will require us to meet the frequency control of the WAPP standard, which are 49.2Hz and 50.2Hz. The intention is that if the utilities can achieve 60 per cent of that standard, then we can synchronise. At the point of the meeting, Ghana and other islands, which involves Côte d’Ivoire, have met that standard. We could have synchronised with them if we also achieved the standard. A day after the workshop, I set up a committee, which reported directly to me and charged them to work towards the achievement of the WAPP standard. I am happy to tell you that, if you look at the frequency control, from three weeks ago till date, the frequency is between 49.8Hz and 50.2Hz for 75 per cent of the time, which is far above the Ghana signal. This is the best in West Africa so far now. We have never achieved this in the history of Nigeria. So, what we are working on is not only to expand the grid, but to ensure that there is stability of the grid. So, that is what we achieved in the last workshop, which held here in Abuja.
What is your relationship with supply of power to neighbouring countries? Has there been a review due to non-payment of outstanding bills?
Our relationship is that we wheel power across and outside the country. We take energy outside Nigeria. Currently, we have two or three points where we supply energy to Niger from the Northern part. One of them is through Maiduguri to Damasai and then through Doso. That one is not working now because the network was destroyed by the terrorist element of Boko Haram. The supply is done at the level of distribution companies (DisCos). It is not at our level. It is Yola DisCo that supplies that energy. The next one is the one we supply to Niger through Katsina. It goes to a town called Maradi and Doso. That one is 60Mw of electricity that we send on a daily basis to Maradi and Gazawa. The next one is the one from Birnin-Kebbi to Yamai and this is 120Mw, and on a daily basis we send this energy to those places. The other point where we send energy to outside Nigeria is through Ikeja west to Sakete. For this we are sending the following power: 200Mw to Community Electric du Benin (CEB) under the agreement we have signed with them, which is a bilateral agreement between the government of Nigeria and the government of Benin and Togo. The other one is the 60Mw that we send to Societe Beninoise d’Energie Electrique (SBEE). SBEE is the electric distribution company of Benin Republic. We have been sending it on a consistent basis. Concerning the issue of payment, I think we have very little problem with Niger, their payment is always up-to-date. Where we have significant problem is on the CEB side, but we have agreed with them on how they are going to liquidate the payment, and I think they are making serious efforts to make all the payments. The one that is Paras Energy is the bilateral agreement between Paras and SBEE. As far as I am concerned, I believe the payment is up-to-date, because Faras is not owing TCN for the payment of transmission charges. So, that is where we are now as far as international customers are concerned.
Sometime in 2017 you sent a request for an increase in extraordinary tariffs to the Nigerian Electricity Regulatory Commission (NERC), what do you think is responsible for the delay in approval, and how has it affected TCN’s operation ?
When we newly came in , we did a presentation to Nigerian Electricity Regulatory Commission (NERC), with a compelling reason that showed that TCN is underfunded. The NERC agreed that we should come and present a case for extra-ordinary tarrif review, this was in 2017. We sought and got the support of Power Africa, which gave us some consultants that support our staff to prepare the case for extra-ordinary tariff review, which we did. We submitted to NERC, and there was a tentative agreement with NERC that our tariff is low and that it should go up. There were a few points of disagreement, but since that time we have not heard anything from NERC.
I think it will be interesting if you can go and speak to NERC why they have not done it. We need extra-ordinary tariff review to be able to operate TCN and to meet our own liability. If you remember, the Transmission Expansion Rehabilitation Programme under which we sought and got support from international donors, TCN is going to repay all those loans, and we are going to pay it through the wheeling charges that we have. So, definitely, we require the NERC to act on this. If you look at the industry now, there is none that is as hard working as the TCN. TCN’s engineers are the most hardworking staff you can see. We have become the game changer. Remember, this is the same TCN that was believed that you need to bring foreigners to manage it. Manitoba Hydro was brought here to manage this place, and in four years that they were here, Manitoba did not bring a single investment into TCN. Nigeria (officially) paid Manitoba Hydro $32million for managing TCN. For the four years that they managed TCN, they did not carry out a single audit of TCN. For the frequency control I just told you, one of them has sent an email to me to congratulate us for achieving it, saying that this is something they contemplated of achieving, but they could not. They could not even come close to it. So, all these things we are doing, I think there should be some motivation on the side of government and the regulator. But if you look at it now, TCN is the least paid in the industry. I don’t think it makes sense because we operate high voltage. Look at it from the point of risk, TCN is exposed to more risks than anyone in the sector. I think I will be happy if from your side you can put pressure on the government, the regulator and find out from them why they are not approving our extraordinary tariff review.
What is TCN’s wheeling capacity?
You have to give credit to this government for some of the actions they took, including reconstituting TCN management. I remember that they inherited all those structures from the previous government and some of the decisions they took, including bringing someone like me to come on board to see how we can fix the power sector. When we came in February 2017, the capacity of TCN was around 5,000Mw. As at December 2017 when we simulated the grid, it was 7,124Mw. The last simulation which we did in December 2018, the capacity of the grid was 8,100Mw. We are on track to moving the grip to at least 20,000Mw by 2021. These are some of the achievements that we have recorded. Also, we have installed more transformers in the last one and half years to two years, more than what was done in previous 15 years. How did we do it? We met stranded containers of about 800 at the port; some of them had been there for over 15 years. Some of them had been auctioned. Manitoba was just looking at those things and did nothing to them. As at now, we have recovered 708 of the 800 containers, and we have also come up with strategies to remove the remaining ones.
Some of the equipment recovered will encourage TCN engineers to do the installations themselves. In many cases, the TCN engineers do the installations at the rate of 10 per cent of the time that we normally spend on contractors, and at the rate of about 10 per cent of the money that we normally spend on contractors. This is where we achieve so much more than what has been achieved in the past. I can tell you that it is sustainable, and they are not doing below standard work. In reality what we discovered is that most of the contracts executed in the past were done by TCN staff. So, we decided to empower them directly, and because they are using TCN engineers, who work for TCN most of the time, they don’t work on weekend and public holidays. That is why it takes long time for them to finish the job. But now they are doing it directly and we are achieving a lot of results. We have also decided to support contractors that are doing well, and are willing to work with us and are not willing to fight us. We enter and support them to complete the project and pay whatever we owe them. But we have stopped variation of that kind of contracts. That is how we were able to finish Kukwaba here in Abuja. That is how we were able to finish the first segment: Katsina, Daura 132kv line and several others. Last week we entered Gagarawa and we are going to complete Gagarawa like that.
There are some contractors that don’t want to cooperate with us. They want to continue to stay in the old regime. For your information, before the coming of Buhari administration, most of the contracts given in the power sector were not given with the hope of completing them. The objective was to empower people and make them rich. And that is why capacity and experience do not matter. You see some people, who have never done the project they give them. Some of those projects have been funded 100 per cent, LC money removed from them and you cannot see the material commensurate with the money that has been paid: no erection, nothing. I can give you example of one of these.
For example, the 330 KV line from Alaoji to Owerri, Owerri to Ihiala, from Ihiala to Onitsha was given like that, and there is nothing on ground now. Now, the government is going to borrow to build that line again after it was given to some people and they abandoned it. Such contractors that have refused to complete their work, we sometimes enter forcefully, take over the job and complete it. I, also can tell you that no contractor took us to court and succeeded because we are very good in project management. We understand how to intervene, and how to enter and take over. So, when we are cancelling such contracts that have such problem we don’t validate them. We leave them where they are. When we are cancelling we say we are not understanding so there is no contract for you to see us for. This is how we were able to forcefully take over Damaturu. Precisely, Damaturu was awarded in 2006, with a completion period of 24 months. As at last year up to June, Damaturu was not completed; so we forcefully entered and completed the project. It is supplies at 330KV now. Invariably, by completing Damaturu, Maiduguri, which was actually completed but because Damaturu was not completed was not supplied, Maiduguri got supply. I can tell you in the Northeast now the government of President Muhammadu Buhari has put 100 per cent capacity of power in the Northeast. Before now, the whole of Northeast had only two 330KV substation in Yola and Gombe. Now, we have another 330KV in Maiduguri and Damaturu. We also took over Wudil and completed it. Next week we are going to commission it. We also took over Yauri. It is going to be completed in the next one or two weeks. They have started the pre-commissioning test. We have forcefully taken over Nineth Mile in Enugu State and we are going to complete it. So, this is how it is. I can tell you that no contractor holds us to ransom now. I can also tell you that TCN engineers are building a 132KV substation in Lagos on an island called Ilase; they are the one carrying every equipment to the sea and the job is 98 per cent completed.
Is your penchant for engaging in-house engineers generating any bad blood in the industry?
Why should it generate bad blood? When contracts are not working, there are people benefiting from it. Those people who are benefiting from it would be angry, of course. If a system is not working, it is the majority of the people that will suffer. So, you have included those few people who are not benefiting and supported the majority of the people that are benefiting.
There was an assessment pool done by either China, where they did a population poll; more than 70 per cent of Nigerians say their lives have improved with the improvement of power supply. I think it is important. What is more important is that we have created a system where TCN engineers are testing their capacity. No nation should be depending on foreigners and other people. So, we are building the capacity of our people.
Why is distribution still low (between 4,000Mw to 5,000Mw) despite the increase in generation between 7,000Mw and 8,000Mw?
I will tell you that the kind of privatisation that was done by the previous government has never been done in any part of the world. If you ask the people who did the privatisation, they will tell you that they used the Indian model. The Indian privatisation model is such that they privatised one state called the state of Orisa. It is the experience from the state of Orisa that they used to privatise Delhi. In the industry, the most important segment you have to work properly is the distribution because they are the one that collect the money. It is the money from distribution that is supposed to go to all other places. So, they privatised state of Orisa and the experience learnt from it is what they used for Delhi. Nigerians have this report, but we went and sold everything at the same time and put a continual liability of $5.4 billion. So, what most people don’t know is that when they are gauging Buhari administration, they are gauging it from the point of what it has achieved. Nobody is looking at the hole that the previous administrations put Nigeria into. This is what this government has inherited. Now the option of cancelling the privatisation is the option of paying $5.4billion
I agree with this government that they didn’t tamper with the reform of previous government, if they had done that, it will also send a wrong signal to the international community that the government is against reform. But the government has done a lot of work. The privatised segments are generating but generation is no longer a problem. Transmission was the weakest link in the power value chain. It was also the biggest problem in the power value chain. But today, it is no longer the problem. We are not saying transmission has solved all its problems, but anywhere we have problems, at least, we have a plan to fix it. We are working on putting nil contingency across the country; meaning any part of Nigeria where one line or equipment goes out, it should not affect the supply. That is consistent with the transmission expansion programme that we are doing, and that is the standard worldwide and we are on track. What remains is the last mile, which is the Discos. If you remember, the government also came out with N72billion investment in DisCos, which TCN is in charge of managing the investment. We are actually working to stabilise the DisCos. I also want to assure you that every step to stabilise the DisCos is being taken by this government and I am telling you that in the next level that is where we are going to fix it.
Are you still calling for the recapitalisation of the DisCos?
Of course, that is what is required. Government has recapitalised TCN; we have raised $1.623bn so far in investments in transmission, so DisCos need to recapitalise. There is need for them to find the regulatory and policy environment that will force this recapitalisation of the DisCos. Let me tell you why the DisCos have to recapitalise. When we did the simulation with the Transmission Expansion Rehabilitation Programme, we also simulated up to 33KVA network, and the finding is that for the DisCos to pick successfully the load we have and put all the required protection, they need at least $4.2bn worth of investments for them to successfully take the power. Where will that money come from? The money is supposed to come from recapitalisation. I also want to tell you that some of the mistakes we have made in the past. Infrastructure financing requires long term finance. Part of the problem we have with the DisCos is that most of the funding that they have came from commercial banks, which are short term in nature and very expensive. We need funding that will have repayment period of at least 10 years moratorium period; you can’t get it from financial market. So, we are not talking about recapitalisation by bringing all those short-terms. Short terms are expensive and they will not be able to build the infrastructure successfully. If you look at our interface now, we have 738 interfaces across the country. Out of these 738 interfaces we have only 421 that are fully protected. What do I mean? Only 421 are the distributions that have their own injection substations. You know the power industry works with what you call protection and that is why if you go to your house you have what is called ELCB. If you have a problem in your house it will trip. That is the nature of power work. If your house doesn’t trip it will burn the transformer. So, all of them need to work and if they don’t work there is going to be a problem. The remaining interfaces, some have protection, some don’t have. For the balance of 179 there is no protection at all. In recent times we have been having problems with our transformers in some stations. In Abuja, in Karu we lost one transformer, we have replaced it. In Kubwa, we also lost a transformer. In Benin we had two not too long ago. We have one in Onitsha. All are those networks that are not protected meaning faults in people’s house can come and hit our transformers. So, that requires investments. They have to put investments to be able to do this. This is the existing infrastructure and we are moving it from 8000mw to 20,000Mw. So, even TCN investments cannot be protected if we don’t have significant investments in DisCos.
What is the level of demand for power?
The fact is that transmission has a capacity of 8,100Mw, and generation has a capacity of 7,500Mw, and the DisCos can pick only 4,000Mw – 5,000Mw. That is what you will generate; you can’t generate more than that. So, we need to fix the last mile to ensure that we optimise the use of electricity and all the efforts are being made. We are expanding generation and we have every plan to make generation work. Most of these power plants, we are rehabilitating their capacities. Mainstream is expanding Kainji and Jebba. So, they are putting what is called floating solar. You know about Zungeru, it is going to be completed before the end of this year or early next year, and that is 700mw. Mambilla, which we have been talking about for several years has been resolved. We also have to give credit to this government. Any other thing you read in the papers are all lies. We have got approval to evacuate Mambilla through the Eastern Backbone. You heard about the QIPP, you heard of Agip, it is doing phase two, which is going to be about 510mw. All these are coming on board. Transmission is outstanding. We are building network. We are even building a cord line, which has never happened in the history of this country. That is going to be double of the circuit line.
Benin Electricity Distribution Company (BEDC) says its problem with its customers that are complaining has to do with TCN. What do you say to this?
I don’t know which location they are saying but you know that Benin DisCo admitted that one of the last transformers that got spoilt in Benin was caused by them. They even wrote to us to say that they are willing to fix it. The point is that do you fix a transformer in one day? So, we have to carry a transformer from somewhere and fix it. The problem we have with most of the distribution companies is that we sold our companies mostly to those that have no experience. And they don’t have capacity to raise enough investments. Of course, there are also some issues that have to do with tariff which the government has not completely fixed. But I can also tell you that many of them are operating auto-closers, where they are also keeping people outside the supply. Except you can tell me which specific place. But I can tell you generally that we have enough supply that Benin is not taking. As I told you, it is not as if there are no places we have problems. There must be one or two places where we have problems. But I told you anywhere we have a problem we have a plan of fixing it. So passing the buck like that doesn’t make sense. If there are specifics let us know. I can tell you we are on top of our plans.