A recent report by the Association of Nigerian Electricity Distributors has shown that the Distribution Companies (DisCos) in Nigeria recorded 8% growth in their revenue collection in 2019. The eleven DisCos grossed N473 billion in 2019.
As the name implies, DisCos are Electric Distribution Companies in Nigeria have the primary responsibility to facilitate the supply of power, using its distribution network to provide electricity to customers within its franchise area (area of operations).
DisCos are also responsible for ancillary services such as the operations and maintenance of the distribution network, customer connections, installation, maintenance and reading of meters, billing and collection etc. The power that is distributed by the Disco is received from Power Generation Companies (GenCos) via the transmission lines operated by Transmission Company of Nigeria (TCN).
According to Nigeria Electricity Regulatory Commission, the generation sub-sector presently includes 23 grid-connected generating plants in operation with a total installed capacity of 10,396 MW (available capacity of 6,056 MW) with thermal based generation having an installed capacity of 8,457.6MW (available capacity of 4,996 MW) and hydropower having 1,938.4 MW of total installed capacity with an available capacity of 1,060 MW. This comprises the privatized GenCos, Independent Power Producers (IPPs) and the generating stations under the National Integrated Power Project (NIPP).
IPPs are power plants managed by the private sector prior to the privatisation process. These include Shell operated – Afam VI (642MW), Agip operated – Okpai (480MW), Ibom Power, NESCO and AES Barges (270MW).
Differentiating DisCos from Transmission Companies and Generation Companies, NERC says it is important to note that DisCos are neither the generation nor the transmission company, but are merely the last mile operator that completes the process of power supply from source to the end user.
DisCos play the critical role of collecting the revenues associated with the power supply on behalf of all operators within the value chain and subsequently remits to each party its allocated portion.
As a way to increase the level of power generation in the country, the Federal Government in 2004, incorporated the Niger Delta Power Holding Company (NDPHC) as a public sector funded emergency intervention scheme.
The company has a mandate to manage the National Integrated Power Projects (NIPP) which essentially involves the construction of identified critical infrastructure in the generation, transmission, distribution and natural gas supply sub-sectors of the electric power value chain.
The National Integrated Power Project (NIPP) was conceived in 2004 as a fast-track government funded initiative to stabilize Nigeria’s electricity supply system while the private-sector-led structure of the Electric Power Sector Reform Act (EPSRA) of 2005 took effect.
With an innovative lead reposed in Mr. Chinedu Ugbo, the Managing Director, NDPHC, NDPHC has successfully flagged off construction of transmission substation worth Billions of Naira. Amongst which is another 330 kilovolt (KV) in Lafia, the Nasarawa state capital.
The Managing Director of NDPHC, Chiedu Ugbo at the site was quoted as saying the project which will be completed this year, 2020 will add about 300 megawatts (MW) of electricity capacity to the state.
There are several components of the project which will cost about $18 million (about N5.49bn at N305 CBN exchange rate). NDPHC is known for its aggressive projects and commitment to achieving tremendous progress in terms of generation and transmission of electricity.
President Muhammadu Buhari’s administration has committed itself to the power sector, and the dedication of NDPHC has helped in the distribution not only within the Niger Delta region, but even outside its territory. Give it to NDPHC, the Power Holding company’s projects have improved power supply across the region and its environs.
In the generation sub-sector, NDPHC has four gas fired power stations on its grid, all these gas assets are completed, commissioned and functional, while the Power Holding Company is working on six others which are at different stages of construction in different parts of the country. NIPP Gas assets will add about 4,774MW of power to the national grid network after completion.
Its gas assets at the moment include: Egbema Gas station, with 338 MW in Imo state, Alaoji Gas station (1,074MW) in Abia state, Calabar (563MW) in Cross River state and Benin Gas station (451MW) in Edo state.
Some of the NIPP power stations have already been privatised while plans are under way to sell the rest to interested investors in order to increase private sector participation in the sector thus strengthening the reform programme of the government.
Tracing the history of power generation in the country, NERC says Power generation in Nigeria dates back to 1886 when two (2) generating sets were installed to serve the then Colony of Lagos. By an Act of parliament in 1951, the Electricity Corporation of Nigeria (ECN) was established, and in 1962, the Niger Dams Authority (NDA) was also established for the development of hydroelectric power.
Afterwards, a merger of the two (2) organisations was forged in 1972, which resulted in the formation of the National Electric Power Authority (NEPA) which was saddled with the responsibility of generating, transmitting and distributing electricity for the whole country. In 2005, as a result of the power sector reform process, NEPA was unbundled and renamed Power Holding Company of Nigeria (PHCN).
In March 2005, the Electric Power Sector Reform (EPSR) Act was signed into law, which enabled private companies to participate in electricity generation, transmission, and distribution.
The government unbundled PHCN into eleven electricity distribution companies (DisCos), six generating companies (GenCos), and a transmission company (TCN). The Act also created the Nigerian Electricity Regulatory Commission (NERC) as an independent regulator for the sector.
In furtherance of the reform programme, the Nigerian Electricity Regulatory Commission (NERC) reportedly has in the past licensed several private Independent Power Producers (IPPs) some of which are at various stages of project development.
The Commission has also enacted the Bulk Procurement Guidelines that will ensure the efficient and orderly procurement of large capacity generation in the future. This will enable the Commission to effectively predict the amount of power that can be added to the grid every year.
The Commission has in addition developed a Regulation on embedded generation which allows for power generation plants (including renewable energy) to be directly connected to and evacuated through a distribution network.
It provides a window for investors, communities, state and local governments to generate and sell or utilize power without going through the transmission grid. This also offers a means for DisCos to increase the amount of power available to sell while eliminating the transmission cost component of the tariff.
Reportedly, by implementing reforms, Nigeria targets 40,000MW generating capacity by 2020 and will need to spend approximately $10bn per annum on the power sector for the next 10 years to achieve this. In the post-privatized power sector, the Nigerian Bulk Electricity Trading PLC (NBET) purchases power generated by the GenCos and IPPs at agreed prices stated in Power Purchase Agreements (PPA) and resells to the DisCos who deliver the power to the end consumer.
Olamide Adeniji is a member of the Editorial Board of TheScript Newspapers
