Even With a Large, Brand New, Hydropower Project, Nigerians Will Suffer Outages - Africa’s premier report on the oil, gas and energy landscape.

Even With a Large, Brand New, Hydropower Project, Nigerians Will Suffer Outages

By Lukman Abolade, Senior Correspondent

Challenges around transmission and distribution of electricity will hobble the efficacy of Nigeria’s newly commissioned Zungeru Hydroelectric Power Plant, the country’s fifth largest generating facility, going by installed capacity.

The government constructed, commissioned and concessioned the $1.3Billion plant to Penstock Limited, on February 20, 2024. Penstock Ltd is a subsidiary of Mainstream Energy Solutions Limited (MESL), which has been the operator of the Kainji and Jebba hydro power plants since 2013.

“This is significant generating capacity”, Adebayo Adelabu, Minister of Power, told delegates at the Nigeria International Energy Summit (NIES) on March 1, 2024. He was optimistic about “other forthcoming minor projects, including several small hydro power facilities that will increase in Nigeria’s power generation capacity”.

“Even the President is Owing Electricity BillsIn the third week of February 2024, the Abuja Electricity Distribution Company (AEDC) published a notice of disconnection where it listed Ministries, Departments and Agencies (MDAs) that have failed to settle their electricity bills including the Presidential Villa, among others. Other MDAs listed are the chief of defence Staff-Barracks and Military formations with N12Billion debt as well as the Federal Capital Territory (FCT) with N7.5Billion debt. The Ministry of Finance, the DisCo said, owes N 5.4Billion, Niger state governor (Abuja liaison office) owes N3.4Billion, and N1.58Billion is payable by the CBN governor”.

Adelabu also referenced the 14 proposed, solar energy IPPs that were awarded licenses for grid-tied solar PV, some of which are planned to peak at 100MW. None has reached financial close and yet to commence construction. “We will revisit them”, he assured.

On paper, the 700-megawatt (MW) Zungeru hydropower plant is estimated to generate about 2.64Billion kilowatt-hours (kWh) of electricity a year, amounting to 10% of Nigeria’s total domestic energy needs.

Zungeru lines up after Egbin (1,320MW), Sapele (1,020MW), Ughelli (900MW), Kainji (800MW) in terms of nameplate capacity, but none of these plants delivers, to the consumer, their capacity limits, for reasons often outside their control.

The minister himself lamented, in the speech he read after an address by President Tinubu’s Special Adviser on Energy, the failings of the transmission lines which he admitted was populated with old, dilapidated infrastructure. “I have gone around visiting power facilities around the country”; he told the delegates. “I found lines which bear the label ECN”, he disclosed. “ECN is Electricity Company of Nigeria!” Adelabu exclaimed. “That’s 1960s!”.

One of the two towers destroyed in the most recent attack. Image Source: TCN

And there is the matter of vandalism of transmission towers. In February 2024 alone, two transmission towers were destroyed in the north of the country with explosive devices planted by Islamic insurgents. They included a 132kV Single Circuit transmission line along the Jos-Bauchi Road and a 330kV transmission line along the Gombe–Damaturu Road. This is the catchment area for the Zungeru generation plant.

Even before Zungeru, Nigeria’s total name plate electricity generation capacity has often been widely reported to be in excess of 13,000MW and the transmission nameplate capacity has been cited as being over 7,000 MW, but the transmission inefficiencies hamper the grid from wheeling more than 5,000MW, while distribution companies, the last mile deliverers of power, are only able to funnel about 4000MW to consumers.

The country’s gas supply challenges also continue to impair electricity generation, which is the upstream segment of the electricity supply chain.

In the event, around 86Million people lack access to electricity in Nigeria, while an estimated 40% of all the electricity consumed in Nigeria in 2023 was produced from backup generators making the country with the largest number of people without access to electricity, followed by fellow African countries, Democratic Republic of Congo and Ethiopia.

Despite the government’s efforts to privatise and modernise the power sector, challenges such as corruption, mismanagement, and lack of investment persist. These issues undermine the effectiveness of initiatives like the Zungeru project in alleviating Nigeria’s electricity woes.

While the inauguration of the Zungeru plant represents a significant milestone, it is imperative for the Nigerian government and relevant stakeholders to address the systemic challenges plaguing the power sector comprehensively. This includes investment in infrastructure, policy reforms, tackling corruption, and fostering a conducive environment for private sector participation.

Poor management has also been a major impediment to Nigeria’s electricity access. In the third week of February 2024, the Abuja Electricity Distribution Company (AEDC) published a notice of disconnection where it listed Ministries, Departments and Agencies (MDAs) that have failed to settle their electricity bills including the Presidential Villa, among others.

Other MDAs listed are the chief of defence Staff-Barracks and Military formations with N12Billion debt as well as the Federal Capital Territory (FCT) with N7.5Billion debt.

The Ministry of Finance, the DisCo said, owes N 5.4Billion, Niger state governor (Abuja liaison office) owes N3.4Billion, and N1.58Billion is payable by the CBN governor.

Earlier in January 2024, the Transmission Company of Nigeria (TCN) had also issued a 14-day suspension notice to Ajaokuta Steel Company Limited (ASCL) over N33.71Billion in electricity debt.

The mounting debt is hindering investment and proper development of infrastructure in the sector by distribution companies. The country’s outstanding debt stands at N1.3Trillion to electricity generating companies and $1.3Billion to gas companies, according to Mr. Adelabu,

Addressing the issue of subsidies, Minister Adelabu emphasized the need to transition towards a cost-effective tariff model. He pointed out that neighbouring countries such as Ghana, Togo, and Benin Republic pay significantly higher prices for electricity compared to Nigeria. Given the financial strain, the government may no longer be able to sustain subsidy funding.

In the proposed 2024 budget, a provision of N450Billion has been allocated for subsidies. However, Adelabu highlighted that this amount falls far short of the N2.9Trillion required to sustain subsidies at the current electricity prices. He urged a realistic assessment of the nation’s ability to afford such subsidies, considering the substantial financial implications involved.

Until Nigeria resolves its policy inadequacies, projects like the Zungeru hydropower plant will continue to be overshadowed by the lingering challenges.

 

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