Usman Gur Mohammed, CEO Transmission Company of Nigeria, (TCN)
At the Future Energy Nigeria (FES) conference which was held in Lagos, stakeholders across the value chain converged to deliberate and sort out issues bothering the country’s dwindling power sector. One of the major issues in the front burner is recapitilisation of the electricity Distribution Companies (DisCos).
One of the advocates of DisCos recapitilisation is the Chief Executive Officer of Transmission Company of Nigeria (TCN), Usman Gur Mohammed. He opined after a panel session on recapitilisation that the DisCos should be recapitilised to raise funds. It was done in the banking sector and it worked as most banks are now efficient. He said government has also recapitilised TCN.
Mohammed spoke to journalists at the FES event that if one chain is not effective, it will bankrupt others and government cannot continue to fund a segment that is not functioning.
Contrary to insinuations that there is no synergy among power stakeholders, the TCN boss said, there is collaboration in the value chain and they work together.
Mohammed revealed that most associations within the sector are managed by green horns who do not have technical knowhow about power.
According to him, the DisCos are owing TCN N400billion which could go a long way to fix power in the country if the money is paid.
Excerpts:
Based on metering and estimated billings which a lot of Nigerians are complaining about from the DisCos, can you convince us why you think recapitalisation is the way out?
You said the DisCos are not metering their customers and they don’t know them. There are two things here, at first, they need money to meter customers because it involves capital. Metering requires capital. Secondly, enumeration needs capital as well to meter customers, but this is not enough. We should also understand that capital goes with management, when you recapitalise your customers invariable you are changing the management or improving the management of that company because anyone involves in recapitalisation expects some share.
If you look at the banks that were recapitilised in the past, you will discover that they are now efficient than they were before. This will also be applicable to the DisCos. It is obvious that after privatization of the power sector there is need for recapitalisation to raise fund. This is why we advocate for it.
By the way TCN has been recapitalised that is why we implement $300 million World Bank project and there is another $1.6 million investments. This is recapitilisation. So, government has recapitilised transmission aspect of the country’s power. If DisCos are not capitilised now, it means the capacities that are in transmission will not be distributed which is a wasted investment.
Is recapitilisation the issue of the power sector and will it solve its numerous problems?
You have to understand that in the power sector, each of the three parties, generation, transmission and distribution can bankrupt the other. For instance, if the Generation Companies (GenCos) did not perform their roles both transmission and distribution will become bankrupt. The same thing applies, if transmission cannot play its role, it means generation and distribution will be bankrupt. In the same vein, if the distribution companies cannot collect money from end users to fix their networks and distribute power to the people, they will bankrupt the other chains, transmission and generation.
As at today, government is putting payment assurance to support GenCos while government is supporting TCN through budget and donor funding for it to remain afloat. This is because DisCos fail on its part in terms of fund. This cannot be sustainable hence government cannot continue to fund the power sector simple because a segment is not doing its job. The only way out is to inject efficiency into the last segment of the power sector. How do you inject efficiency, at first, you need the fund to fix the network? The network of the DisCos that were privatized are largely what they are before and after it has been sold. If you have a car that is being repaired for the past five years and you don’t change the engine oil, how do you expect that car to function properly? This is the problem we have.
I can clearly tell you that from December 23rd to May 5th 2019, we achieve frequency control of 49.75 and 50.25 hertz at 85% but from May 6th 2019, we are struggling to achieve 30% of that simply because the distribution network is very weak and whenever it rains network collapses. It is not sustainable, we have to recapitilise the DisCos and fix the network.
Since I have started talking about recapitilisation more than one year ago is there any one from the DisCos that said my position is not right? Nobody! It is the right thing. Eko DisCo has come out with number of capital requirement in consonance of what I have emphasised. Ikeja DisCo also brought the same number. So, everyone has to agree and be in the same page.
An operator in GenCo said there is no synergy among stakeholders across power value chain. What can you say about this?
I don’t understand what you mean by there is no synergy among power stakeholders. I gave example of Ikeja DisCo and Eko DisCo. Clearly, there is a synergy among us. For instance, Eko DisCo has said that out of the 12 substations that we (TCN) feed them from 2019 to 2024 the only three places they will have constrain are: Isolo, Lekki and Agbara. Already, we are at advance stage of concluding procurement to increase the capacity of Lekki by 100%. We are also building a 330KV substation which is part of the GIKA project and we are putting 330KV in Agbara, reinforcing Isolo by increasing the capacity to 80% this will take place by the end of next year or early 2021. So, there is synergy among us.
The issue is that the DisCos association, Association of Nigerian Electricity Distributors (ANED), is different from the operators. ANED wants to justify the money members are being paid. There was a time a member said the grid is radial and as at today we have five lops. These are the lops: we have a 330KV line from Ayede to Ikeja West, from Ikeja West to Omotosho, from Omotosho to Benin, from Benin to Osogbo, from Osogbo to Ayede. Is that not a lop? There is another line from Ikeja West to Benin, Benin to Abuja, Abuja to Shiroro, Shiroro to Jebba, Jebba to Osogbo, Osogbo to Ayede, Ayede to Ikeja West. Is that not a lop? These are two lops.
From Benin to Alaoji, Alaoji to Ikot Ikpene, Ikot Ikpene to Ugwaji, Ugwaji to Jos, Jos to Kaduna, Kaduna to Shiroro, Shiroro to Abuja, Abuja to Benin? Is that not a lop? Another lop again, from Onitsha to Alaoji, Alaoji to Ikot Ikpene, Ikot Ikpene to Ugwaji, Ugwaji to New Heaven, New Heaven to Onitsha, is it not a lop? These are four lops. The bigger lops are from Alaoji to Ikot Ikpene, Ikot Ikpene to Jos, Jos to Kaduna, Kaduna to Shiroro, Shiroro to Jebba, Jebba to Osogbo, Osogbo to Ayede, Ayede to Ikeja West, Ikeja West to Benin, Benin to Alaoji, is it not a lop? These are five lops.
Those who are saying otherwise are only justifying the money they are being paid. It is not based on scientific findings, go and interview MDs of DisCos and find out if they are consistent with TCN or not. The DisCos expansion plan which we are embarking on was done in conjunction with them. If any MD of DisCo tells you what we are doing is not synergy with them let him come to us (TCN) we will sit down and sort things out.
Some of those who manage and run association within the power value chain do not have idea about the sector. Most of them don’t have experience and have never worked in any power related company. I started my career in the power sector from the defunct National Electricity Power Authority (NEPA) and I am a bonafide NEPA man from the beginning. Some of the interventions that were done in the power sector I was involved.
Journalists should imbibe in investigative journalism to ascertain how many expansions has DisCos done in recent time? How many new networks have they extended? We are not blaming them because the situation is beyond their capacity.
We have suggested that their records should be reset and government should support them with 40%. There is no need of blame game or bulk passing, the right thing should be done by taking decisive action. Money is being injected into the DisCos through payment assurance.
The gas operators said they have abundant gas to supply to the GenCos but they are willing to buy it. If GenCos buy gas and it is supplied by now power issues would have resolved. What’s your take on the position of gas operators?
The main issue is to solve the commercial aspect and all other issues will be taking care of. As at today, outstanding plus interest, the DisCos are collectively owing TCN N400billion. If we have this N400billion we will expand transmission and do many other things. When commercial issues are resolved there will be fund available across the value chain and everyone plays its own part. If you fail to play your role, you will be penalized based on the contract. Everyone has to adhere by the contract.
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