Power Sector Reforms- Challenges And The Way Forward

Power Sector Reforms- Challenges And The Way Forward

Friday, July 14, 2017 12:42 am

Hon. Minister of Power, Works & Housing, Mr Babatunde Fashola, SAN delivering a lecture on the topic, “Power Sector Reforms – Challenges and the Way Forward,” at the Department of Economics 2017 Distinguished Public Lecture Series held at the J.F Ade Ajayi Auditorium (Former Main Auditorium), University of Lagos, on Thursday 13th July 2017.

By Babatunde Raji Fashola

I thank you for inviting me to be your guest lecturer at the 2017 edition of your public lecture series.

I accepted this invitation for many reasons. First it was conveyed through Mr. Ayo Gbeleyi who served with me meritoriously as Honourable Commissioner and Head of PPP Office and he implored me to do the best I could to make time to accept.

Secondly, the topic which focuses on “Challenges and the way forward” resonates with my view of the power sector and I believe that of many, who acknowledge that the sector has challenges; more importantly the topic is solution driven and positive in outlook which is consistent with my attitude, that, instead of recrimination, reproach and cynicism, we should look for the way forward.

I will like to say that many right thinking and well-meaning Nigerians are now taking this view, which is that the problem of power in the countrycan be solved, and we all have different but very important roles to play.

I will come to this as I proceed, but I must warn that this may be a fairly long speech, because there is a lot to say, and because there is a lot happening in power, and more importantly because I believe one of the most important things I can do as a Minister is to simplify what is going on for the benefit of the public and to discuss it using street level terms and not technical terms.

The bottom line really is that people want to know when they will have stable electricity, why they do not have it, and what government is doing about it.

Permit me to share with you, what our road map is.

We recognise that our power supply is not enough and what we have done is do the simplest thing, get more power.

So our road map seeks to get, first incremental power, progress to stable power, and then achieve uninterrupted power.

From this road map it must be clear to any right thinking and well meaning person that this is a journey and not an event that will happen overnight.

As we progress on this journey, we will get to critical milestones from which we can look back and say we are now better off at that milestone, than when we started the journey.

I understand the urgency of now, to get the power, I understand the high level of expectation.

I know that they come from many years of broken promises and a change from government-managed power to privatisationof power.

While I fully support privatisation, I believe what took place in 2013 in the heat of politics was a privatisation that was well intentioned since 2005 but delivered with some deception in 2013 with the expectation of political profit.

It led many uninformed Nigerians to believe that once the privatisation was concluded, the assets sold to the Distribution companies (DisCos) and the Generation companies (GenCos) there was immediately going to be power.

I cautioned then that people’s expectations were being unduly raised without telling them that there was a lot of work to do.

While I believed that the APC government will do a better job, little did I expect that I would inherit the problem. But I am grateful for the opportunity from Mr. President, to contribute to solving a problem that I am deeply passionate about and I will offer nothing but my best while I am at it.

As I have said, there are challenges, which is why I accepted this invitation and they can be solved, which is why I have come to share my thoughts about the way forward.

I have also pointed out that we have a road map whose first objective is to get incremental power and this means power from gas, solar, wind, coastal waves, hydro dams, nuclear and bio mass.

I have also pointed out that all of us have roles to play.

I am inspired by the history of Nigeria that whenever we have united to confront a problem, we have never lost. The number of Nigerians interested in generating power is increasing daily and this is encouraging.

This is evidenced by dozens of letters and proposals I get daily, even though they are wrongly directed to the Ministry, because power is now privatised.

There are people who know about it, there are those seeking to make money from it, there are those who know absolutely nothing about it but are still seeking to try. The positive I take away from it is that we are increasingly looking in the right direction.

I will share a story with you, first for its humour and secondly for its consistency, with our road map to get the incremental power.

I had received a text on my telephone, one of the many hundreds I get daily since I published my telephone number many years ago.

This particular one was interesting because the sender alleged that he had found the solution to our energy needs and was wiling to share it with me.

I called him to discuss this “novel” idea he claimed to have. He then referred me to a news report that showed how somebody was generating electricity from a potato.

I then took the time to explain to him that this was not new technology but indeed what we had shared with school children in my time as Governor, in the Power Kids Club that we set up to introduce people to the fundamentals of electricity early in life.

Just as I was preparing this speech, one of my former state Executive Council members who served with me referred me to an online publication about generating electricity using biomass.

Ladies and gentlemen, these two instances confirm what I said about:

a) Increasing interest of Nigerians in solving the power challenge, which is positive and welcome.
b) Generating incremental power from all viable sources.

The hard truth is that generating electricity from potatoes or cow dung is possible. The question is viability and sustainability.

First, how much cow dung can we produce to keep the power going? Because even countries who have enough cows,like Brazil and can export beef, don’t use cow dung for power.

Similarly, how much potato can we produce to fire our power needs?

In any event, in a country where there is poverty and hungry people, and with the proven calorific and nutritional values of potato, I think it would be a poor choice to use it for power generation as opposed to using it for nutrition and well-being of children and people.

I will shortly come to specifics of what we are doing to resolve the challenges, but permit me as I have just clarified the situation about cow dung, potato, (which also by the way applies to all those who want to generate electricity by using waste) to also explain what I think is fundamental about power.

It is that there is no real problem in buying and installing a power plant. It is not different from you buying and installing a generator in your home.

The problem starts when you cannot get diesel or petrol, just as we usually don’t have enough gas supply either because of production shortages or vandalism.

The problem with your generator starts when you have to connect your neighbour and issues arise as to how you share the cost or what appliances your neighbour or even your family can switch on when the generator is running especially if it is not a very big one, in order to avoid damage.

The problem arises if the generator needs maintenance or repairs. Can you use it during repairs if you don’t have a backup?

What is true of the generators we install for ourselves is essentially true of the power plants we have as a country.

Those plants are nothing more than big generators. We connect them through 330KV wires, 132 KV wires, 33KV wires and 11 KV wires that transmit the power from the plant, carrying them across several hundreds of kilometres, injecting and sending them through about 183 sub-stations to the distribution companies before they get to our homes, offices, schools and so on.

Fashola, (right), being welcomed by Pro-Chancellor and Chairman of Council of the University of Lagos, Dr. Wale Babalakin, SAN(2nd left), the Vice Chancellor, University of Lagos, Prof. Rahamon Bello (left) and former Commissioner of Finance in Lagos State, Mr Ayo Gbeleyi (2nd right) to the University on Thursday 13th July 2017.

In the process wires snap, equipment gets damaged by us or by natural wear and tear and requires replacement. Most of it, we have to import because we do not have enough as backup, the plant is not available during repairs.

In order to get incremental power therefore, we have resolved to use all our sustainable energy sources like hydro, gas, wind, solar, and coal (not potato and cow dung)and work is now going on at:

For Hydro –
a) Zungeru Hydro plant in Niger for 700 MW
b) Kashimbilla Hydro plant in Taraba for 40 MW
c) DadinKowa Hydro plant in Gombe for 29 MW
d) Gurara Hydro plant Nigeria for 30 MW
e) Later this year work should start on Mambilla Hydro for 3,050 MW

As for gas plants, there are many already such as:

Egbin 1,320
Geregu I & II
Omotosho I
Omotosho II
Olorunsogo I
Olorunsogo II
to mention just a few, all of which are challenged by Debts owed from the previous administrations, lack of sufficient gas or vandalism of existing gas lines or a combination of them.

Gas supply is the responsibility of the Ministry of Petroleum Resources and its parastatalslike NNPC, Nigerian Gas Company and others.

We are working with them to improve on supply of gas to these plants to ensure that their redundant capacities and idle turbines come back into operation to produce electricity.

We have just concluded repairs on AfamIV Power Plant that was plagued by a damaged transformer which we replaced in order to restore100 MW of gas fired power to the grid.

Simultaneously there is a Presidential initiative with General Electric through our Ministry to deliver 240 MW of emergency power to the site of AfamIII using the existing gas resources there.

The turbines are already in country and installation should be complete within year.

As for wind energy, we are completing the abandoned 10MW Katsina wind farm project to pilot wind energy development and if sustainable, we can expand it.

There is no recorded coal power production today. The last one at Orji River Coal Power Plant in Enugu built by the colonial government had been dismantled when I visited.

But we are working with a group that shows the commitment to deliver up to 3,000MW of coal power in the Benue/Kogi belt where there are proven and sustainable deposits of coal about 20 kilometres from the intended power site.

Solar power presents the real window of opportunity to quickly increase power and also give people access.

We have shown that we can deliver solar by completing the 1.2MW solar project in the lower Usman Dam area. We have signed power purchase agreements with 14 developers who potentially can deliver 1,125 MW of solar.

We are partnering with Jigawa state to deliver about 1,000 MW of solar power at a site of 2,000 hectares already delivered to us by the state government. The project is at design and preparation stage.

We have completed the energy audit to deliver independent power to 37 universities and 7 teaching hospitals and one of them is the University of Lagos.

27 (TWENTY-SEVEN) of those plants will be solar plants.

These are only one side of what government is doing to deliver incremental power through solar.

The other side is what citizens have started on their own with solar.

Some of the ones I can recallare those of an oil marketing company that is now powering its petrol filling stations by solar, and initiatives by other groups which I have helped to launch to deliver solar packs to unconnected communities.

Recently, the Acting President also commissioned an Independent Solar Power facility at a village called Wuna in Abuja that had not been connected to the Grid.

For the avoidance of doubt solar is the new power, its appeal is very strong with young people and it provides a unique opportunity to close our power supply deficit.

My final word on these sources of power generation is that they speak to the idea of an energy mix; and we have delivered one for Nigeria which targets 30% renewable of our total energy production by 2030.

Generation of power is not the end of the power value chain. On the contrary, it is just the beginning. To reach our homes the power has to be transported.

This is the Transmission System and theNational Grid thatco-ordinates8 transmission regions with 183 substationsfrom the National Control Centre in Oshogbo.

For the record, this Grid is also somewhat misunderstood. People have said it is the problem because it can only carry 5,000 MW.

I will correct this unchanging opinion first by stating that under the Buhari Administration, the Grid has expanded to 6,200 MWbecause we have completed transmission stations in places like IkotEkepene, Okada, Alagbon, Ajah,Katampe, Sokoto and awarded many more in places like Damboa, Pankshin, Osogbo, Kumbotso, Odogunyan to mention a few.
In the last few days we completed work at:
a) Kukwaba substation in Abuja
b) Increased transformer capacity at
i) Ajah substation in Lagos
ii) Mayo Belwa substation in Adamawa

Cross section of the audience

The logic therefore is that if projects to expand the Grid are being completed and new ones started, it is either ignorance or mischief to continue to argue that the Grid cannot wheel more than 5,000 MW.

The correct, informed and sensible view is that the Grid is dynamic and must grow as power production grows.

How we got to this Grid improvement is the story that I will share now.

Since the integrated power project started almost a decade ago, several projects were issued as contracts to develop the transmission system.

Many of the equipment imported by contactors were trapped at the port in over 800 containers for almost 10 (TEN) years because Government did not budget to pay the contactors.

It is in the first full budget of the Buhari Administration that a budget for payment was presented and approved in 2016.

At the time of preparing this speech, we have paid N930,229, 418 (NINE HUNDRED AND THIRTY MILLION, TWO HUNDRED AND TWENTY-NINE THOUSAND FOUR HUNDRED AND EIGHTEEN NAIRA)and resultantly 387 (THREE HUNDRED AND EIGHTY SEVEN) containers have now been recovered and handed to the contractors for deployment to their site.

Some of those sites whose projects have been held back were:
1. Design and construction of 2×60 MVA 132/33KV transmission substations at Kachia Kaduna State.
2. Ganmo-Ogbomosho 132KV transmission Line Project (45KM) Kwara-Oyo.
3. Supply of Aluminum conductor composite core for Re-conducting of Onitsha New Haven 330KV transmission line.
4. Construction of 132KV DC TRX line Yola-Song-Little Gombe-Mubi- Gulak.
5. Construction of Onitsha Oba-Nnewi-IdeatoOkigwe 132KV Double CircuitTransmission.
6. Even the completion of the 215 MW Kaduna plant was held back becausesome of those equipment were previously trapped in the port.

We are currently planning to maintain and upgrade the carrying capacity of some old lines by re-conducting them and expanding their transmission capacity.

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