27 December 2011
When short-term targets in the power roadmap, which was launched in August 2010 were not met at the end of 2010, the situation was blamed on the uncompromising posture of electricity workers and the preparation for April 2011 elections, which was believed to have dominated the activities of key actors in the reform. But a review of activities in 2011 showed that eight months after the general elections, the implementation of the medium-term plans is still far behind schedule, though on right track, with improvement in power supply. Ejiofor Alike writes
Background
The development of a world-class power sector roadmap by President Goodluck Jonathan in August 2010 had demonstrated that with the support of all the key actors in the power sector, he was genuinely committed to improve electricity supply for the benefit of all stakeholders.
Jonathan’s roadmap sought to identify and implement measures required to create a competitive electric power market in which experienced power sector companies and lenders are confident to make investment by buying stakes in existing companies and building new power plants and distribution infrastructure.
Since the roadmap was launched, Jonathan has demonstrated an unprecedented commitment to the implementation of the reform agenda.
Under the reform agenda, power generation ought to hit 5,379 megawatts as at December 2010.
The action plan had envisaged that 2278 megawatts(mw)and 1,230mw would come from Federal Government-owned gas-fired plants and hydro power stations, respectively.
A total of 351mw was also targeted from the National Integrated Power Projects (NIPP) and 1,520mw from the Independent Power Producers (IPPs).
However, statistics indicated that generation hovered around 3,500mw as at the end of 2010 and this figure was even below the 3,800mw generating capacity recorded at the period the roadmap was launched.
The reform process also provides that the corporatisation of the successor companies of the Power Holding Company (PHCN) with management performance contracts would be concluded in November 2010, while the complete winding up of the ailing power utility giant was scheduled for December 2010.
But both the corporatisation and the winding up were not concluded as scheduled and it was envisaged that they would be actualised within the first quarter of 2011.
The failure of the Federal Government to realise the milestone dates of some of the major programmes in the reform agenda at the end of 2010 had fuelled speculations that the key actors in the reform process were concentrating greater efforts on political interests ahead of the 2011 elections.
But the major obstacle to the implementation of the reform was the uncompromising posture of electricity workers under the aegis of National Union of Electricity Employees (NUEE), which was opposed to any move that could engender the privatisation of PHCN assets.
As at December 31, 2010, other pre-transaction actions such as the settlement of outstanding labour issues, employment contracts and technical boundary delineation, which were scheduled to be concluded in September 2010 were still lingering.
The Labour Adviser to the defunct Presidential Task Force on Power (PTFP), Mr. Salisu Mohammed had told THISDAY that the labour unions had refused to come to a negotiating table, forcing the government to review the September 2010 milestone date for the labour component of the reform.
He said the new target date was December 2010, as the initial deadline was found to be unrealistic since the roadmap was launched only in August 2010.
Mohammed however admitted that the milestone was still not attained in December 2010 as scheduled because the electricity workers refused to come to the negotiating table.
“The unions refused to come to a negotiating table and we believe that the only place to resolve it is on the table. But we are working hard to resolve them in the first quarter of 2011. We are coming from the holidays with greater commitment because the unions have now realised the need to come to the table,” he said.
The roadmap however recorded success in the areas of getting approval from the National Council on Privatisation (NCP), engagement of transaction advisors for approved transactions and holding of power sector investors’ fora.
2011 Short-term Targets
Jonathan had noted in the roadmap that as at July 2010, the transmission network was capable of evacuating and transmitting just over 5,000 MW of power and that was sufficient to ensure the evacuation of all the available power generation capacity.
He also stated that the principal short-term objectives – in the period up to April 2011; are two-fold.
In the first place, the President said the government was aiming to ensure a substantial increase in the total quantum of power delivered to electricity consumers across the country.
According to him, the second and equally important objective was to ensure that the supply of power would not only be significantly greater than ever before but that it would also be much less erratic and unpredictable.
Based on these projections, the roadmap had envisaged that by April 2011, the actual available power generation capacity would hit 7,000 mw. However, the roadmap took into consideration of the fact that the water flow at the hydro plants limits the available average generation to 950 mw.
It also noted that at the thermal plants, the impact of temporary equipment failures and the need for routine maintenance means that the generating capacity of even brand new plants could rarely exceed 85per cent.
So, although the total actual generating capacity was targeted by the roadmap to increase from 4,612 mw to 7,033 mw by April 2011, President Jonathan had stated that from a transmission planning perspective, the more meaningful set of figures was the fact that the increase in the annual average generation is targeted to increase from 3,825mw in July 2010 to 5,755 mw in April 2011.
To ensure that this increase in generating capacity was not left stranded for lack of evacuation capacity, the President had noted that there would be a need for a 30per cent increase in the “true deliverable” transformation capacity of the country’s 330kV network between July 2010 and April 2011 above its August 2010 limit of 4,500 mw equivalent.
He also stated that in practice, however, it was highly unlikely that an increase of this magnitude would be realisable by April 2011.
“On the contrary, the government’s projected targets for April 2011 are that the “true deliverable” transformation capacity will rise by just over 10per cent to about 5,000mw equivalent – even though the total nominal 330kV transformation capacity is projected to rise to 5,995 mw equivalent,” he said.
2011 Medium Targets
According to the reform agenda, the medium term will witness a substantial reduction in the Federal Government’s funding and managerial direction of significant elements in the electricity value chain.
The roadmap sought to increase actual generation capacity by December 2011 to 9,767mw, which would translate into an available annual average generating capacity of over 7,900 mw.
However, the total nominal transformation capacity of the country’s 330kV network was not expected to exceed 6,500 mw equivalents by December 2011, according to the roadmap.
The President also noted that although the total nominal transformation capacity was projected to increase to 8,653 mw equivalents by December 2013, the gap between generation capacity and transmission capacity would have grown still further during the intervening two years.
He attributed this to the fruits of the new investments in the transmission network, which would lag the medium term increase in power generation capacity by at least one or two years.
Actual Performance/Conclusions
A landmark achievement of the present administration in the power sector in 2011 was the payment of the PHCN workers’ monetisation benefits, which were abandoned for over seven years by previous administrations.
AllAfrica – All the Time