The energy sector, for so many years has defiled solution by past administrations. However, the minister of Power, Professor Barth Nnaji says power problem will soon be a thing of the past. Recently he fielded questions from journalists in Abuja where he gave an insight on the progress report. CHUKS OHUEGBE was there. Excerpts:
What is the government doing to make electricity affordable?
What I need to point out is that it is a two-pronged approach that the government took in addressing the power sector reform; one is to have short term measure which has led to an improvement in what we met on the ground. The other is for medium and long term.
In terms of the short term, you can do emergency power by some other way which means somebody brings the equivalent of generators and you use diesel to run them or you use some other fuel to run them and then when it comes to tariff, they will charge you about three or four times the tariff.
So, who is going to pay? That is why we have not gone that route. But if you want to build a sustainable power plant, it takes usually about a minimum of two years. What we are trying to do is to see what we can do within the period before we begin to get the benefit of the new plants that are being built.
The short term measure includes recovering capacities in already existing power plants that are just there, probably because one thing went wrong with the turbine or something in the power station. So, we want to recover the capacities and that is what we have actually done in the last year or so.
You will find that when we came on board, we had about 2800 megawatts. Now we are talking about 4400 megawatts even though I don’t want us to be talking about numbers. But that is tremendous growth in power just within the short period and it comes from focusing on recovery of installed capacities that are just lying dormant.
Secondly, I believe that most Nigerians would have seen this; there is greater stability and people may have forgotten that it used to be epileptic power supply before now. But it is not so anymore. We are not saying that we don’t lose power but we are saying that we have greatly stabilized power on the national grid.
Thirdly, the whole system collapse that we used to have, at times three to four system collapse every month, no longer happen. In fact, I am happy to announce this year that we have not had any system collapse at all up till this moment. There was a partial system collapse once in December 2011.
But it is no longer frequent because of the measures we have taken. So there is a lot going on, but we have to say that Nigeria is a country of 167 million people and to be talking about 4000, 5000 megawatts is nothing because you really need to do this leapfrogging am talking about which is why the long term measures are important to have an appropriate investment.
It is not about putting so much cash by government in it but about how the system is structured to deliver power with the appropriate investment.
A few days ago, a national newspaper reported that the electricity tariff would be increased by over 88%. How true is this and is this a sign of what we should expect from the investors that would take over the power sector?
In terms of tariff increase, you may be surprised that it is just like paying for nothing.
In Nigeria today, the tariff for electricity is the second lowest in Africa other than Zambia which pays the lowest tariff in sub-Saharan Africa and we are not the poorest country.
We can even say that we are perhaps the richest in west-Africa may be not by per capita. What we want is for Nigeria to be at least, in the middle tariff-wise (belt) and what we are talking about tariff-wise is for the upper income people.
The urban poor and rural dwellers will not see this tariff increase because there is subsidy in place to make sure that this doesn’t happen and that even when subsidy eventually goes out in some years to come, there are some cross-subsidy that lifeline that ensures consumers will continue to receive electricity at the rate they can afford to pay. So it is not the same as when you had fuel subsidy issue.
There is what we call C1 tariff consumers like the local welders and those that have small scale businesses will pay low tariff because they are subsidised in the regime that is in place. So, this is all properly structured and worked out as it is done everywhere in the world.
You mentioned some sort of subsidy for the poor in the power sector. Can you tell us how much is involved and is there any guarantee that this subsidy would not end up in the pre-paid meters of the rich and powerful?
Approximately N60billion will be available this year to ensure that the urban poor and rural dwellers will not experience significant increase in tariff. Right now, they are all rated. The distribution companies have rated all the consumers of electricity as at now. So we have R1, R2 and R3 which are the classes for the residential and you have C1, C2 and C3 for commercial and you have the industrial classification.
For those that are rated, if they are using meters, they buy meters, if not, in the interim, they would be using estimated billing system, which we want to wipe out as quickly as possible; if they are using meters, they buy credit and it is according to consumption in that area that determines the rate which they pay.
So really, the consumers are known and we want all of you to monitor how it is going to work. What happens is that at the end of the month, the volume of power that went to R1 consumers and R2 would be recorded and that is where the distribution companies get their subsidy. So the market operator only pays for power consumed? There is a bulk meter that measures the amount of power transferred on per second basis to the distribution companies.
You said that it takes a minimum of two years to build a power plant and we can recall that since the time of the administration of the former president Olusegun Obasanjo, we have been hearing of power plants being built in this country. At some time, we were told that there were about 14 in the offing. If it takes a minimum of two years to build one, how come none has been completed at this time?
I told you that for a period, the process was stalled for two and a half years. It is part of why the projects have not been completed.
I don’t want to stand for what people did in the past, but I would want to say that at least, the stalling of the process contributed to why they have not been completed and if you look at it, if you have a contract – EPC (Engineering Procurement and Construction) contractor, you have what we call an end to end contract to build a power plant and suddenly, you have mobilised to site but there is no money released to you to continue to do anything, so you have to demobilise and you have to abandon the equipment in various places and go which is what happened here.
When you come back, you now have to be paid a remobilisation money which will cost more money and you have to be paid to test the equipment purchased before to see if they are still in good condition.
So a lot of those things have to be done by the operators of what you call National Integrated Power Projects (NIPP). But many of those projects are now accelerating to completion, we have about 10 power plants of that nature and then you have transmission, distribution project and you have hundreds of different projects under the NIPP which are being managed by Niger Delta Power Holding Company.
So the reason why is partly that. But truly, when you start a power plant, it means you have broken ground, the period of design which could be about a year is not included in the two years, the conception period, design, procurement period are not included, so really when you have done all these and you start the construction that you have between 18 months to two years.
You have to go to a site where power plant is being built, the civil works, the mechanical, the electrical, the controls, the miles and miles of wires that would have to be laid, it is not a simple matter. So it is only those who are being mischievous that will say that they can build a power plant in six months or 8 months.
They are just being mischievous, they need to go and see what it looks like. That is what I am saying, it takes a while. This year alone, we should be able to commission four power plants which should be about 1000 megawatts of power.
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