By ABAH SUNDAY, Abuja
As part of efforts to reposition the Nigerian Electricity Supply Industry for effective performance, the federal government has canvassed a risk-mitigated naira-priced domestic gas-to-power, even as it also identified with calls for the restructuring of the Transmission Company of Nigeria, TCN.
Minister of Power Adebayo Adelabu made this known on Wednesday in his opening speech at the ongoing 2-day Ministerial Retreat on the Integrated National Electricity Policy and Strategic Implementation Plan (INEP-SIP).
The Minister said, “A major issue in the sector is the pricing of gas utilised by GenCos in US Dollars, a hugely volatile variable that significantly affects the pricing of electricity to end-users.
“A more preferable option is to ensure that the gas utilised by the GenCos, (Generating Companies) is traded in naira so as to better manage the foreign currency related inflationary trends that challenge the faithful application of the Multi-Year Tariff Order (MYTO) methodology.
“While we appreciate the interplay of contractual obligations, economics and the application of the Petroleum Industry Act, it must also be said that, as a matter of urgent national interest and economic survival, we must find ways and means to pursue domestic gas policies and incentivise stakeholders for the supply of gas for inland use in electricity supply, other industrial activities, and conversion to CNG (Compressed Natural Gas) and LPG (Liquified Natural Gas) for transportation and domestic uses respectively.
“Therefore, I would suggest that one of the major deliverables from this policy-making process is a viable method for establishing a sustainable capital investment programme around gas processing and transportation infrastructure with its associated fiscal incentives and policies that will attract/unlock investments into the production of naira-denominated gas from inland gas basins, and in Non-Associated Gas fields from Nigeria’s various prolific hydrocarbon basins.”
He noted that the transmission subsector has been widely identified as a critical weak point in the electricity value chain lately, and to align with the Electricity Act 2023 and the industry’s demands, “it’s time to restructure the Transmission Company of Nigeria (TCN) into two entities: the Independent System Operator (ISO) and the Transmission Service Provider (TSP)”.
The restructuring, he said, must synchronise with the evolving landscape of State Electricity Markets, addressing calls for the decentralisation of the national grid into regional grids interconnected by a new higher voltage national or super-grid.
On devising ways of ensuring a true and effective energy transition for Nigeria, the Minister disclosed that “over 98% of electricity generated in Nigeria is through clean or transition fuels which shapes the discourse and activities to be undertaken as we strive to achieve net zero CO2 emissions by 2060”.
Speaking further, he said, “This Ministry would like to see more utility scale solar power plants by 2030, which brings added responsibility for investments in generation and grid stability to address the variability that transmission of renewable energy generated power over long distances brings.
“This brings with it the need for distributed generation power systems from renewable energy driven power plants, that are localised around clustered communities and embedded or captive areas while at the same time stabilising our national grid and/or deploying super-grids or regional-grids that’s able to transmit generated power over long distances with minimal losses.
“We need our investors, financiers and NESI value chain players to dimension the opportunities and electricity sector alignment with Nigeria’s Energy Transition Plan to ensure we meet our energy transition aspirations.”
The root causes behind the lack of substantial growth in the NESI since the EPSRA 2005 and 2013 privatization exercise are not for me to assert. Nonetheless,
He said certain observable aspects within power sector which have been identified as the root causes of the stunted growth in the NESI since the EPSRA 2005 and 2013 privatization exercise, such as poor track record in contracting, contract management, and adherence to contractual obligations, in some cases, even by design must be given proper attention.
“With impartial examination, it is evident that these identified factors erode confidence in the viability of the sector and pose fundamental challenges of inadequate capitalisation and limited access to funds for the diverse players along the energy value chain, from gas supply to electricity distribution,” Adelabu said.