Sambo Inaugurates Board for Nigerian Electricity Liability Company

Vice-President Namadi Sambo on Thursday inaugurated the Board of the Nigerian Electricity Liability Company Limited (NELMCO) with Dr Ngozi Okonjo-Iweala, the Minister of Finance and Coordinating Minister of Economy as Chair. The Minister of State for Trade and Investment, Dr Samuel Ortom, told State House correspondents in Abuja that the board was inaugurated during the meeting of the National Council on Privatisation (NCP), presided over by the Vice-President. He stated that the council also approved the application for an extension of time for completion of payment of the bid price for Sapele Generation Company (GENCO) by the preferred bidder, CMEC/Eurafric Ltd. ``Today, the NCP, headed by the Vice President, inaugurated the Board of Nigeria Electricity Liability Company and the Chairperson of the board is the Minister of finance and Co-ordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala. ``NCP also approved the application of CMEC/Eurafric, the preferred bidder for Sapele, for the extension of time to complete the payment of the bid price,`` he said. In his contribution, the Chairman of NCP’s Legal Committee, Ustaz Yunus Usman, said that the extension was legally granted to the highest bidder because the company had paid 180 million dollars out of the expected 201 million dollars. He said, ``Eurafric was the highest bidder and the reserved bidder bided only 106 million dollars. ``Eurafric had paid about 180 million dollars but it could not pay before the expiration of the time fixed for it. ``So, the problem was brought to us to advise the NCP as to whether we should extend the time or give it to the reserved bidder. ``We looked at all the clauses in the agreement and came to the conclusion that there are clauses for waiver that say that the NCP, that is the Federal Government, can extend the time when the highest bidder fails to pay within time. ``We also considered this issue that the highest bidder bided 201 million dollar, the reserved bidder bided 106 million dollars. The highest bidder has paid about 180 million dollars. ``Our legal standpoint since we have the right to extend at any time and since the highest bidder has paid about 180 million dollars, then it is safer and in the interest of the public to so extend. ``The Vice-President graciously said since the monies are meant for Nigerians, so, you cannot take 106 million dollars that has not been paid and say you are foregoing 180 million dollars.

Electricity revenue to hit N1.5trn as private investors lead charge

The entry of the private sector into Nigeria’s electricity supply industry, which had over the years been characterised by inefficiencies in terms of revenue collection, will bring about significant increase in revenue of over N1.5 trillion yearly, an analysis of data seen by BusinessDay shows. The increased revenues expected to be generated in the transitional electricity market by the new investors would be driven by the massive metering of many Nigerian households and businesses that are still unmetered, improved output and efficient service delivery, analysts said. Industry analysts and stakeholders have said that the envisaged electricity revenues have the potential to dwarf revenues and profitability of the earlier deregulated telecommunications industry, making the power sector a goldmine for investors. Eyo Ekpo, commissioner for marketing, competition and rates, Nigerian Electricity Regulatory Commission (NERC), said the country’s electricity market at the moment is doing N500 billion per annum, which translates to about N40 billion to N45 billion monthly. NERC had recently stated that the nation’s electricity market would grow from its current value of N620 billion to over N1 trillion in 2016. “What the electricity distribution companies are doing is to reduce loss level from 50 percent to about 10 to 15 percent in the next five years. As more energy comes on stream, they will continue to reduce the losses. Now, none of the Discos is efficiently collecting money to pay the people generating power,” Ekpo said. “The potential of the emerging power sector is limitless. Nobody can tell you what the potential earning power of the market will be. Now, we are supplying about 4,000 megawatts (MW) in a market that needs 20 times that. That’s clearly below global benchmark.” Diran Fawibe, chief executive officer, International Energy Services Limited, said, “One expects that the private investors will be more efficient in revenue collection as they will apply good business practices to what they will do, unlike when the assets were owned by government. The new investors are expected to be able to realise appreciable returns on their investments.” Nigeria is currently finalising the privatisation of its state-owned power assets, which comprise 11 distribution companies (Discos), six generating companies (Gencos), and a transmission company. The acquisition of the companies, which was recently concluded with the payment of the 75 percent balance of the bid prices on August 21, had already gulped over $2.5 billion from the investors. Fawibe stated that NERC would push the new investors hard to ensure that they deliver improvement in output, quality of service, among other things. “We will ensure that Nigeria sees growth every year in power supply,” he said. Nigeria, Africa’s second largest economy, with a population of 170 million, is estimated to need about 40,000 MW of electricity over the next decade, but currently has less than 5,000 MW of available capacity. Half the population lacks access to the grid, while per capita consumption is 3 percent of that of South Africa, the largest economy in Africa. “Without increasing power, and just by doubling efficiency, revenue generated could reach N44 billion a month next year, and as we gradually get close to 10,000 MW in three years, I see the number hitting N100 billion a month,” said one analyst. Goddy Duru, chief executive officer of PowTech Nigeria Limited, said with discipline the Discos could realise up to 70 percent of the revenue they are currently making by the time they have all their customers metered. Stakeholders in the industry said that a company like Eko Disco, which is the highest revenue earner among the Discos, can still increase its revenue level by 70 percent from its current level. According to Reuben Okeke, director general of NAPTIN and former managing director of Ikeja Distribution Zone, by the time the private investors take over the control of the distribution companies, there would be great improvement in all units of the distribution networks, including revenue collection. “The company that purchased Eko and Ikeja Discos, for instance, would be out to supervise the companies to such an extent that all leakages in the companies that existed when the government was in charge would be blocked. This would ultimately lead to increase in their revenue profiles. This would also apply to the other Discos that are under the control of the private owners. By the time they are able to reduce their ATC/C losses from 30 percent to 16 percent, their revenue profile would grow four times what they are getting now,” he said. Analysts believe that after 2015, there may be a surge in electricity consumption from a steadily growing economy. Then, Nigeria may be seeking the generation of up to 20,000 MW. Ekpo, while speaking about the huge potential in the electricity supply industry at BusinessDay Capital Market Conference held recently, noted that the electricity market would see huge growth in the coming years. “Losses are now being reduced significantly by some of the Discos. About six of them are already showing potential in terms of revenue. Eko Distribution Company has reduced losses by 75 percent, followed by Ikeja Disco, 65 percent, and Abuja Disco, 60 percent,” he said. He indicated that the ongoing privatisation of the nation’s power sector would help to meet the electricity needs of over 60 million Nigerians who do not have access to electricity.

Electricity supply drops as power plants shut down in Delta

Management of Transmission Company of Nigeria (TCN) said that power supply will drop by 400 megawatts today, as the Agip- Okpai Power Station in Delta State, is shut down for scheduled annual maintenance, from 31st August to 4th September, 2013. In a statement , the management of TCN said that the five-day maintenance exercise was carried out yearly, to ensure equipment availability as well as improved grid performance and stability. The management of the company said that as a result, there would be nationwide load-shedding during the period, and appealed to all electricity customers for their understanding, adding that the maintenance of the station is critical and must be carried out to ensure that the station continues to contribute maximally to the nation’s generation capacity. TCN also apologised for whatever inconveniences the planned load-shedding would cause its customers nationwide during the period, and assured that it would continue to work hard to ensure power supply stability in the country.

Nigeria considers coal to ease power shortage

An agreement to invest in coal-fired power generation could be a positive move for broadening Nigeria’s energy mix and strengthening formal grid supply, which lags well behind demand. On August 19, Nigeria’s federal Ministry of Mines and Steel Development signed a $3.7bn memorandum of understanding (MoU) with a Nigerian-Chinese consortium, HTG-Pacific Energy, which is set to lead to the development of a coal-fired power plant in Enugu state, in south-eastern Nigeria. The plant is expected to be operational in the next four years, and will use coal from the nearby Ezinmo coal block, which straddles the border of Enugu and Benue state. Eventual generation capacity is projected to be 1000-1200 MW, a sizable increase when compared with the country’s current production of less than 3000 MW. Pacific Energy chairman Adedeji Adeleke told the press the project would be almost entirely funded by foreign institutions. Adeleke added that, following the MoU, which covers the mining concessions needed for the plant’s inputs, the company would continue working to confirm estimated reserves, which may be able to power the new plant for up to 50 years. Exploration is expected to start imminently. The investment will come in two stages: the first developing the coal mine and the second constructing the power plant. Obtaining a suitable power-purchasing agreement (PPA) from the national grid, which will ensure that the project is profitable, may be a challenge, Adeleke said. Once the PPA is secured, the consortium can push ahead with construction of the power plant. Although Nigeria has sizable oil and gas reserves, it has not yet leveraged them for electricity production and, given the urgent need to improve electrification, alternative sources such as coal have attracted increasing attention. President Goodluck Jonathan stated that Nigeria could generate up to 30% of its energy requirements from coal. Jonathan noted that the country has substantial coal reserves of suitable quality for power generation, and that Nigeria could develop its coal-driven energy sector using environmentally friendly technology. He said the MoU was a sign of enhanced coordination between the Ministry of Mines and Steel Development and the Ministry of Power, which the government hopes will smooth the path for greater investments in coal mining and coal-fired power to help meet Nigeria’s large and growing electricity needs. “We expect the cooperation to continue until we get the desired destination in terms of our power needs,” the president said. Coal could provide an important contribution to power capacity at a time when demand is growing and generation remains woefully low – and even declining. Average power generation in August 2013 fell to 2628 MW, well below the 3000 MW of the previous month and the 4518 MW peak in December 2012, and just over a quarter of the target of 10,000 MW for end-2013, the local press reported. Disruptions to gas supply are one issue behind the dip, but security threats and a lack of political will to execute plans to boost capacity have also been blamed. With estimates suggesting that peak demand will hit 12,800 MW by the end of the year, much of the shortfall is being met by “self-generation” costing up to N2trn ($10bn) annually. Indeed, the peak demand figure likely underestimates the underlying demand, given the large share of consumers who rely on diesel generators. The 10,000-MW target is unlikely to be met this year, given the investments in generation and distribution (as well as securing and enhancing existing supply) that need to be made to achieve it. There are also only a few months before the end of the year. The ongoing privatisation of much of Nigeria’s generation and distribution capacity, formerly operated by the Power Holding Company of Nigeria, could help, although the preferred bidders only recently took full possession of these assets. It will take time for the shift in ownership to have an effect, and no major improvements to the electricity supply are expected to be felt this year. Given rising demand, driven by population growth and the expansion of industry, Nigeria has been slow to ensure that its power supply keeps pace. The new coal development is promising in that it should both boost generation and broaden the energy mix, potentially freeing oil and gas for export and use in value-added industry. However, with a long lead time for the project, these positive developments will not happen quickly

Demand for renewable energy will drive Europe transmission market A rising demand for electricity and growing environmental concerns across Europe is leading countries to look for more diverse energy sources, which will boost investment in their transmission and distribution (T&D) infrastructure, according to research and consulting firm GlobalData. Key European countries, including Germany, France, U.K., Norway, Italy, Ireland and France, will spend substantial sums on grid expansion and upgrade programs in order increase security of electricity supply, deploy smart grid technology and accommodate new sources of power generation — particularly renewable energy. Shivanshu Agnihotri, senior analyst at GlobalData, says, “Renewable energy accounted for around 70 percent of the total power generation capacity additions made in the E.U. in 2012, and further additions are being introduced as a result of E.U. targets aimed at reducing greenhouse gas emissions and increasing the share of renewables total energy consumption by 2020.” According to the report, European T&D grids are characterized by congestion and the integration of distributed energy resources. “The aging nature of the T&D networks in Europe has raised concerns regarding the stability of the electricity supply and has prompted a number of nations to frame policies for the incorporation of efficient technologies into the grid,” Agnihotri said. The need to increase cross-border grid interconnections will be another boost to the European T&D market, as it could lead to competition in the power market and the potential reduction of power prices. By providing a broader generation base, interconnections can improve energy supply security and reduce the need for the additional construction of power generation capacity, according to the report. “Europe is expected to invest heavily in the establishment of transmission infrastructure as it strives to create cross-border grid interconnections and harness the energy generated from renewable sources around the continent,” he said.

West Power Raises $500m for Eko Electricity Company Electricity Meter In a bid to address the growing concern that some of the core investors in the on-going privatisation in the power sector would not be able to access funds to expand the assets after acquisition, West Power & Gas Limited (WPG) said it had raised close to $500 million in equity and debt financing to fund significant rehabilitation and transformation work required to improve distribution network infrastructure and operations of Eko Electricity Distribution Company. WPG recently completed payment for the acquisition of a 60 per cent stake in the electricity distribution company, two days ahead of the deadline issued by the Bureau of Public Enterprises (BPE). The final payment of $101.25million followed the payment of the initial 25 per cent deposit of $33.75 million earlier this year for the Eko Disco valued at $135million. The Chairman of WPG, Mr. Charles Momoh, said in a recent statement that $250 million had been allocated to rehabilitation while the company had allocated a further $48 million towards a power purchase agreement with the Nigerian Bulk Electricity Trading (NBET) Plc. “Today marks a tremendous milestone; and a major step forward towards the completion of the most significant privatisation of government assets in Nigeria’s history. The success of the power transformation programme is critical to the future development of Nigeria. WPG, along with the other preferred bidders, fully appreciate the magnitude of the task before us and are honoured to have been selected. As a sector we must work together to ensure we achieve the desired results,” Momoh said. “As well as securing the finance to complete the acquisition, WPG has brought together a world class team of local and international industry experts to implement the rehabilitation and expansion programme. We look forward to the completion of the acquisition process and all matters to be resolved so we can begin the task of transformation of the Power sector in the Country,” he added. West Power & Gas Limited is a Nigerian Power Investment Holding Company established to invest in Nigeria’s fast-evolving power sector. The company recently completed the acquisition of the Eko Distribution Company and has also unveiled plans to explore other opportunities for investment in the power sector as a whole including generation.

Energy firm npower latest firm to see revenues up - posts 11% increase

The 'Big Six' energy supplier npower is the latest energy firm to reveal a surge in its UK gas revenues.

Figures from its parent company RWE showed an 11% rise in revenue for the first half of the year - with figures reaching a total of £1.1bn.

Npower put up its gas prices by 8.6% back in November 2012, and has subsequently benefited from one of the country's coldest springs for years to see its UK revenue soar in the first six months of the year. In total the firm has 6.5 million gas and electricity customers in the UK.

It wasn't all positive news for the energy supplier however, as npower also reported its operating profits were down three per cent on this time last year at £176m.

The firm blamed the shift in government regulations and schemes pushing UK energy suppliers to offer energy consumers ways to make their home more energy-efficient.

It said: "The persistent trend towards energy efficiency also led to earnings shortfalls."

RWE npower is one of the few 'Big Six' energy suppliers not currently participating in the government's flagship Green Deal initiative, however it is set to join the scheme later in the summer.

The Green Deal scheme offers energy consumers loans on ways in which they can improve their property's energy efficiency, for example the fitting and installation of wall insulation or the upgrading of an old boiler to a more energy-efficient model.

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