Dr. Sam Amadi Presentation at the Lagos Oil Club_April 23rd 2012

Contents:

Background to capacity growth in the Nigeria Electricity Supply Industry

Assessment of Capacity and Capacity problems in Nigeria

Blackouts – System Collapses

Measures to increase capacities in Nigeria

Solving Capacity problems in Nigeria: Are more Utilities and Competition the answer?

Electricity on Demand

Background to Capacity growth in the NESI

History of power generation in Nigeria:

Electricity generation in Nigeria began in 1896.

NESCO commenced operation in Jos as a utility company in 1929.

The Electricity Corporation of Nigeria (ECN) responsible for distribution, was established in 1951

The Niger dams authority (NDA) was established in 1962

ECN and NDA were merged in 1972 to form National Electric Power Authority (NEPA).

NEPA, a statutory body had monopoly over electricity generation, transmission, distribution and sales.

In 2002, the Power Holding Company of Nigeria (PHCN) was formed.


Assessment of capacity and capacity Problems in

Nigeria


Assessment of capacity and capacity Problems in Nigeria

Problems:

Generation; Transmission; Distribution sub-sectors

Neglect and inadequate investment resulted in dilapidated power system with high technical and non-technical losses

Poor Maintenance of both generation, transmission and distribution facilities

Corporate Governance issues resulted to the inability of the Utility Operators to generate enough revenue from its operation to cover its cost and invest in new facilities

Inadequate planning for capacity expansion of infrastructure

Inadequate Metering Capacity


Assessment of Capacity and Capacity problems – DEMAND PROJECTION AND CURRENT GENERATION CAPACITY


NATIONAL CONTROL CENTRE, OSOGBO (TCN)

TENTATIVE GENERATION SCHEDULE AND FORECAST FOR SATURDAY 21/01/2012 & SUNDAY 22/01/2012.

STATION

G E N E R A T I O N

R E M A R K S OFF PEAK PEAK

00:00- 18:00 HOURS 18:00 - 24:00 HOURS

GEN S/R GEN S/R

SHIRORO 280 0 280 0 2 units to be on bar.

KAINJI 298 40 298 40 5 units to be on bar.

JEBBA 80 0 400 0 1unit for 16hrs & 5 units for 8hrs.

OKPAI 457 0 457 0 3 units to be on bar.

EGBIN ST(GAS) 780 80 780 80 4 units to be on bar.

SAPELE ST 118 0 118 0 2 units to be on bar.

SAPELE GT NIPP 0 0 0 0 No unit on bar.

AJAOKUTA 0 0 0 0 No unit on bar.

DELTA II-III 31 0 31 0 3 units to be on bar.

DELTA IV 100 0 100 0 2 units to be on bar.

AFAM IV - V 62 0 62 0 1 unit to be on bar.

AFAM VI 583 0 583 0 4 units to be on bar.

AES 141.2 0 141.2 0 5 units to be on bar.

GEREGU 251 0 251 0 2 units to be on bar.

OMOTOSHO 101.2 0 101.2 0 4 units to be on bar.

OMOKU 26.1 0 26.1 0 3 units to be on bar.

OLORUNSOGO PHASE I 0 0 0 0 No unit on bar.

OLORUNSOGO PHASE II 95.5 0 95.5 0 1 unit to be on bar.

IBOM 61.8 0 61.8 0 1 unit to be on bar.

TRANS AMADI 8.8 0 8.8 0 1 unit to be on bar.

TOTAL AVAILABLE GEN. 3474.6 120 3794.6 120 GENERATION SHORTFALL:

FORECAST (DEMAND) 8320.0 10400.0 OFF-PEAK : 4845.4MW

GENERATION SHORTFALL 4845.4 6605.4 PEAK : 6605.4MW

# Parameters Qty

1 Capacity 330/132kV (MVA) 7,044

2 Capacity 132/33kV (MVA) 9,852

3 Number of 330kV Substations 28

4 Number of 132kV Substations 119

5 Total Number of 330kV circuits 60

6 Total Number of 132kV circuits 153

7 Length of 330kV lines (kM) 5,650

8 Length of 132kV lines (kM) 6,687

9 National Control Centre 1

10 Supplementary National Control Centre 1

11 Regional Control Centres 2

Current Transmission Capacities:


Assessment of capacity and capacity Problems in Nigeria - Cont’d…

Current Distribution Capacities: Route Length

(KM) Transformer

Capacity (MVA) Number

33kV Distribution Lines length

46,481

11kV Distribution Lines Length

31,784.76

0.415kV Distribution Lines Length

193,822.01

Total No. of Injection Sub-stations (33/11kV)

1,078

Total Capacity of Injection Sub-stations

10,988.29

Total No. of Distribution Sub-stations

41,477

Total Capacity of Distribution Sub-stations

17,044.29

Total Number of Registered Customers

4.6 million



The gas sector holds significant potential. Nigeria has the 7th largest reserves in the world with significant scope for growth. The gas quality is high – particularly rich in liquids and low in sulphur

Following several years of low domestic gas utilisation, the sector is now confronted with a huge potential for unprecedented growth from about 5bcf/d currently to over 20bcf/d by 2011/15. Compared with the global average, this is by far the world’s most aggressive growth forecast


Natural Gas:


Gas to Power

Efforts are focused on meeting a projected 3.5 bcf/d of gas demand by over 30 existing and proposed power plants.

10

PHCN

818 mmscfd

1

NIPP

1,297 mmscfd

2

JV IPP

322 mmscfd

3

3rd Party IPP

531 mmscfd

4

• Egbin + AES • Delta IV • Sapele • Olorunshogo • Omotosho

• Geregu • Afam I-V

• Olorunshogo • Sapele • Geregu • Omotosho • Ihovbor

• Egbema • Gbaran • Omoku • Alaoji • Calabar

• Chevron Agura • NAOC, Okpai • Total, Obite • Shell, Afam VI • ExxonMobil, QIT

Numerous 3rd party IPP in consultation with the Bulk Trader



Gas to Power Supply Outlook:

11 Electricity on Demand


Coal:

At present, there is no single coal-fired-power plant operating in Nigeria despite the abundance of high quality coal deposits

Coal exploitation is at its lowest ebb in Nigeria

FGN has initiated the Coal-to-Power projects with at least 3 Government owned proposed power stations

IPPs are also encouraged to develop coal power plants

Base-load clean coal power plants are needed to support power supply from the national grid.



Electricity Metering Capacity Issues: Only about 40% of the Country’s population (about 160

million) has access to electricity.

Total customers figure is about 4.5 million

There is a very wide metering gap in the NESI with only about 40% of customers metered. A lot of customers are on estimation.

Electromechanical, Electronic and Prepaid Meters are in use in Nigeria.

Some of the problems associated with metering in the NESI include; bye-pass of meters, inadequate funding;

NERC has developed a proposal for Smart Metering deployment based on certain drivers.



Drivers for Smart Metering in Nigeria:

Anti-theft of electricity and surveillance capability

Energy accounting and Loss control

Remote collection of real-time data for billing and analysis on demand and on schedule

Guaranteed cash flow through popular PPM functionality (solving the problems of inflated billing efficiency and poor collection efficiency)

Remote switching

Customer control of budget and enhanced decision making

Smart metering already in Nigeria in the form of Automated Meter Reading (AMR) for MD customers and Grid metering


14


Drivers for Smart Metering in Nigeria Cont’d… Existing PPM clusters may be upgraded to smart metering

Scalability, openness and flexibility of smart metering to dovetail into future technologies (e.g. smart grid)

Bad debt recovery management from time of cut-over (this can even help defray the cost of smart metering roll-out)

Regulatory demands (e.g. the ability to automatically load free units to consumers who qualify under the Power Consumer Assistance Fund or automatically apply loss adjustment factors)

The Aggregate Technical, Commercial and Collection loss reduction model for privatization adopted by NCP.



Human Capacity Issues: Total Number of permanent Staff 37,235

Total Number of casual Staff

11,000

Percentage of staff in core technical functions

59%

Percentage of staff in non-core technical functions

41%

Percentage of staff above 40 years of age 51%

Percentage of staff with Senior School Leaving Certificate or equiv.

33%

Percentage of staff that are graduates (university/Polytechnic)

25%

Percentage of workforce that has served for over 21 years

32%

Implications

Dearth of competent and skilled staff

Poor Succession Planning due embargo on employment

Ageing Workforce

Paying for inefficiency and unable to deploy lean financial resources optimally



Blackouts –System Collapse


What is it and how does it happen (Causes) –

Under frequency – when demand is more than supply

Over Frequency – when supply is more than demand

Poor transmission infrastructure maintenance and failure of equipment

Poor trace clearing – vegetation control

Disco-ordination of protective relays

Over-loading of transmission lines and equipment

Blackouts –System Collapse


Blackouts –System Collapse (Statistics)


Date of last total collapse: 10th November, 2011

No. of days since last total collapse:71

Date of last partial collapse: 20th November, 2011

No. of days since last partial collapse:61

Highest No of days attained in-between total collapses: 131

Highest No of days attained in-between partial collapses: 143

Jan

Feb.

Mar.

Apr

May

Jun

Jul

Aug

Sep.

Oct

Nov

Dec

Total

2009

Total 1 -- -- -- 2 5 5 4 1 -- -- 1 19

Partial -- 5 4 3 3 -- -- 1 -- 2 1 1 20

2010

Total --- 3 1 -- 3 3 3 -- 2 2 1 4 22

Partial 1 -- -- 1 1 3 4 4 3 2 -- 1 20

2011

Total -- -- -- -- 4 3 1 1 1 2 1 --- 13

Partial -- 1 1 -- -- -- -- 1 -- 1 2 --- 6

2012

Total

Partial

Blackouts –System Collapse - Cont’d…

Mitigating measures: Re-strengthening of the Transmission Grid: Expansion and

rehabilitation

Provision of Ancillary Services such as Spinning Reserve (for Frequency Control), Reactive Power (Vars) (for Voltage Control), Black Start etc.

Developing tariffs structure for compensating Ancillary Services.

Generation capacity increase through the participation of Licensed IPPs, FGN, State and Local Governments to the reduce the imbalance between generation and demand.

The Commission has developed the Grid Code: System Operator implements the Grid Code and preserves the integrity and security of the Grid System(through Operational Planning, Connection, Grid Operation and Control).


Measures to increase Supply in Nigeria


Reform of the Power Sector

The Electric Power Sector Reform (EPSR) Act passed in March 2005, led to the enactment establishing the following:

The emergence of the Power Holding Company of Nigeria (PHCN) as the holding company of the assets and liabilities of NEPA, and a vertically integrated company.

The unbundling and corporatization of PHCN into 18 successor companies (6 GenCos, 11 DisCos and TCN), in preparation for the privatization exercise.

The establishment of a Regulator for the sector – Nigerian Electricity Regulatory Commission (NERC).

Establishment of the Rural Electrification Agency (REA).


22

Measures to increase supply in Nigeria - Cont’d…


Presidential Road Map

Private Sector Participation (issuance of Licenses/Permits): On-grid (Generation Licenses) - 32 - 14,056MW

Off-grid (Generation Licenses) - 23 - 335MW

Embedded Generation Licenses - 4 - 663MW

Distribution Licenses - 3

Bulk Trader License - 1

Captive Generation Permits (for own use) - lots

Privatization exercise: 11 DISCOS – divestment of FGN shares (51/49)

4 Thermal GenCos – divestment of FGN shares (51/49)

3 Hydro GenCos – (Concessions)

TransCO - Management Contract


15,054MW

Electricity Trading arrangement: the Bulk Trader and World Bank Guarantees:

The Nigerian Bulk Electricity Trading Company PLC has now been incorporated this entity will be appropriately resourced and established, negotiate power purchase agreements with successor generating companies, existing independent power producers (IPPs) and potential new entrants into the power generating market.

The World Bank will provide partial risk guarantee for the power procured by the Bulk Trader.

Federal Ministry of Finance, in addition to the World Bank partial risk guarantee, is reviewing a set of other options through which the Federal Government may provide credit enhancement to the bulk purchaser that will enter into PPAs with the successor generation companies and IPPs.



Proposed Trading Arrangement In the Transition Stage:



Generation Capacities Expansion – Future Outlook (Ongoing Projects)

YEAR

2012

2013

2014

2015

Existing Generation Capacity (FGN + IPPs)

5,317MW

5,317MW

5,317MW

5,317MW

New IPPs - 1,405MW 1,655MW 6,570MW

NIPPs 1,000MW 1,500MW 2,275MW -

TOTAL 6,317MW 8,222MW 9,247MW 11,887MW




TRANSMISSION GRID STRUCTURE WITH THE SUPER GRID IN PLACE

ONITSHA

KAINJI

JEBBA/GS

JEBBA/TS

SHIRORO

AJAOKUTA

Abeokuta

Ikeja

Akure

Benin

Asaba

Port Harcourt

Owerri

Uyo

ALAGBADO

Birnin Kebbi

Minna

Kaduna

Abuja

Jos

Bauchi

Gombe

Damaturu

Maiduguri Kano

IIorin

Ado Ekiti

Lokoja

Lafia

Makurdi

MAKURDI

Enugu Akwa

Umuahia

Ibadan

Sokoto

Gusau

Katsina

Hadejia

Jalingo

Yola

Abakaliki

Calabar

JIGAWA

KANO

KATSINA

SOKOTO

ZAMFARA

KEBBI

KWARA

KADUNA

ABUJA

NIGER

NASSARAWA

TARABA

YOBE

PLATEAU

BENUE

EBONYI

CROSS RIVER

AN AMBRA

OSUN

BAYELSA

KOGI

EDO

ABIA

RIVERS DELTA

ONDO

OYO

ENUGU

IMO

ADAMAWA

BORNO

GOMBE

BAUCHI

EKITI

LAGOS

AKWA IBOM

ATLANTIC OCEAN

NIGER

REPUBLIC

OF BENIN

REPUBLIC

OF CAMEROON

REPUBLIC

OF

CHAD

TRANSMISSION LINE LEGEND

BULK SUPPLY POINT

HYDROELECTRIC POWER STATION

THERMAL POWER STATIONS

330 KV

H

SAPELE P/ST.

DELTA POWER ST.

OGUN

Osogbo

EGBIN P/ST.

NIGERIA

Potiskum

Niamey

132 kV

2

3

2

3

4

2

2

Aliade

Mambila

Bali

2

AFAM POWER ST.

2

2

330KV LINES – MULTIPLE CIRCUITS

330KV LINES - EXISTING

2

2

2005 : new

2

2015 : new

2015 : new

2015 : new

2015 :

3rd Circuit

2010 : new

2015 : new

2010: new

2

2

4 2015 : new

SAPELE

P/ST.

Okitipupa

Geregu

2015 : 2nd Circuit

Agip

Zaria

2015 : new

2015 : new

2015 : new

2015 : new

700KV LINES – SUPER GRID

700 / 330KV SUBSTATION

Mambila Hydro

Some 330kV lines especially in

Lagos and Delta areas could not

be indicated on this geographical

Map.

See attached single diagram for

Details.

NOTE:

Ongoing Transmission Capacity Expansion Projects

• 5,590 MVA of

330/132kV

transformer capacity

• 3,313 MVA of

132/33kV transformer

capacity

• 2,194 km of 330kV

lines

• 809 km of 132kV

lines

• 10 new 330kV S/S

• 7 new 132kV S/S

• Expansion of 36

existing 330kV and

132kV S/S

• Closing the eastern

flank of the national

grid



28

3540 MVA additional Inj. Capacity

•2666 Km of 11 KV Lines

22,598 Distribution Transformers

•1701 Km of 33 KV Lines

Ongoing NIPP Distribution Capacity Expansion Projects


New Cost Reflective Tariffs The Nigerian Electricity Regulatory Commission is undertaking

a major review of the tariff regime which will be completed before the end of the first quarter of 2012 with a view to replacing the national uniform tariff with a new genuinely cost-reflective ceiling on end-user tariffs.

However, to protect against “rate shock” and to ensure that low-income consumers are

provided with the “lifeline” tariff for consumers that cannot truly afford to pay their bills.

A Power Consumer Assistance Fund is being established by the Commission to support indigent consumers.



Deployment Strategy to address metering capacity gap:

Strategy: phased implementation through Project Monitoring Office domiciled at NERC.

1. Grid Meters

(Immediate action since the successful take-off of the Transition Market Stage depends on adequate Grid metering)

2. Industrial/ Commercial /Institutional Meters

Change all substandard MD meters to smart meters

(Immediate action since about 60% revenue comes from these classes of customers)


30


Deployment Strategy to address metering capacity gap – Cont’d…

3. Residential Customers Each phase expected to last 15 months

Phase I

i. Towns are first categorized as (1) State Capitals and major commercial hubs (2) Other commercial centers (3) Local Govt Capitals and (4) Others

ii. Start pilot projects by converting PPMs where possible to smart metering in small areas in strategic cities: Abuja, Lagos, Kano, Port Harcourt, Onitsha and Yola.

Phase II

i. Use lessons learnt in pilot schemes to cover category (2) towns.

ii. Replace all conventional meters with smart metering in category (2) towns.

Phase III

i. Use lessons learnt in pilot schemes to cover category (3) towns.

ii. Replace all conventional meters with smart metering in category (3) towns.

Phase IV

i. Replace all conventional meters with smart metering in category (4) towns. Cover all unmetered customers with smart metering.


31

Fuel-to-Power Initiative: In view of the high capital costs and long lead

times required to develop commercial power generation through solar, wind, nuclear and biomass, the Federal Government will focus its development efforts on hydro, coal and natural gas. The potential of natural gas, in particular, will be prioritised and incentives will be provided to investors to exploit this resource to its fullest potential.



Proposed NIPP Gas Delivery projects

Calabar

Port Harcourt

Warri

Benin City Lagos

Paplanto

Egbin

Omotosho

Calabar

Alaoji

Eyaen

Sapele

Gbaran

Egbema

Ikot Abasi Omoku

Okpai 1&2

Agura, Ikorodu

Obite

Bonny

Geregu

Afam

OBEN TO AJAOKUTA

Ajaokuta

OBIGBO NORTH TO

ALAOJI

IKOT ABASI

TO IBOM IPP

AJAOUKUTA TO OBAJANA AJAOUKUTA TO KADUNA,

ABUJA

ELPS TO OMOTOSHO

ELP TO PAPLANTO

ELP TO EYAEN

SCOPE: • Calabar, 90km off-shore Adanga to Calabar •Eyaen, 5km off ELPS •Egbema, 12 km to Izombie •Gbaran, 6km to Gbaran/Ubie •Omoku, 1km from Omoku •Sapele, 1km to ELPS Oben Sapele System



There are 11 significant known coal deposits in Nigeria with total proven reserve of over 396million tonnes and 1,091million non-reportable reserve.

Nigeria’s goal is to revitalise the coal mining industry and expand power generation by attracting companies to develop these large coal resources and construct coal-fired generating plants that will connect to the country’s national grid.

FGN has initiated the construction of 3 coal power plants at Enugu, Gombe and Kogi. Already preliminary designs are in progress.

NERC has developed coal-to-power special tariffs to encourage private investment in clean coal technology power generating plants.


Coal Fuel Measures to increase supply in Nigeria - Cont’d…

Renewable Energy National REPS is 10% 2020.

Feed-in-tariffs (FITs) are being developed by the Commission for Renewable Energy Generation; funded by USTDA.

FGN is constructing a 10MW wind farm in Katsina

FGN also consider full development of small hydro potentials across the country

FGN, States and Local Governments are involved in various Solar PV projects

There are several ongoing IPP small scale waste-to-power projects.



Other Interventions A strategy has been put in place to ensure the

recruiting, training and retention of an effective workforce that will drive government's vision for the electricity industry.

Making fully operational the National Power Training Institute of Nigeria (NAPTIN).

The Commission has just approved Regulations on Embedded Generation and Independent Electricity Distribution Networks (IEDN) to increase generation capacity and access to electricity.


Conclusion

Solving capacity problems: Are more Utilities and Competition the answer? YES!!!

Completion of all ongoing Power Stations, Transmission Lines & Sub-Stations and Distribution Lines & Sub-Stations will increase the viability of the Utilities and enhance capacity of power production and delivery.

These will restore electricity grid system integrity and make the sector more attractive to the private sector


What Does Infrastructure Deficit tell Us about Governance Deficit? Lack of Vision – Compare Nkrumah and Akosombo

Dam

Failure of strategic planning

Persistent problem of corruption

Perverse political incentive

Weak commitment to development

7 Disciplines to Overcome Infrastructure Deficit Discipline of effective and independent regulation

Discipline of cost-reflective tariff

Discipline of prudent and cost-efficient investment

Discipline of effective and efficient project management

Discipline of effective and meaningful public participation

Discipline of consistent policymaking

Discipline of honest leadership

Time to Change the Paradigm Private sector is important but not the sole driver of

infrastructure development for three reasons:

- Can’t take all the risks

- Cares more for short term rather than long term

- Cares more about financial interest rather than security or strategic interest

Contact us at: Adamawa Plaza, Plot 1099 First Avenue,

Off Shehu Shagari Way, Central Business District,

Abuja www.nercng.org

E-mail: [email protected] CEO- [email protected]

Tel: +234-8033299879


http://www.nercng.org/

mailto:[email protected]

mailto:[email protected]

Documents

Dr. Sam Amadi Presentation at the Lagos Oil Club_April 23rd 2012