Ex-NERC Chair Calls for Regionalisation of Power Grid

•Says sector problems political, managerial

A former Chairman of the Nigerian Electricity Regulatory
Commission (NERC), Dr Sam Amadi, yesterday advocated the
regionalisation of power grid as part of the ways to solve the
current problems in the Nigerian Electricity Supply Industry
(NESI).

Amadi, who spoke when he appeared on The Morning Show, a
breakfast programme on ARISE NEWS Channel, explained that the
development will engender competition among the grid operators who
will thrive to outdo one another.

According to him, though the regionalisation may create
disparity in the quality of power supply across regions, eventually
some of the region’s will catch up and become efficient.

He stated that the problems with the sector were multi-faceted,
including managerial and political issues , misalignments as well
as investment challenges.

He said: “There is acute and comprehensive shortages and there
are issues of geography like in the North where you have sparsely
populated and dispersed areas, which require long lines of
network.

“If that is not looped, then total losses will be very high. We
have shortage of quality of transmission network, shortage of
generation, meaning that we don’t even have capacity. Some 4,000mw,
potentially available and sometimes 2,300mw.

“We have distribution network problems. There’s low tolerance
level in the sense that if something snaps, something quickly takes
it up. There’s also poor managerial capability and maintenance
culture, which means that we have not done any maintenance,
oversight etc for a long time. They are old problems.

“But in solving them, we think there’s disruptive, disjointed
approach in terms of reforms, (they) privatise this, privatise that
instead of a gradual incremental managerial improvement on the
managerial side and investment and project management will get
underway.

“If you privatise the grid, like you have with the distribution
companies, where you have scarcity, a market that’s almost
non-existent, then you can be sure who comes to the market and have
the managerial and financial capacity to make the kind of needed
investment.”

In solving the problems, he said decentralisation could play a
positive role, adding that as it is currently constituted, much of
the financing in the sector goes into funding the bureaucracy as
represented by the power minister and across the entire strata.

“We talk about decentralisation, we probably need to be thinking
about it on the national grid. But one outcome is that there will
be significant improvement in some grids and grid loss in some.

“Again, the problem is political; we get our power based on
sharing formula. Not based on use. If I have control over the usage
formula, Lagos zone will get much more power than Yola that is
quite distant and removed from source of supply.

“Primarily, regionalisation will improve our supply, improve
local competencies, give some gap for some people to catch up and
grow. Technology is changing, moving from large scale to modular
capacity in terms of embedded generation, isolated distribution
network, convergence in transmission network.

“We need to rethink the grid. But the primary problem is
elementary, managerial, capacity and investment and how much goes
into the sector problem instead of financing the bureaucracy that’s
wasteful and incompetent.

“Look at the leadership structure of the electricity market
today, from minister downwards. Let’s have some incremental
improvement before disruptive things. “Regionalising the grid could
be a way to take the large-scale inefficiency away from the
system,” he added.

He described the Siemens deal as a good move, but lamented that
NERC was sidelined throughout the process, making it fail to
exercise some prudency checks in it the execution.
Amadi said Nigeria should have commercialised, rather than
privatise the power sector, like Egypt did, adding that the sector
cannot move from N20 to N40 without commensurate improvement in
quality of service.

“The Discos have failed in their duty because they are not able
to improve services. They are not engaging their customers. We need
a lot of communication,” he stated.
He said those who invested in the sector deployed short term or
‘hot funds’ into an industry that requires long-term returns,
noting that they are now desperate to make quick returns on their
investment because of the nature of the monies put into the
business.

•Says sector problems political, managerial

A former Chairman of the Nigerian Electricity Regulatory
Commission (NERC), Dr Sam Amadi, yesterday advocated the
regionalisation of power grid as part of the ways to solve the
current problems in the Nigerian Electricity Supply Industry
(NESI).

Amadi, who spoke when he appeared on The Morning Show, a
breakfast programme on ARISE NEWS Channel, explained that the
development will engender competition among the grid operators who
will thrive to outdo one another.

According to him, though the regionalisation may create
disparity in the quality of power supply across regions, eventually
some of the region’s will catch up and become efficient.

He stated that the problems with the sector were multi-faceted,
including managerial and political issues , misalignments as well
as investment challenges.

He said: “There is acute and comprehensive shortages and there
are issues of geography like in the North where you have sparsely
populated and dispersed areas, which require long lines of
network.

“If that is not looped, then total losses will be very high. We
have shortage of quality of transmission network, shortage of
generation, meaning that we don’t even have capacity. Some 4,000mw,
potentially available and sometimes 2,300mw.

“We have distribution network problems. There’s low tolerance
level in the sense that if something snaps, something quickly takes
it up. There’s also poor managerial capability and maintenance
culture, which means that we have not done any maintenance,
oversight etc for a long time. They are old problems.

“But in solving them, we think there’s disruptive, disjointed
approach in terms of reforms, (they) privatise this, privatise that
instead of a gradual incremental managerial improvement on the
managerial side and investment and project management will get
underway.

“If you privatise the grid, like you have with the distribution
companies, where you have scarcity, a market that’s almost
non-existent, then you can be sure who comes to the market and have
the managerial and financial capacity to make the kind of needed
investment.”

In solving the problems, he said decentralisation could play a
positive role, adding that as it is currently constituted, much of
the financing in the sector goes into funding the bureaucracy as
represented by the power minister and across the entire strata.

“We talk about decentralisation, we probably need to be thinking
about it on the national grid. But one outcome is that there will
be significant improvement in some grids and grid loss in some.

“Again, the problem is political; we get our power based on
sharing formula. Not based on use. If I have control over the usage
formula, Lagos zone will get much more power than Yola that is
quite distant and removed from source of supply.

“Primarily, regionalisation will improve our supply, improve
local competencies, give some gap for some people to catch up and
grow. Technology is changing, moving from large scale to modular
capacity in terms of embedded generation, isolated distribution
network, convergence in transmission network.

“We need to rethink the grid. But the primary problem is
elementary, managerial, capacity and investment and how much goes
into the sector problem instead of financing the bureaucracy that’s
wasteful and incompetent.

“Look at the leadership structure of the electricity market
today, from minister downwards. Let’s have some incremental
improvement before disruptive things. “Regionalising the grid could
be a way to take the large-scale inefficiency away from the
system,” he added.

He described the Siemens deal as a good move, but lamented that
NERC was sidelined throughout the process, making it fail to
exercise some prudency checks in it the execution.
Amadi said Nigeria should have commercialised, rather than
privatise the power sector, like Egypt did, adding that the sector
cannot move from N20 to N40 without commensurate improvement in
quality of service.

“The Discos have failed in their duty because they are not able
to improve services. They are not engaging their customers. We need
a lot of communication,” he stated.
He said those who invested in the sector deployed short term or
‘hot funds’ into an industry that requires long-term returns,
noting that they are now desperate to make quick returns on their
investment because of the nature of the monies put into the
business.