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Why power sector fared badly in Q1 2019

The performance of the nation’s  power sector in the first of 2019 took a worst turn in the period under review with most of its age long challenges persisting going by the first quarterly report of the Nigerian Electricity Regulatory Commission(NERC).

An analysis of the report showed that, during the first quarter of 2019, the total electric energy generated was 8,951,869 MWh – 0.8 per cent more than the level of generation during the fourth quarter of 2018.

According to the report, the industry recorded the peak generation of 5,375MW in the quarter under review, although the available plant generation units declined to 61 from the daily average of 72 recorded in the last quarter of 2018.

Despite the decline in the available generation units in the first quarter, the total energy generation rose by 0.8 per cent with 8.9 percentage points increase in generation capacity utilisation arising from the reduction in the constraints of insufficient gas supply, transmission and distribution networks, and water management at the hydropower stations.

With this marginal improvement in the sector performance during the quarter under review, the aforementioned constraints continue to pose major technical and operational challenges to the industry.

Deteriorating Power supply

Despite claims by NERC that 8,951,869MWh electricity generated in Q1 2019, was 0.8 percent more than what it offered in the fourth quarter of 2018, a power poll report by NOIPolls indicated that, Nigerian households suffered worse power supply in Q1 2019.

The Power Poll results indicated that, the power sector supply to households declined to 37 per cent in Q1, 2019 from 42-percents obtained in Q4, 2018.

According to NOIPolls, the decline in power supply to households could be attributed to the combined challenges of gas shortages to the generating companies and low water levels at the hydro power stations, while adding that the downward trend in supply was was noticeable in all three months in Q1, dropping consistently from 46 percent in January to 35 percent in February and further to 30 percent in March, 2019; which had the lowest figure in Q1 2019.

The results obtained from the poll also revealed that the quarterly average cumulative hours of power supply experienced a marginal decline from 9.7 hours in Q4, 2018 to 9.6 hours in Q1 2019.

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‘‘A cumulative power supply of 9.6 hours per day was a far cry from the standard 24 hours’ power supply which households in Nigeria expected in an ideal situation. This shortfall in hours of power supply across the country further depicts the perennial challenges experienced in the power sector which has a direct effect on the country’s economy.

It is on record that the Federal Government has embarked on attempts in the past to fix the power sector but these have remained futile as power supply to businesses and households continued to dwindle over the past months.’’

The report further indicated that, monthly analysis of the state of power supply between January and March 2019 revealed that only 30 per cent of Nigerians experienced an improvement in supply to their households in the month of March, 2019. This figure, it said represents the lowest power supply improvement in Q1 2019 when compared to February (35-per cent) and January (46 per cent).

System collapse increases

The industry, according to the NERC report recorded a significant decline in the stability of the grid network during the first quarter of 2019 relative to the fourth quarter of 2018 as there five (5) incidences of total system collapse (i.e., total blackout nation-wide) in the first quarter of 2019 compared to two (2) incidences recorded in the last quarter of 2018.

But, to further improve the grid stability and prevent system collapse in subsequent quarters and beyond, NERC in collaboration with the Transmission Company of Nigeria (TCN) said, it shall intensify efforts to ensure further improvement in the grid performance.

‘‘The Commission shall intensify monitoring of strict compliance to the System Operator’s (SO) directives to generators on free governor and frequency control mode in line with the provisions of the subsisting operating codes in the electricity industry. Furthermore, the Commission has reviewed the outcome of the competitive procurement of spinning reserves conducted by the TCN. This is to guarantee adequate spinning reserves for proper management of the grid by the System Operator.’’

DisCos collection efficiency drops to N116.9bn

On revenue, electricity distribution companies  collection efficiency recorded  a drop in the first quarter of  this year  despite an increase in the total billing to electricity consumers by the power firms. In the first quarter, the electricity bill to customers by the 11 power distributors rose to N182.8billion, but the DisCos only recorded an aggregate collection of N116.9bn, representing 64.1 per cent collection efficiency.

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This shows there was a drop when compared to their performance in the fourth quarter of 2018, when the power firms billed customers a total of N172.5billon and collected the sum of N117.5billion representing 68.1 per cent collection efficiency.

A comparative  analysis of Disco performances in the fourth quarter of 2018 and the first quarter of this year, based on data obtained from the Nigerian Electricity Regulatory Commission (NERC) also showed that the remittances of the DisCos to the power market dropped in Q1 2019.

In its 2019 first quarter report, NERC stated that the financial viability of the Nigeria Electricity Supply Industry was still the most significant challenge threatening the sustainability of the power sector.

It noted that as reported in the preceding quarterly reports, the liquidity challenge was partly due to the non-implementation of cost-reflective tariffs, high technical and commercial losses exacerbated by energy theft, and consumers’ apathy to payments under the widely prevailing practice of estimated billing.

“The total billing to electricity consumers by the 11 DisCos rose to N182.8bn in the first quarter of 2019 but only an aggregate collection of N116.9bn, representing 64.1 per cent collection efficiency was achieved, a 4.1 percentage points decrease from the last quarter of 2018. The level of collection efficiency during the quarter under review indicates that a sum of N3.6 out of every N10 worth of energy sold during the first quarter of 2019 remains uncollected as and when due.”

The commission explained that the severity of the liquidity challenge in NESI was further reflected in the settlement rate of energy invoices issued by the Nigerian Bulk Electricity Trading Company and the Market Operator to DisCo, as well as the payment by special and international customers.

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