Poor Investment in Discos’ Networks May Upset FG’s Grid Expansion Plan

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*TCN’s $10m transformers lost to poor network

By Chineme Okafor in Abuja

The poor funding of electricity networks of the 11 distribution companies (Discos) in the power sector may eventually derail the federal government-backed Transmission Rehabilitation and Expansion Plan (TREP), if not resolved soon, the Managing Director, Transmission Company of Nigeria (TCN), Mr. Usman Mohammed, has said.

Mohammed, said that the TCN has continued to record frequent breakdown of its expensive transformers on account of the poor networks operated by the Discos.

Speaking during an inspection tour of some TCN facilities in Abuja, Monday, he stated that the Discos’ had remained reluctant to fund their networks, adding that this was affecting TCN’s transmission equipment.

According to him, five of TCN’s high-end transformers worth $10 million had been lost to this in the last couple of months, noting that more transformers could be lost, including new ones installed under the TREP.

He stated that while the TCN has embarked on an investment drive using the TREP to upgrade the capacity and reliability of Nigeria’s national grid, the Discos have not invested in the upgrade of their networks, adding that such frequent breakdown of its transformer could upset the targets of the TREP.

The Discos, Mohammed alleged, have refused to invest in distribution equipment, but rather take power directly from the TCN to consumers in their networks.

He further noted that while the Discos connect consumers under their networks directly from TCN’s facilities thus exposing the facilities to dangers of potential breakdown, only 421 out of 731 connection interface the TCN currently has with the Discos are fully protected.

This, he suggested, leaves TCN’s transmission equipment in the remaining 310 unprotected interfaces vulnerable to breakdowns.

“Let me tell you why we are having failed transformers: the distribution companies are not investing in their networks, and most of the transformer you see here are supplying the customers of the distribution companies directly and there is no protection between our
equipment and that of distribution companies and if there is a fault, it hit our transformer directly.

“That is why we are having these kinds of transformer failures and are calling on the government to provide policy that will lead to the capitalisation of the Discos, as well as on NERC to do a regulatory order that will lead to this capitalisation,”Mohammed said.

According to him: “Out of the 731 interface between us and the Discos, only 421 are fully protected, the rest aren’t and those that are not fully protected are where we lose our transformers.

“Between us and the Discos, there is supposed to be injection substation where they will also have their own protection, and on our side we will have protection that will isolate these substations from the main grid.”

“Every transformer is very expensive, to import a transformer and install it is close to about $2 million and when you lose $2 million,b you know what it means. We don’t want this to continue that is why we are calling for a policy that will stop it. We have lost two in Benin, we have lost two in Abuja, we have lost one in Onitsha, and that is five. If this continues, then we are going to lose many.

“Let me also tell you that we are expanding the grid, and if investment does not come into the Discos, it means that even the expansion we are doing, we are going to also have the same problem. If you look at Abuja now, we have already signed contract to build two
new 330kV substation in Abuja, currently we have only two and we are building additional two.

“We are also building three 132kV substation, adding to the five we have in Abuja. So, all those ones that are coming, if the existing ones are not protected, the new ones that are coming definitely will not be protected, and that is why we need massive investments on the sides of the Discos,” he explained.

Mohammed, said it was unfair for the Discos to continue to cause shortage in the entire system, adding: “Apart from the fact that we are not getting the required revenue the Discos are supposed to bring to the market, we are also not getting the required investment on their side so that we can have seamless relationship.”

Asked if he believed the Discos’ complaints that the market does not have a cost-reflective tariff was responsible for their reported poor investment, Mohammed, said: “To have a good tariff is good, but if you look at the Discos, how many of them have collected the current tariff fully. I don’t believe in the argument that only tariff is the problem, capacity is also the problem, and if they collect 100 per cent of the tariff we have now, we will not be where we are now. If we don’t have capacity to collect N10, how can we collect N20?” He added that the TCN now engages its in-house engineers to repair its failed transformers, and insisted it is a lot more economical to the company than it would be giving it out to external repairers.