Experts Urge FG to Unbundle TCN, Liquidate Stake in Discos


Stories by Chineme Okafor in Abuja
Experts in global energy business have asked the federal government to hasten its planned unbundling of the Transmission Company of Nigeria (TCN) into three separate entities.

They also advised the government to liquidate its shareholding in the 11 electricity distribution companies (Discos) to stimulate efficiency in the country’s electricity market.

Speaking during a webinar organised and hosted by the Covenant University’s Centre for Economic Policy and Development Research (CEPDeR), the experts hinted that Nigeria needed quick and sustained solutions to her energy challenges.

The conversation was centered on ‘natural gas utilisation and energy market prospects in Nigeria’ post-COVID-19. Chair of CEPDeR, Prof. Evans Osabuohien, however explained that the goal of the webinar was to influence policy and enhance processes that will engender growth in Nigeria

During their presentations, experts such as Dr. Obindah Gershon, who co-chairs the CEPDeR, said the government could take a cue from the successes recorded with the privatisation of power generating companies (Gencos) and Discos to liquidate its remaining interests or shareholdings in the sector.

According to them, the government has considered a three-tier separation for the transmission company which is fully owned by it; they added that such separation will increase transparency and enhance efficiency in the system.

The experts explained that despite an increase in power generation capacity to above 12,000 megawatts (MW), Nigerians have consistently struggled to have adequate power supply to grow their businesses or remain productive.

This, they noted was due to the poor operations of the transmission network which causes the grid to often collapse.
“The lack of liquidity and fair pricing in the sector has also hindered investors from coming in to tackle the challenge, hence the government’s intervention with the Siemens deal. The deal which is expected to ease the bottlenecks and disruptions of transmission will take place in phases.

“The first phase will see an upgrade in transmission lines from 5,000MW to 7,000MW, then 11,000MW by 2023 and the final phase is to reach 25,000MW in 2025,” said Gershon.
Dr. Ekpen Omonbude, who heads Eraskorp Limited, said that Nigeria’s ability to generate funds have dwindled in recent years, thus forcing it to embrace more radical solutions like the removal of petrol subsidy.

Omonbude, noted that despite losing more than half of oil revenues between 2013 and 2018 as a result of lower oil prices, Nigeria continued to keep petrol subsidies which were almost equivalent to half of the revenues generated within that period.

The country’s oil revenues, he explained, dropped from about $25 billion in 2013, to less than $15 billion in 2018.
Omonbude stated that abolishing the subsidy as announced recently, in addition to new measures such as the Nigerian Gas Flare Commercialisation Programme (NGFCP) and power sector interventions such as the Siemens deal, were good steps.

He, however, stressed the need for more of aggressive push towards the use of gas as 80 per cent of Nigeria’s power generation currently comes from gas, while oil and hydro make up the balance.
Because natural gas provides a scalable opportunity for big increases in generating capacity, he explained that a successful implementation of the NGFCP will enhance gas utilisation in the power sector.

He also advised the government to create friendlier policy and regulation to enable price discovery in the sector.
Similarly, in his remarks, Prof Subhes Bhattacharyya from the Institute of Energy and Sustainable Development, at De Montfort University, Leicester, UK, spoke on the need for Nigeria to create a price balancing regime in her energy market.

According to Subhes, the cost of fuel, cost of purchased power, employee costs, interest charges, and all other costs that necessitate electricity production and availability must be balanced with the revenue from customers, government subsidies and supplier credit.

Based on his description of a tight fix with operational inefficiencies such as reliability and quality of electricity supply, Subhes advised the country to abolish the Multi-Year Tariff Order (MYTO), and gradually move towards cost recovery.