‘Up NEPA!!’ : But wait, how is this light produced?.
There is a reason electricity is called power, because its powerful (lol, dry joke, i know, i know). On a serious note though, electricity is the bedrock of any meaningful infrastructural development, modernisation and industrialisation in a society. Electricity is Man’s greatest invention or discovery after fire, which is why learning how the electricity value chain works is pretty important.
Nigeria’s electricity value chain can be viewed or understood from two angles: the infrastructure angle and the institutional angle. The infrastructural angle basically deals with the physical assets that must be present for electricity to be made while the institutional angle focuses on the institutions that controls and manages these infrastructures, the ‘players’ in the power sector.
Infrastructural Value Chain:
Let me tell you about an interesting conversation i had with a friend about 10 years ago :
Me: Privatising the Electricity sector would solve this problem of power failure in this country.
Friend: Privatisation is not a cure-all for all of Nigeria’s problem.
Me: who told you that? look at the telecommunication sector, we all have phones and internet, this was not possible 7 years ago, the MTNs and GLOs have made telecommunications cheaper and accessible because the Government privatised NITEL. Same thing would happen in the power sector when it is privatised.
Friend: Folabo, you really cannot compare telecommunications to electricity. Privatisation is only the first step in solving the electricity problem but it wont be as easy as it was in the telecommunications industry because Electricity is not wireless.
ELECTRICITY IS NOT WIRELESS.
1. Power Plants/Stations:
These are basically gigantic generators that produce (generate) electricity, more like the first line of production in the electricity factory, and just like your standard Generators, power plants need fuel to run. Gas, coal and water are the major sources of fuel for power generation currently found in the world. Gas and coal can be referred to as fossil fuel and power plants that use them are called thermal plants, while plants that use water are called hydroelectric plants. Nigeria currently has 27 power plants with a total installed capacity of more than 12,000MW but our available capacity right now stands at about 7000MW.
Total Installed generating capacity refers to the total amount of electricity all of our existing power plants can generate if Nigeria was a normal society with normal societal problems, but since we cannot be termed as a normal society yet, we still find ourselves having to deal with some extraordinary problems preventing us from generating the 12,000MW we have. Problems that even common sense could fix, but as i said earlier we are not a normal society. (don’t worry, i am going to talk about these abnormal problems in subsequent write ups, not today). Available installed capacity refers to the amount of electricity that can be generated today if the infrastructural issues that cut across the electricity value chain were to be fixed today (the Government is working hard to fix the normal problems).
Basically 1MW can light up 1000 houses with all the electrical appliances that make up a modern home or business. Invariably, this means that Nigeria has the ability to power 12,000,000 houses,but for a country with an estimated population of 170,000,000 Nigeria needs to generate at least 100,000MW to boldly call itself a developed nation. At this point I’m sure we can all agree that we have a very very long way to go. But why am i even going far considering we have never generated up to 50% of the 12,000 MW installed capacity, in fact Nigeria has never generated more than 5300MW at any given point in time.
Of Nigeria’s 27 power plants, 23 of them are fuelled by gas while the remaining 4 are hydro electric. This is why gas is so important to the supply of electricity in Nigeria, so the vandalisation of Gas pipelines in Nigeria is tantamount to darkness (though, darkness is already a natural occurrence with or without vandalism. What i meant to say was vandalism = Ultra darkness, hopeless darkness, the ‘i cant even see the tunnel’ kind of darkness)
2. Transmission Lines and Substations:
Transmission towers and its attendant wires (transmission line) can basically be referred to as the infrastructure that enables the long distance transportation of electricity in really high voltages.
A power plant generates electricity, the electricity generated is then passed on to the transmission lines for onward light-speed, long distance transportation to different parts of the country. A collection of these towers, wires and its substations are what makes up the National electricity GRID (don’t forget the meaning of this word).
The Grid consists of the interstate routes where the transmission lines are situated for the transportation of electricity across the country. Because these towers are interstate and all interconnected we have found ourselves in the unfortunate situation of having a central grid (another unfortunate situation to find ourselves in). The total transportation (wheeling) capacity of the Grid is about 6000MW. (it should be noted that the last time the grid took up more than 5200MW it (TCN) reported a system failure).
You see those poles (wooden or concrete) in front of your houses, the transformers in your estate or neighbourhood and the larger poles that takes the wires from one neighbourhood to the next? those are all distribution infrastructures. So distribution is the aspect of the power value chain that we all know about, as the name implies it collects power from the transmission and distributes it to us the final consumers. Total distribution capacity in Nigeria as at 2013 when it was fully privatised was 5300MW.
Institutional value chain
- Generation companies (GENCOS): The generation aspect of Nigeria’s power sector has been fully privatised. GENCOS fully own their power plants, it should however be noted that the Nigerian Government (federal, state and local government) owns about 8 power plants through a special purpose Vehicle (company) Niger Delta Power Holding Company (NDPHC), NDPHC’s status and performance would be a topic for another day.
- Transmission Company of Nigeria (TCN): This company own and controls the National Grid consisting of all the transmission towers and substations. Because Transmission controls the transportation of electricity in Nigeria, TCN is also referred to as the Systems Operator (SO). TCN is fully owned by the Federal Government.
- Distribution Companies (DISCOS): there are currently 11 licensed distribution companies in Nigeria. These distribution companies are 60% privately owned with Government retaining the remaining 40%, they are privately run without any interference from the Government on Matters of operations. DISCOS are also the end point for revenue collection, i.e they collect the payments from the final consumer on behalf of the other players on the value chain. The Electricity bill we pay to our DISCOS is shared across the value chain of the electricity sector.
I am sure we have started seeing some the problems of the power sector manifesting itself in the different installed capacities of the infrastructural power chain. When the installed capacity across the value chain is not uniform, then a part of the value chain would definitely suffer because of the inadequacies of the others, and in this case, Generation is the suffering step sister in this value chain.
Having looked at the Infrastructural value chain and the types of institution that controls them, my next write up would be focusing on the Market and Policy structure of the Electricity Sector.