How and where do I start to educate my legal and professional colleague, the Egba Chief as he proudly refers to himself, who incidentally is the spokesperson for the DisCos, on the issues of the sector notwithstanding his many years in the sector? Severally, he has accused me of being paid to lie. Yesterday he personally sent me a stinker on his chat with the media where he said “it was a big lie by the GenCos Spokeswoman”. This is not the first nor second, but on several occasions the DisCos spokesperson has left critical issues to chase shadows. On one of such occasions, on Live TV show, NTA to be precise, he said “She has been paid to lie for the GenCos”. This was disgusting to both the audience and interviewers but I pardoned his ignorance. The next day, we were on set again I presented irrefutable facts from the grid proving my point for all. With all sense of humility and responsibility, I stand for facts and not propaganda or frivolities. Facts speak for themselves. He who asserts, we say as lawyers, must prove and below are my evidential proof buttressing all my submissions in the referenced publication. Ignorance unfortunately is incurable but can only be managed.

I researched for the cure for ignorance and what I saw was that though there’s no cure for ignorance, overall, there are some things we can do to manage or mitigate the negative effects associated with cluelessness.

We can:

· Be aware of it.

· Seek to reduce it in the areas that matter most to our lives.

· Stay curious and open about it as much as possible.

I am very much aware that many people on this forum are veterans and are my mentors and teachers as I do not claim to know it all but I take learning as a daily exercise.

However, for the benefit of others who may need to know how the power sector works as well as the various terminologies relative to the subject matter discussed, below are some of the terminologies relative to the so called Truth versus Lies thesis submitted by the DisCos spokesperson. For the records, I stand by every fact I publish. My facts are verifiable even as they are from the NESI’s only source of data (NCC/APT) which we all have recourse to.

Installed Capacity: Nameplate capacity, also known as the rated capacity, nominal capacity, installed capacity, or maximum effect, is the intended full-load sustained output of a facility such as a power plant, electric generator etc. The total installed capacity in Nigeria currently stands at over 13000MW. For better reference, please refer to NBET and the market/system operator for full details on the breakdown.

Peak Generation: is the highest level of generation that has been called up and is usually measured over a 24 hour period with the maximum of daily peaks recorded over a given duration of time. Peak Generation is usually less than available generation and its value is driven by offtake hence peaks occurs within an instant, a second, rather than throughout the day.

Actual Capacity: means the actual net generating capacity of the Plant expressed in MW, calculated using ambient site conditions, gas availability, Grid conditions, Ancillary Service obligations.

Installed Capacity: Nameplate capacity, also known as the rated capacity, nominal capacity, installed capacity, or maximum effect, is the intended full-load sustained output of a facility such as a power plant, electric generator.

Available Capacity: means the net generating capacity of the Plant expressed in MW at the Reference Site Conditions that Seller would have been able, in the absence of any Availability Events, to make available for dispatch to Buyer at the Delivery Point; provided, however, that Available Capacity may not exceed the lower of Tested Capacity and Initial Tested Capacity. Available generation capacity is one of the indices of the MYTO, which is as globally practiced, the capacity that has been declared, tested and available.

Unfortunately due to lack of understanding, the DisCos consider Available Capacity to be equivalent to what they actually off-take to distribute to consumers. This anomaly presents a serious risk to the market, especially in developing a comprehensive framework for determining the industry pricing structure with a view to delivering a viable and robust tariff policy for the Nigerian Electricity Supply Industry (NESI). This has become a big challenge and an inhibitor to the NESI, defeating the effort of the GenCos in recovering unavailable capacities, considering the massive fixed charges incurred to keep such units available.

REJOINDER TO COMMENTS FROM THE DISCOS SPOKESPERSON

In other to put my responses in perspective, I have itemized the comments from the DisCos spokesperson into categories, i.e. LIES & TRUTH NO 1, with my response to each category.

It is truly regrettable that we either spend time on propaganda or propagate information that is inconsistent with facts rather than putting heads together to seek resolution of NESI’s issues.

For emphasis, please see the following –

*LIES No

1 “The supply growth from the takeover date of November 1, 2013 to date shows that available generation capacity, which was 4,214.32MW, has increased by 93.27 per cent to 8,145MW (as GenCos recovered 3,930.68MW). “Due to system constraints, generated power is rejected or forced to be reduced to match the infrastructure that transmits and distributes this power to the customer”

TRUTH No 1: While there has been commendable recovery of generation capacity, a review of NCC records would indicate that peak generation ever, has been 5,373 MW (7th February 2019), with gas (mostly), hydro and line constraints. With 25 out of 28 of our power plants fueled by gas, it seems to me to be misleading to keep making references to generation availability of 8,145 MW, when effectively, to date, only a peak of 5,373 MW has been achieved, due to lack of gas, principally.

RESPONSE No 1: He who asserts must prove. If the GenCos data obtained from the NESI source of data, NCC are lies, then what is the truth? In their TRUTH, the DisCos spokesperson admittedly agrees that there has been commendable recovery without stating the facts.

Again a further display of ignorance is not understanding that while the GenCos primary responsibility is to make capacity available, it is the obligation of the off-taker to determine when such capacity is called up. In other words, in a normal electricity market, a GenCos’s primary responsibility is to ensure its machines/equipment are available and a call to generate power is at the behest of the off-taker (Government or NBET). The Off-taker is expected to provide the gas or could mandate the GenCos to enter into gas contracts that the off-taker guarantees. Today, the Nigerian Electricity Market is much distorted as NBET pushes thermal GenCos to sign gas contracts without providing the under-guarding PPA that takes the risk of the gas contract.

Some GenCos who have entered into gas contracts are in a financial mess as they are left to figure out payment for the contracted gas. It is on record that the system has not been able to optimally utilize power that is available even from the seemingly lack of gas so called. Every day, several power stations are told to switch off to manage frequency due to low energy demand. Generated power is rejected or forced to be reduced to match the infrastructure that distributes this power to the Customer, making GenCos operate below their optimum.

The generation plants are now being run as regulating power reserves by TCN, via its subsidiary SO/NCC to stabilize the national grid. Some of the machines with 145MW capacity are subjected by NCC to operate at 70MW – 100MW daily average, which constitute50% base load value.

Indeed, the peak generation till date is 5,373MW. However, ANED’s assertion of this figure as the available generation capability can best be described as hilarious and shouldn’t be expected from a group which ought to understand the workings of the power sector. First, GenCos hourly generation is highly dependent on the System Operators instructions which is determined by transmission and distributions ability to accept load (power). Thus, GenCos cannot generate beyond what is being requested by the SO. Also, ANED listed gas, water and line (grid) constraints, one is surprised as to why they are silent over their inefficiency. In the case of 7th of February 2019, despite a peak generation of 5,375MW, it must be noted that the DisCos rejected as high as 923MW, while TCN’s inefficiencies led to a loss of 120MW. On average, since 2015 till date, DisCos have rejected over 955MW daily and as high as 2,485.4MW (as recent as 27th of April 2020), making supply to consumers less than 4,300MW despite an ‘acclaimed’ 11,000MW distribution capacity. Why so?

ANED is always quick to point out gas constraint when responding to sectorial issues, forgetting the fact that lack of gas is primarily as a result of the liquidity crunch in the sector. Data made available by the bulk trader shows that DisCos remittances in the first quarter of the year 2020 only accounted for 21% of GenCos total invoice, falling short of the 36% MYTO requirement. Putting it to context, Gas supply accounts for about 60% of a typical thermal GenCos monthly revenue. In March 2020, GenCos total invoice was N52.6Bn, however, only N5.7Bn was remitted by DisCos. Implying an 11% remittance by DisCos despite a MYTO minimum requirement of 36%. In line with this, how is a GenCo expected to settle its gas bill, and other obligations such as O&M when what is made available has not been utilized from 2013 till date?

LIES No 2: “Out of the meagre 5,500MW of transmission wheeling capacity, the DisCos have not proven to be able to distribute more than 4,500MW, continuously leaving yet another 1,000MW of generation capacity unutilized”

TRUTH No 2: First of all, DisCos can only distribute energy that they receive. Secondly, the most energy ever wheeled by TCN is 4,557 MW, with generation at 5,074 MW (7th February 2016). Even at the peak generation of 5,373 MW (7th February 2019), the maximum energy wheeled to the DisCos was 4,303 MW. Finally, it is important to mention that a stress test conducted by TCN in 2015 indicated that the DisCos have a distribution capacity of 6,288 MW. The more recent distribution capacity indicated by Siemens in its “Electrification Roadmap for Nigeria” report, May 7th, 2019” is 11,000 MW.

RESPONSE No 2: One can only wonder what the DisCos spokesperson is referring to as lies here, other than a gross display of ignorance to the modalities of the market? The speaker in his own words admitted that the maximum energy wheeled to the DisCos was 4,303 MW. Again, going by the day ahead model discussed below, and the fact that dispatch is driven by demand and it is instantaneous, where then is the lies. The data used by GenCos is from NCC/APT sites not GenCos records for your information.

The popular lingua franca that “DisCos can only distribute energy that they receive“ has now become a cliché. They forget that it is what they demand that they get since Frequency will rise when more is given than their capacity. On a daily basis the frequency that should remain within 49.75Hz – 50.25 Hz (+/- 0.5% from nominal value of 50Hz) varies from 51.5 Hz to 48.5 Hz . Available information shows that the DisCos have consistently not met their respective MYTO Allocations. Case in point, on 24th March 2020, despite a meagre MYTO Allocation of 3,932.76MW, DisCos actual consumption only totaled 2,700.34MW, thereby amounting to a 31.34% (1,232.42) loss. Also, on the 6th of April 2020, despite a MYTO Allocation of 4,324.46MW, DisCos actual consumption only totaled 3,267.58MW, thereby bringing about a 24.4% loss. Once again, this is worrisome, considering an acclaimed 11,000MW distribution capacity.+/-2.5 %) hence causing extensive damage to the GenCos machines from system induced stresses.

At the moment, Electricity on the grid cannot be stored for future use, so supply must vary dynamically with changing demand. For grid stability and reliability, supply and demand must be matched at all times. Balancing supply and demand on the grid is important for its reliability and stability. Unlike other commodities that can be efficiently stored in bulk; electricity demand and supply must be matched in real-time. If supplied electricity is higher than demand at any time, there will be loss of electricity and system frequency will rise. Hence, electricity must be produced and used simultaneously.

Having said this, the NESI practices a day ahead declaration model to schedule for load or electricity. Each day, the generation companies are made to issue a declaration to the System operator on their plant capability against the next day. This is submitted by 12noon latest. Same is done by the distribution companies as to what they can offtake. This data from the DisCos is then communicated to the GenCos. It is a common fact that to enable efficient load management, Supply must meet demand exactly in the power grid. This in addition is because, Generation is at the instance of the Off-taker.

The DisCos spokesperson stated the capacity of the DisCos by referencing a stress test conducted by TCN in 2015 which indicated that the DisCos have a distribution capacity of 6,288 MW. There is persuasive evidence out there that for both technical and commercial reasons, the DisCos have been rejecting load not because they do not have the capacity to take but for reasons best known to them. But let us assume, their available capacity is 6,288MW and their installed capacity is 11,000MW. How does that match the current installed capacity of the GenCos of over 13,000MW, or the available capacity which currently stands at 8,500MW? Given that the ideal power delivery model for Nigeria envisages a transmission wheeling capacity that is at least 20% higher than the generation capability and a distribution capability that is at least 20% higher than the transmission wheeling capacity:

• Allowing for optimal loading

• Allowing for technical loss considerations (especially in the distribution subsector)

• Allowing for the N-1 criteria (redundancy) and ring networks (back-feed network arrangements).

This means that transmission should be 20% more than 13,000MW while distribution should be 20% higher than transmission. Please our mathematicians, tell me if this amounts to 6, 288MW?

Secondly, the said spoke person stated that of the GenCos claims which he declared as all lies, on the ground that the system has only ever achieved a peak of 5,373 MW it is hoped he now understands that Peak generation is the highest instantaneous generation that is called for or taken. It does not mean that is all GenCos have to give.

TRUTH No 3. I would suggest that there is greater value to an independent assessment of the technical capacity of NESI, for the minimum alignment of the entire value chain, gas-to-power, than the effort we spend on information that is not consistent with the facts.

RESPONSE No 3: GenCos are waiting earnestly for that day to come. We have delivered. The famous Siemens report, World Bank, NIAF, DFID etc. have all attested to the fact that Generation is cooling off, expending money/investments and waiting for others to catch up. We set the pace for other to follow. But for how long is the big question. I rest my case for now.

Thank you.

Dr Joy OGAJI

Executive Secretary, APGC

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Dr (Mrs) Joy OGAJI (MBA, PhD, LLM, BL, LLB)

Phone: +234 813 092 2398