Wednesday, November 3, 2010

Nigeria may lose N20 trillion to poor electricity yearly

THE stalled expansion of Nigeria’s grid capacity combined with the high cost of diesel and petrol generation may cost the nation N20 trillion yearly.

Disclosing this, a report by the Presidential Task Force on Power, observed: “ If this situation were to persist, the cost by 2020 in terms of lost GDP would be in the order of 20 trillion naira ($130 billion) every year.”

Also, all bridging claims by petroleum products transporters will be done by electronic automation via Radio Frequency Identification (RFID) device thereby eliminating malpractices.

The report on the power sector obtained by The Guardian noted: “Despite annual capital injections averaging $2 billion per annum, the available capacity of Nigeria’s state-owned electricity utility has been stuck at about 3,000 MW for the past two decades.

“However, the cost in terms of lost GDP is many times greater than all the waste and leakage which have attended these capital budgets. This is because of the strong and inescapable link between electricity supply and economic development.

“Self-generation of electricity, from diesel and petrol generators, is conservatively estimated at a minimum of 6,000 MW, that is, more than twice the average output from the grid during 2009. Moreover, half the population and the vast bulk of the country’s poor, have no connection whatsoever to the grid. The consequence of this yawning gap between demand and supply is that, although the current regulated, average and levelised tariff is just N8.5/kWh, the poor currently pay more than N80/kWh burning candles and kerosene; manufacturers pay in excess of N60/kWh on diesel or LPFO generation; everyone else pays around N50-70/kWh on self-generation, diesel or petrol. The result is that Nigerians as a whole spend between five and 10 times as much on self-generated light and power as they do on grid-generated electricity.”

Meanwhile, Chairman of the Presidential Task Force on Power, Prof. Bart Nnaji, Minister of State, Power, Nuhu Wya, and experts from across the world would converge on Abuja this month to explore avenues to make government policies in the power sector more consistent. The event would be the Nigeria Energy and Power Summit (NEPS), billed for November 25 and 26.

A statement from the London office of the organisers of the programme sent to The Guardian maintained: “It should be understood that the Nigerian power sector has had a long history of failed policy implementation, ineffective coordination, and underfunding, low production, just to mention a few. It is on the heels of these that the Africonomie has come up with the NEPS, a step in solving the hydra headed power anomalies otherwise known as the power sector problems in Nigeria.

“In simple terms, NEPS is a high-level coalition of key energy, power and finance professionals, government departments, businesses and organisations. This strategic coalition is designed to facilitate action towards meeting the energy and power supply needs of the country as well as securing the nation’s energy and power future. What’s more, NEPS is expected to deliver on our environmental target. The 2010 NEPS is designed to foster dialogue between policy makers, energy and power industry, and the investment community. It is the most comprehensive gathering of policy makers, international and indigenous energy professionals in Nigeria,” the statement added.

Mrs. Sharon Kasali, the PEF boss, stated in Abuja yesterday at a press briefing that the agency saved about $2 million, explaining that the solution was developed by in-house computer engineers.

The new system which she tagged, “Operation Aquila”, will replace the present e-payment system which was first introduced in PEF in 2007 when she assumed office.
Kasali maintained that the new system was influenced by the need to checkmate payment delay and irregularities.

The new automated system which she said would be introduced in December would operate simultaneously with the present system till first quarter of 2011 when the automated system will be introduced fully.

She said: “The present solution entails that PEF staffers are on ground at depots where products are loaded and then check again at the receiving depot to ensure that delivery actually takes place. This system is fraught with irregularities and the amount of paper work needed is enormous. We have all kinds of bags here containing the claims of transporters and the verification processes can be cumbersome. When we first introduced e-payment system, most people thought that it will be impossible but today, it has become the common practice in government businesses. But there is the need to further improve on that and that is why we have developed this solution that has completely eliminated paper works.”

Kasali who said the device would be attached to tankers and not truck head, added that the device is fully configured to eliminate all sharp practices employed in the transportation of petroleum products across the country.