February 25, 2024

Despite $7.5b investment, TCN fails to stop 138 grid collapses in decade

By Our Reporters

Poor governance structure and abysmal management of the Transmission Company of Nigeria (TCN), especially the national electricity grid, that has gulped over $7.5 billion in the past decade without proper transmission as lots of energy is lost has remained quite a challenge.

There has been over 138 system collapses since the power sector was privatized.

Data on on grid collapse seen by EnergyDay revealed that in 2013, the country recorded 24 power system collapses. The collapse incidents stood at 13 in 2014. In 2015, the grid collapsed 10 times; in 2016, it shot up to 28, while 21 cases were recorded in 2017.

Grid collapse cases in 2018, 2019, 2020 and 2021 were 13, 11, four and four, respectively. It collapsed about 10 times between 2022 and this year.
A number of Distribution Companies (DisCos) confirmed to The Guardian that the grid went down at 00:41a.m. and 7:40a.m. as the TCN, admitting to the development, linked it to a fire incident.

It’s worthy of note that federal government had gone a borrowing of over $7.5 billion from the World Bank, African Development Bank (AfDB), Japan, France Development Agency and other financiers to strengthen the debilitating wheeling capacity of the transmission network and the grid.

But Dr. Olufemi Omoyele, an economic analyst and energy watcher shared the arguments of many stakeholders when he told EnergyDay that the inefficient management bureaucracy and bottlenecks that recall the pre-privatization practices, alongside pervasive corruption, political indecision and exigency, non-alignment of infrastructure, and the inability of the DisCos to increase their off-taking capacity, among other factors, have made the efforts of the lenders null and void.

In spite of huge funds sunk into improving transmission capacity, it has not yielded any tangible results.

Recall the $2.3 billion Siemens deal, which was meant to improve transmission infrastructure, Nigeria had also taken pains to inject about taken a $486million-loan from the World Bank under the Nigeria Electricity Transmission Project (NETAP).

International efforts to improve transmission infrastructure also came handy , as Japan gave a $242.4 million loan to the Federal Government for the implementation of the Lagos and Ogun Power Transmission System Improvement Project, just as the House of Representatives in 2017 disclosed that foreign loan to the TCN totalled $1.5 billion, with a separate $500 million loan being negotiated with the Islamic Development Bank (IsDB).

It’s on record that Recall that the AfDB a year ago confirmed a total financing loan of $1.8 billion for Nigeria with the electricity loan forming a large chunk of it.

In 2020, it would be recalled that the Federal Government sought a $3 billion World Bank loan to finance the transmission network. The fund was provided in four tranches of $750 million each.

As part of its efforts to improve transmission capacity, in 2019 the The African Development Bank (AfDB), further gave approval of a $210 million loan for the upgrade of the electricity transmission and distribution network.

GenCos and DisCos had in the past repeatedly rued the negative impact incessant grid collapses have had on machines and revenue, and experts have smelled contract violation on the part of transmission company.

They maintain that slew of grid collapses has constituted contract violation signed between TCN and Nigerian Electricity Regulatory Commission (NERC) to ensure that minimum of 5,000MW is transmitted through the grid under the Service Based Tariff (SBT).

The grim reality according to many energy experts is that in the face of other implications, the collapse of the grid cost end-users in Nigeria about N3 billion per day. Nigerian Bulk Electricity Trading (NBET) Plc had at different fora insisted that electricity invoices in the country average N60 billion monthly from the national grid, translating to about N720 billion every year. With existing subsidies being incurred by the government, the daily cost of a collapse hovers around N3 billion, according to experts.

Omoyele said not all effects of the frequent grid collapse are analysed. According to him, pervasive loss of value across different sectors of the economy would reflect the impact of the grid collapse.

Sources at the Association of Power Generating Companies told EnergyDay that most factors always responsible for these frequent collapses are equipment failure, since most of them are obsolete; lack of gas and other problems in the sector, noting that the power value chain is the cause for the drastic drop.

GenCos hold strongly to the belief that foreign exchange crisis, shortage of gas as well as TCN lack of capacity to tackle frontally the challenges in the sector are also causing incessant disruption of the grid causing sudden drop in generation, as the system has become more fragile.