Interview: Jay Ireland
How has the privatisation of the power sector impacted overall network reliability?
JAY IRELAND: The privatisation of the power sector is under way and moving in the right direction, but in terms of its impact on the final consumers, there is still a lot of work to be done. Power generation is still quite low when you compare the deficit between what is generated with the total potential and real demand. Generation of power is now deregulated. We have seen some progress in the privatisation of the legacy the Power Holding Company of Nigeria’s assets, and some sites have increased generation.
On the generation side, there is a huge shortfall between installed capacity and actual generation capacity. This gap is due to a variety of reasons such as inadequate maintenance of facilities, vandalism of gas lines and cable lines, low funding of power stations, and obsolete equipment, among others. The transmission infrastructure as it exists today is woefully inadequate and would require significant investment to enable transmission of the power currently being generated and to increase capacity in the future. This sector would benefit greatly from development finance to overhaul the system and improve the flow of electricity to the end-user. The distribution arm has also been fully privatised, and the recent 45% increase in consumer tariffs for the distribution companies is a great step in the right direction for increased liquidity.
However, there are losses of revenue that could be fixed by a more adequate metering regime and discipline of collections. It is difficult to predict how long it will take to meet the power needs of Nigeria, but the efforts are certainly moving in the right direction. By fully utilising the stranded assets in generation, improving the return on investment in distribution and attracting significant investment to help overhaul the transmission system, Nigeria should be set to meet the demand for electricity.
What potential do you see for off-grid or distributed power in Africa, and how are you working towards off-grid solutions currently?
IRELAND: Off-grid power is the quickest way to get electricity to the final consumer. Because the power is generated at or near the point of use, it gives users more options and flexibility to generate and control power when and where it is needed. This is why GE launched a “distributed power” business in Africa, which includes a portfolio of innovative power solutions, including gas turbines and reciprocating engines ranging from 100 KW to 100 MW, giving businesses and communities across Africa the ability to generate reliable, fast and efficient power anywhere, whether on or off the grid.
GE is working with the US Africa Development Foundation and the US Agency for International Development on off-grid solutions. A major benefit of off-grid energy is that it allows for a relatively short turnaround time and immediate impact for end-users. While pursuing long-term power solutions, distributed power provides a good short-term solution to meet electricity demand across Africa.
What sort of infrastructural adjustments are needed to better exploit resources for domestic power provision?
IRELAND: If I were to pick one important adjustment it would be the need to further address the pricing structure. Gas has to be priced appropriately to make projects more bankable and encourage investment in the sector.
Other challenges facing private producers include the lack of significant funding, inadequate gas supply and lack of the project management capacity required to take large-scale power projects from start to finish. Overall, there is work to be done across the entire power value chain, from fuel supply to generation, transmission and distribution.
Read More from OBG
