• Transmission company rocked by protest over appointment of new MD
• Power generation rises slightly to 3,528MW
Chineme Okafor in Abuja with agency report
The federal government has approved a new project financing model for the Transmission Company of Nigeria (TCN), through which private investors would be invited to bid, procure and build sections of earmarked transmission projects of TCN, its Managing Director, Dr. Abubakar Atiku has disclosed.
Atiku stated yesterday in Abuja during a briefing on TCN’s activities in the last six months, that the new financing model would enable the company to reinforce and rehabilitate the transmission grid using private funds, which would be repaid overtime from its revenue.
He also took out time to list the achievements of the company since the government took it over from Canadian firm, Manitoba Hydro International (MHI) that previously ran TCN under a management contact.
Last year, THISDAY exclusively reported that the Bureau of Public Enterprises (BPE) had suggested the option of contractor finance to the federal government as one of the ways to set TCN on a strong financial path, and also free the government from funding it through budgetary allocations that are hardly sufficient for the company’s transmission projects.
Atiku added that transmission projects estimated to cost $200 million had been earmarked for the first tranche under this financing model.
He, however, said that a proviso for the commencement of the new model was a healthy revenue stream for TCN from the electricity market.
The market, Atiku noted, owed TCN about N100 billion unpaid wheeling charges revenue over a period of time. This, he noted, was occasioned by a drop in the settlement of TCN’s invoices by the market from 55 per cent to 33 per cent.
“The federal government has approved the contractor finance model for the reinforcement and rehabilitation of projects in the TCN. The first tranche is for $200 million projects,” said Atiku.
He further explained: “The implication of this financing model is that private contractors or investors can now fund TCN projects and be paid overtime. Although this would lead to the timely completion of projects, it is premised on our getting about 60 per cent of our invoices paid, which is not the case currently.”
According to him, the first tranche would shortly be advertised for interested investors to bid and take up the projects.
“Investors are expected to recoup their investments from our wheeling revenue obtained from the electricity market. This exercise is expected to commence as soon as our cash flow increases from the present 30 per cent to 60 per cent which will guarantee repayments to investors over the period of time to be agreed upon,” he said.
On the market debt to TCN, Atiku stated: “The major challenge confronting TCN is the problem of illiquidity in the electricity market. Payment for TCN services in the market has gone down from 50 per cent to 30 per cent in the recent past and with that, funds coming to TCN in the form of revenue have also reduced.”
“It would interest you to note that TCN was paid an average of 33 per cent of her total invoices sent to the Market Operator between January and September 2016, which further reduced to 27 per cent in the month of November 2016.
“The poor run on invoices has negatively affected our operations and development of the nation’s grid. So far, the market owes TCN close to N100 billion as arrears on wheeling charges.”
Atiku said TCN, under his management in the last six months, grew its wheeling capacity from 5,500 megawatts (MW) when Manitoba left, to 6500MW, in addition to reducing its Transmission Loss Factor (TLF) from 8.05 per cent to 7.82 per cent, which resulted in an additional N5 billion revenue growth for TCN.
But as Atiku rolled out the new financing model for TCN projects, a protest over allegations that the Minister of Power, Works and Housing, Mr. Babatunde Fashola has appointed Mr. Usman Gor Mohammed, an official of the African Development Bank (AfDB), to take over from Atiku as the transitional managing director of TCN, broke out at the company’s corporate headquarters shortly after Atiku’s briefing.
Led by state chapter heads of the National Union of Electricity Employees (NUEE) and Senior Staff Association of Electricity and Allied Companies (SSAEAC), workers of TCN alleged that the government was about to welcome a fresh $150 million project funding plus an additional $200 million promissory note from the African Development Bank (AfDB), and as such appointed Mohammed whom they described as its lackey to oversee the fund’s expenditure.
Reporters sighted a letter from the Ministry of Power, which was signed by the Permanent Secretary, Mr. Louis Edozien, and addressed to Atiku to amongst other things, immediately handover the running of TCN to the Mohammed.
The letter was dated January 31, 2017, and state that Atiku was no longer the substantive head of TCN.
This, according to the union, was an unhealthy process for recruiting a replacement for such position.
They equally alleged that Mohammed, who was a former junior staff of the TCN before he moved to AfDB but is now back on secondment, lacked the requisite skills to head the TCN.
According to them, the development would not be accepted by the union on the grounds that Mohammed is an accountant, while TCN is an engineering outfit.
The state Chairman of NUEE, Wisdom Nwachukwu, who spoke to reporters, said a protest letter in this regard has been written to the government requesting that it follows the right recruitment process, and that if the union’s demands are not considered, it may be forced to take drastic measures.
Similarly, another letter to the federal government by the Nigerian Society of Engineers (NSE), which also queried Mohammed’s appointment, stated that a situation where a lender was allowed to pick for the government who would lead its benefitting agency was unhealthy and unacceptable.
However, a source in the Ministry of Power informed THISDAY that the unions and NSE were being instigated by Atiku who is trying to hang on to his job.
He said: “President Muhammadu Buhari has already approved the appointment of Mr. Usman Gor Mohammed as a stop gap measure. His contract is limited to six months, during which the government will decide on the next step to be taken with respect to TCN.
“His contract also clearly stipulates that he will be excluded from the recruitment exercise for a substantive managing director of TCN.
“All this is Atiku’s doing and we have it on good authority that he has sent petitions to the National Assembly to stop his removal, but quite frankly this is the prerogative of the executive arm.”
When asked if the AfDB had demanded for Atiku’s removal as a precondition for providing a loan to TCN, the power ministry source denied the allegation, stating: “AfDB last year approved $1 billion as part of the budget support facility for the federal government of which $600 million was released.
“Of the $600 million, nothing has come to TCN. This, notwithstanding, TCN has received funding from multilateral donor institutions for years.”
Meanwhile, TCN has said power generation nationwide inched up slightly to 3,528.90 megawatts (MW) on February 1 from 2,662MW generated on January 22.
This figure was disclosed on the website of the System Operator (SO), a sub-agency of the TCN, in its daily forecast on power generation in Lagos yesterday, reported the News Agency of Nigeria (NAN).
“The slight increase in generation is due to slightly increased gas supply to some Generation Companies (Gencos) to boost operations.
“The total output of 3,528.90MW from all the Gencos on Wednesday has been transferred to the 11 Distribution Companies (Discos) across the country,” the System Operator said.
The Nigerian Electricity Supply Industry (NESI) operational report said the power sector dropped to 2,662.20MW on January 22 because of low water levels and challenge of accessing gas by Gencos.
The report said the sector recorded highest system frequency of 51.50Hz and lowest system frequency of 48.80 Hz, while the highest and the lowest voltage recorded yesterday were 372KV and 300KV, respectively.
A reliable TCN official, who preferred anonymity, confirmed that gas supply to the Gencos had increased slightly, thereby increasing electricity generation.
The source said that the Gencos’ inability to pay up the debts they owed gas suppliers also contributed to the drop in power generation on January 22.
“Government’s intervention helped the gas companies to allocate more gas to generation companies.’’
Another top official of Egbin Power Station, who also preferred to remain anonymous, said due to the slight increase in gas supply, the station ramped up generation to 400MW, against 150MW last month.
The station however has a capacity to generate 1, 320MW.
The official appealed for improved gas supply to the station, so that it could fire all its six units.
According to the official, the Gencos are equally being owed a huge amount of money by the federal government, which poses a serious challenge to their operations.
“Gas to Power should not be politicised. Government should take issues of power very seriously and find lasting solutions to the lingering issues.
“The 400MW Egbin generated was wheeled out to the national grid at 6 a.m. today (yesterday),” he said.