The Nigerian government on Tuesday hinted at plans to restructure the Transmission Company of Nigeria (TCN) into two entities.
Nigeria’s Minister of Power, Adebayo Adelabu, disclosed this while speaking at the Federal Ministry of Power ministerial retreat held in Abuja on Tuesday.
The TCN, which coordinates the nation’s electricity transmission network, is one of 18 companies that were unbundled from the defunct Power Holding Company of Nigeria (PHCN) in April 2004. It was incorporated in November 2005 and issued a transmission licence a year later.
TCN’s licensed activities include electricity transmission, system operation and electricity trading. The company is currently fully owned and operated by the government.
Speaking on Tuesday, Mr Adelabu said the Nigerian Electricity Supply Industry (NESI) transmission sub-sector has been identified as a critical weak point in the electricity value chain.
“To align with the Electricity Act 2023 and the industry’s demands, it’s time to restructure the Transmission Company of Nigeria (TCN) into two entities: the Independent System Operator (ISO) and the Transmission Service Provider (TSP),” Mr Adelabu said.
He said this restructuring must synchronise with the evolving landscape of state electricity markets, addressing calls for the decentralisation of the national grid into regional grids interconnected by a new higher voltage national or super-grid.
“Essentially, we must ask whether the government should directly provide electricity nationwide or rather facilitate its provision.
“Drawing comparisons with China’s centralized model and the US’s diverse access models like rural cooperatives and state-based utilities with regulatory oversight presents various considerations.
“How to handle subsidies, cross-subsidies, and aligning the Rural Electrification Agency’s role with emerging State markets are vital questions that demand stakeholder scrutiny for effective resolution,” he said.
Speaking on the finance, revenue assurance and capital investment programmes across the electricity value chain, Mr Adelabu explained that the heart of NESI’s proposed reforms hinges upon securing long-term financing across the entire value chain.
“While past discussions highlighted concerns about the financial capacities of private sector players from the 2013 privatization, our focus must centre on collaborative solutions to alleviate present liquidity challenges.
“Initiating this quest for robust investment involves attracting domestic institutional investors and reputable partners from well-governed sectors within the electricity value chain,” he added.
The minister noted that the major issue in Nigeria’s power sector is the pricing of gas utilised by generating companies (GenCos) in US dollars.
“A hugely volatile variable that significantly affects the pricing of electricity to end-users. A more preferable option is to ensure that the gas utilized by the GenCos is traded in Naira to better manage the foreign currency-related inflationary trends that challenge the faithful application of the Multi-Year Tariff Order (MYTO) methodology,” he said.
As of 2022, he said 70.5 per cent of Nigeria’s electricity was generated from thermal plants, 27.3 per cent from hydro, whilst solar and other power plants made up 2.2 per cent.
“The good news here is that over 98 per cent of the feedstock powering electricity generation in the country are transition or clean fuels, as Nigeria ramps up its capacity to generate more electricity through renewable means such as solar, hydro, wind, bioenergy and others,” he said.
Mr Adelabu said the ministry would like to see more utility-scale solar power plants by 2030, which brings added responsibility for investments in generation and grid stability to address the variability that transmission of renewable energy-generated power over long distances brings.
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“This brings with it the need for distributed generation power systems from renewable energy-driven power plants, that are localized around clustered communities and embedded or captive areas while at the same time stabilizing our national grid and or deploying super-grids or regional grids that can transmit generated power over long distances with minimal losses.
“We need our investors, financiers and NESI value chain players to dimension the opportunities and electricity sector alignment with Nigeria’s Energy Transition Plan to ensure we meet our energy transition aspirations,” he said.
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