Energy and Power
Power: $1.2 billion penalty scares Senate from revocation of agreement
The Senate has lamented over $30 million expended monthly for services not rendered, but beat a retreat Wednesday on move to call for cancellation of Azura and ACU Gas Power agreement the federal government had with the companies in December 2015 .
Federal Government had signed agreement with the companies to enable it secure a $237 million loan to finance its 450MW project in Edo state and get gas supplied to Calabar power plant due to inability of Transmission Company of Nigeria (TCN) to provide the services.
Five years down the line, neither Azura nor ACU has been able to render full services the agreement contained to Nigeria but collecting between $30 to $33million on monthly basis from the federal government for services not fully rendered.
Irked by the worrisome development revealed to it by its Committee on Power, the Senate moved for cancellation of the agreement but quickly beat a retreat when reminded by the Chairman of the committee, Senator Gabriel Suswam, that fine of about $1.2billion would be slammed on the country .
Suswam who made the explanation as part of presentations made on report from the Senate’s Summit on Power Sector held in January this year, said the fine as contained in the agreement, will be drawn directly from the country’s foreign reserves .
“The agreement is a take or pay model which is highly disadvantageous to the country because, whether Azura generates the 450mw or not, Nigeria must pay the $30million to it per month without defaulting in anyway .
“The way out is for the Senate to liaise with the executive and the affected firms for way out of the injurious agreement and not going the way of breaching it to avoid the scary fine of about $1.2billion ” , he said .
Earlier in the report, Suswam explained to the Senate that since the Privatized Power sector as it is presently, is insolvent , government should use its 40% share to get it solvent by way of providing meters for the DISCOs to distribute to electricity consumers .
Doing this , he explained , will help government overcome monthly subsidies cum interventions , it has been injecting into the sector within the last seven years , totalling N1.5trillion now .
After exhaustive debate by virtually all senators present, the Senate adopted recommendations made by the Suswam led Committee.
One of which is total review of the Power Privatization carried out in November 2013 .
The upper legislative chamber also seeks for review of Electric Power Sector Reform Act 2005 in paving way for a new and more dynamic electricity Act that will consolidate all electricity related laws, consolidate the roles of the regulators and policy makers , bridge existing gaps in the legal and regulatory frameworks and cater to post – Privatization operational issues in the Nigerian power sector to boost investor confidence and positively impact on the overall outlook of the Nigerian power sector .
It also adopted recommendation on Cost reflective Tariffs which should only be implemented when majority of electricity consumers , have been metered .
As way of bridging the gap in remittances to the Nigerian Electricity Regulatory Commission (NERC), the Senate urged Ministries, Departments and Agencies of Government (MDAs) to make provision for payment of all outstanding debts and liabilities owed to DISCOs, as well as accommodate budgetary provision for anticipated consumption for the 2021 Appropriation year.
The upper chamber while kicking against the bill on criminalizing estimated billing, called for the immediate removal of the increased custom duties of 35 percent to allow Meter Asset Providers (MAP) clear meters stuck at the port.
According to the Senate, rather than continue to pay for consumption, the Federal Government should consider an intervention that would see to the purchase of customer meters as way of fulfilling its 40 percent shareholding in the Discos.
As way of insulating the Nigerian Electricity Regulatory Commission against political interference, the upper chamber resolved that the regulatory body be empowered and allowed to carry out its functions in a way that guarantees that it is not distorted.
It also called on the Federal Government to consider recruiting 320 additional manpower for the Nigeria Electricity Management Services Agency (NEMSA) to carry out technical inspection, testing and certification of all categories of Electrical installation across parts of the country, as well as provide nationwide metering inspection services.
President Bola Tinubu has approved the appointment of executive and non-executive members for the newly established Nigerian Independent System Operator, NISO.
In a statement issued on Wednesday by the Special Adviser to the President on Informaion and Strategy, Bayo Onanuga in Abuja, listed the names of members as, Adesegun Olugbade as the board chairman, while Abdu Mohammed Bello was appointed the Managing Director.
Four other Executive Directors are Engineer Nafisatu Asabe Ali for Systems Operation, Engineer Shehu Abba-Aliyu for Systems Planning, Dr. Edmund Eje for Market Operations, and Mr. Babajide Ibironke for Finance and Corporate Services.
According to the statement, the Non-Executive Directors include Lamu Audu, representing Generation; Folake Soetan for Distribution; Tajudeen Giwa-Osagie as Market Expert; Sule Ahmed Abdulaziz for Transmission, and Alhaji Mahmuda Mamman, Permanent Secretary at the Federal Ministry of Power.
“The National Council on Privatisation (NCP) will finalise the recruitment process.
“These appointments align with the Electricity Act of 2023. They followed a memorandum from Vice President Kashim Shettima and a rigorous selection process conducted by the Independent Board Nomination Committee (IBNC) in collaboration with Phillips Consulting Limited.
“The creation of NISO fulfils a key mandate of the Electricity Act (2023), which requires the unbundling of the Transmission Company of Nigeria (TCN) into a Transmission System Provider (TSP) and an Independent System Operator (ISO).
“The Nigerian Electricity Regulatory Commission (NERC) officially established NISO on April 30, 2024. The Bureau of Public Enterprises (BPE) and the Ministry of Finance Incorporated (MOFI) are its subscribers, each holding equal equity shares.”
The Energy Commission of Nigeria (ECN), through its Energy Management Systems project, has trained stakeholders in various Ministries and Agencies in Nigeria to enhance industrial energy performance and promote resource-efficient, cleaner production.
The training took place in Abuja on Monday.
The ECN said the initiative is implemented through programmatic approaches and the promotion of innovation in clean technology solutions.
Speaking during the event, the ECN Director General, Dr. Mustapha Abdullahi, stated that the aim of the training was to promote innovation in clean technology solutions under the NIG IEE/RECP Project, which is supported by the Global Environment Facility (GEF) and the United Nations Industrial Development Organization (UNIDO).
According to him, the project is also targeted at strengthening national industrial energy efficiency (IEE) policies and regulatory frameworks to encourage the adoption of UNIDO’s Energy Management Systems Standards (EnMS/ISO 50001) in Nigeria.
The Director General said, “With the increase in energy prices and the environmental impacts of energy consumption, there is a growing need for balanced energy usage and effective energy management to minimize energy wastage. It is therefore commendable that this timely training on Energy Management Systems (EnMS) is organized to present a systematic framework for establishing policies, processes, procedures, and specific energy-related tasks aimed at meeting an organization’s energy-saving targets.”
Also, the Program Coordinator for Environment and Energy at the United Nations Industrial Development Organization (UNIDO) for Nigeria and ECOWAS, Mr. Oluyomi Banjo, commended the ECN for organizing the training.
He said, “Globally, industries account for one-third of total energy consumption and almost 40% of worldwide COz emissions. The need to reduce energy consumption, environmental degradation, and resource depletion by industries in emerging economies is particularly urgent. Since 1990, global growth in industrial production has been dominated by emerging economies like India and China, which together accounted for over 80% of increased industrial production during this period.
“This project was collectively developed and submitted by UNIDO on behalf of Nigeria in 2017 under the Global Environment Facility (GEF) 6 programming cycle. It was approved for full project development in 2017 and subsequently for full project implementation in 2020. It may interest you to know that, for the first time at UNIDO, we are integrating industrial energy efficiency with resource efficiency and cleaner production in a single project. In South Africa, UNIDO’s project on Industrial Energy Efficiency recently received the Best Project of the Year award from the Southern Africa Energy Efficiency Confederation. We look forward to replicating such achievements in Nigeria.”
“The outcome of this project is targeted at industries, aiming to develop an expert base in Nigeria that could also be exported to other countries in Africa and beyond.”
The Rural Electricity Agency (REA), in partnership with the Adamawa State Government, is set to convene the REA – Adamawa State Strategic Roundtable theme “Empowering Adamawa: Unlocking Private Sector Opportunities in Distributed Renewable Energy”, scheduled for the 3rd of March, 2025 at the Transcorp Hilton, Abuja. The Agency invites frontline stakeholders in the clean energy ecosystem, including private sector players and development finance institutions to this strategic, solution-focused Roundtable.
In line with the Agency’s ongoing State-by-State initiative designed to exploit the tenets of the 2023 Electricity Act, passed into Law by His Excellency, President Bola Ahmed Tinubu, GCFR, the Agency has sustained its drive to deliver on the objectives of the futuristic Act, while strengthening the National Electrification and Strategy Implementation Plan (NESIP).
Leaning on the strategic efforts of the Honourable Minister of Power, Chief Adebayo Adelabu, the REA State-by-State Strategic Roundtables continue to serve as a veritable tool and a meeting point to facilitate impactful partnerships between active stakeholders in the energy sector while exploring opportunities for the growth of the state electricity markets.
Having convened five Roundtables with five State Governments, the Agency is now working in lockstep with the Adamawa State Government, at the behest of His Excellency, Governor Ahmadu Umaru Finitri, and the Managing Director of the REA, Abba Abubakar Aliyu, to facilitate structured, data-driven commitments for people-centred infrastructural development through innovation and sustainability in Adamawa State’s electricity market.
The State Government, under the leadership of Governor Ahmadu Umaru Fintiri, has advanced efforts towards strengthening its electricity market, including the planned establishment of Independent Power Plants across the state and the set-up of the Adamawa State Electricity Commission tasked with regulating the generation, transmission, and distribution of electricity in the State.
The 2023 Electricity Act, having aided the decentralization of the nation’s electricity sector has given State Governments the regulatory freedom over their respective electricity market.
Leaning on the mandate of the REA as well as the Agency’s technical and strategic expertise, the REA – Adamawa State Strategic Roundtable will serve as an opportunity to exploit the tenets of the NESIP; strengthening PPPs for data-driven clean energy projects in Adamawa state; supporting the State’s efforts on improved electricity distribution and renewable energy integration; exploring investment opportunities in Adamawa State Electricity market and exploring technology options for improved, sustainable energy access in the State.
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