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POWER CRISIS: TIME TO INVEST IN OTHER ALTERNATIVE SOURCES

By NBF News

Goodluck and Allison-Madueke

Nigeria's epileptic power supply continues to pose a major challenge – or embarrassment – to the country - its leaders, citizens and investors alike.

In the last ten years, the major reason advanced for the crisis in the power sector has been the inability to generate the required power that could meet the needs of the country.

And at the root of this problem is the over-reliance on thermal and hydro power plants as sources of power generation for the country.

While the hydro plants are said to be badly affected by draught occasioned by global warming and the unpredictability of rains to flood the dams and power the turbines, the thermal plants (which included even the new ones built in the last five years) are excused not to operate at optimal levels owing to shortages of gas supply - shortages which are often associated with the vandalisation of pipelines carrying the gas from the Niger Delta to the power plants, or disagreements between gas supplying companies with PHCN over payments.

The crisis in water and gas supplies, more than anything, depicts the shortcoming or inherent danger in the country's over reliance on these two sources of power generation, and reinforces the call by analysts for government and other stakeholders to consider massive investments in other alternative sources of power generation, like coal, wind, solar, and even biofuels.

Indeed, poor power supply has created a lot of discomfort for domestic users who have to grapple with how to cope without light (for weeks or months) to power essential appliances in their homes, for commercial and industrial users, absence of stable power supply has remained one of the greatest disincentives to boost the growth of the real sector. In fact, an estimated 1,000 industries is believed to be shut down annually in the country due to escalating cost of operation or overhead occasioned by exorbitant cost of running plants on diesel or petrol generators. Public electricity from PHCN cost far less; some experts put the cost of running on private diesel/petrol plants to quadruple that of public electricity.

The resultant effect is that government's quest to attract investors to grow the economy has remained a mirage as no investor would invest money in an environment that he is unsure of recouping his investment. In the last couple of months, there has been a relocation of some industries from Nigeria to other neighbouring countries like Ghana where power is stable. The blame on the obsolete nature of existing power generating plants - both thermal and hydro to pump out the required electricity to meet the needs of the people has also been sustained by government.

Nigeria's power generation capacity, at present, is not up to 4,000megawatts, and in a country of about 150 million people, experts have put the appropriate requirement figure at 20,000megawatts. Joe Ajaero, General Secretary, National Union of Electricity Employees (NUEE) acknowledges that the nation has been made to pay a big price for the failure by successive government's to pursue a divestment policy that breaks the over-reliance on hydro and thermal power plants. It is a position corroborated by the President of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Femi Deru.

'The biggest burden on the Nigerian economy is the power sector,' Deru said.

'We need to take urgent steps to diversify our energy sources away from gas because excessive concentration on gas power stations constitutes a major risk to the power sector and the economy. we should begin to immediately focus on other sources such as coal, solar, wind, hydro and nuclear energy sources,' he added.

Another top official at the power ministry told Daily Sun that the ongoing crisis in the sector would have been averted if the Olusegun Obasanjo government had heeded expert advise to start the construction of new plants, harnessing both gas, wind, and coal resources when he came on board in 1999.

'Part of the problem we are facing is that when President Obasanjo came in there was a plan to start the construction of new power plants, but in his wisdom he would rather focus on the resuscitation of existing ones,' the official who preferred to remain anonymous said. 'For over 20 years, no investment was made in the construction of new power plants and this is not done anywhere in the world; you have to keep investing in new power plants because it is not possible to run one car or engine for more than 20 years and expect the same optimal performance - but that is what nigeria has been doing with the existing power plants.'

'So we suggested the building of new plants, if those plants were built I assure you that between 1999 and 2008 we will have inaugurated them and solved the problem to a large extent. At present, there is the call to commence the construction of coal plants and if government heeds the advice the dividend will be felt in the next four years, at most,' the source added.

Ajaero on his part, described the constant excuse that the thermal plants were not working due to crisis in gas supplies as 'flogged' even as he queried the decision not to pursue alternative sources by managers of the power sector. Ajaero even suggests, Low Pour Fuel Oil (LPFO) as an alternative to natural gas for the running of the thermal plants.

'The issue of lack of gas to power plants is flogged,' Ajaero said. 'LPFO is an alternative to gas, though expensive, but we cannot continue to groan under darkness when there is another option to the so called scarce commodity.' According to the electricity workers scribe, at the commencement of construction work on some of the new thermal plants, the union had suggested to government that the plants be designed in such a way that they could run both on gas and on LPFO, sadly, this suggestion was not taken by the government.

'We had advised that that the new generation power plants should be convertible to utilise both gas and LPFO, but this advice was not heeded by the government,' Ajaero said.

He also faults the poor management of water in the hydro stations as another problem.

'There is a problem with the policy of water conservation and management of the hydro stations whereby when the water level or flow is high it could be conserved and used at a low peak period,' the NUEE scribe said. 'The undermining of this policy programme is what usually affects the efficiency level of the hydro stations when the water level of low, thereby causing low generation of electricity for the nation,' he added.

Ajaero, therefore suggests an immediate divestment programme that would ensure that coal is harnessed for power generation.

Why coal? Available data show that coal of sub-bituminous grade occurs in about 22 coal fields spread over 13 states of the federation. The estimated coal resources of the country are about 1,487million tonnes while the inferred reserves are about 2.75billion tonnes. Given that one tonne of coal produces 2,500kilowat hour of electricity, the total available coal deposit can support 15,700megawatts capacity at 80 per cent capacity utilisation for over 50 years.

Coal it must be noted constitutes about 50 per cent of the source of electricity generation in the world.

Ajaero listed Enugu, Kogi and Benue as lying on large coal berge that could sustain the nation's electricity needs. Sadly, he notes that government has not looked at this large resource begging to be tapped.

'We are dismayed that up to date no concrete effort has been made by government towards the development of coal power plants in these states,' he lamented. Aside coal, another source of power generation that could be tapped to tackle the nation's perennial electricity supply is in bio-fuel.

Chief Executive Officer (CEO) of Canadian based firm, Tolao Energy Inc, Mr. Adewale Johnson, said harnessing palm oil and jatropha to refine diesel could provide the feedstock required to provide electricity to small communities. Johnson's company has already secured government to operate a pilot scheme of this project. He said the project would come on stream by the last quarter of 2010, with a 37.5million litre per day bio-diesel refinery cited in Yale Local Government council of Cross Rivers State.

For a start, Johnson said the plant will convert the distillate extracted from palm oil into diesel which would then be sold to final users. At a latter stage, it would be utilizing jatropha, a non-edible crop, which would be refined into diesel.

'This is Nigeria's first bio-fuel project and we are very proud to be associated with this feat,' said Johnson. 'Our target is that by the last quarter of 2010 we should start production; there is a distillate that comes out of palm oil and that is the feedstock or raw material that we intend to convert to bio-diesel for a start, but as time progresses we are going to use jetropha, a non-edible plant which can grow in any part of the world. We don't want to create scarcity of palm oil and be seen to be competing with food; we don't want to solve one problem and create another.'

A 3,000hectres of land has been secured in Yale local government council of Cross Rivers State for the cultivation of the crop. He said both the refinery and the farm where the crops would be planted would create hundreds of jobs for locals and other Nigerians.

Biofuels utilises such stable foods like rice, millets, cassava, corns, etc for the production of such fuels like petrol, kerosene, and diesel and the beauty of it all is that it could also me utilised to power even power plants.

Johnson affirmed this when he said 'our plant will generate its own electricity which will also be distributed free to peoples in the nearby community under the terms of the MOU.'



'We are so excited, not just for the take-off of the plant, but for the hundreds of people we are creating jobs for within our host community and other parts of Nigeria and the other social responsibility projects we are going to embark upon which will also tough the lives of so many people around our plant and farm,' he added.

The cost of the plant has been estimated at about $20million dollars.

This is one area that has remained largely untapped and begging for investors; more investments in this area will indeed assist in no small measure resolve the country's power problems, at least in those host communities to the bio-fuel plants, even if they are made to pay for the power supplied. Solar energy (derived from sunlight) offers another opportunity as source of power generation. Annual average of daily sunshine hours in Nigeria varies from nine hours in the northern boundaries to four hours in the southern axis.

Solar power generation is possible in all part of the country. But areas of very high radiation intensity and long hours of sunshine, like in the northern part of the country, are most promising sites for solar power plants. Already, the project is being implemented in some states of the federation, notably Lagos to power street lights. What is required is more awareness on the utilisation of this source and for the right investment climate that would encourage investors. If properly managed, it will prove a more viable option to power generation in the northern part of the country than piping natural gas to power thermal plants in the northern part of the country.

Wind is another option for power generation. Wind velocity is the main determinant for considering a wind power project. Even a small increase in wind velocity can substantially increase potential energy generation capability. A few wind demonstration power plants, such as the 5kw wind electricity generator in Sokoto by the Energy Commission of Nigeria are currently in operation.

Bayelsa State Governor, Mr. Timipre Sylva also says the state government has commissioned a research firm from Sweden to carry out a feasibility study on how to harness the abundant wind resources in the state to generate electricity for indigenes.

What is left is for more states to join the queue

'We are doing a lot with gas powered electricity and this has ensured that we have 20 hours supply in the state capital Yenogoa. But we are also looking at tapping into wind power,' he said. Liquefied Petroleum Gas (LPG) offers another alternative to the conventional natural gas as a fuel for power generation. Already, plans are underway by the government to diversify its source of power generation, notably for the thermal plants, to LPG to power those plants, whose source of feedstock is usually natural gas.

Daily Sun learnt that based on recommendations by the outgoing Minister of Power, Dr. Rilwan Babalola, the government is considering the reticulation of the thermal plants to run both natural gas and LPG, which is also known as cooking gas and is a common fuel in homes. 'It is part of the short-term measures considered to stem the problems of shortages of natural gas for the thermal plants,' an official in the Power Ministry told Daily Sun on the proposed usage of LPG to fire thermal plants.

'We are working on the proposal and it will involve modifying some of the thermal plants to run on natural gas and LPG. It is a novel idea in Nigeria but it is done in most other countries,' added the source who would not want to be named. Nigeria has abundant LPG which is mostly exported and the source said about 500Megawatts of electricity is targeted to be generated with the use of LPG in the months ahead.

But harnessing LPG for electricity generation purpose could also pose a big challange for domestic users who are even decrying the volume made available as insufficient and the price exorbitant. There is need therefore to strike a balance between export and the demands of the local market. If LPG is adequately made available for domestic consumption, and Nigeria has this resource in abundance, nothing stops investors harnessing it to float mini-power generating plants.

As greater efforts are made to improve power generation and supply, the nation must not lose sight on the need to conserve available energy for maximum usage. It's a global trend and according to the Director General of the Energy Commission of Nigeria (ECN), Prof. Abubakar. S. Sambo, it was about time Nigeria joins the rest of the world in conserving energy given the depletion of natural energy resources.

'The depletion of natural energy resources, the increased cost of energy and environmental consequences of energy resource exploitation and deployment have made it imperative to conserve energy and develop end-use efficiency appliances,' Sambo said. He defined energy efficiency and conservation as the process of adopting a strategy of using more efficiency, whether through behavior, improved management or introduction of new technologies.

Sambo said energy efficiency and conservation was of great importance to the national development as it stipulates economic growth by reducing cost, increasing energy access by supplying conserved energy to other consumers, as well as enhancing production of goods and services as more businesses would have improved access to energy supply.

Said Sambo, 'the creation of he energy centre will stimulate the penetration and acceptance of energy efficiency and conservation practices, as well as develop, on a continuous basis, energy efficiency and conservation methods and technologies for dissemination and application in national energy usage and practices.'

As devastating as the data on the impact of poor power supply may look, at no time in the nation's history - particularly in the last one decade - has the country been offered a lifeline to break the jinx than now. The CBN recently gave a N500billion to assist fix the power generation problem in the country in a bid to boost power supply and attract investment into the country.

As erstwhile Power Minister, Rilwan Babalola submitted, about $5billion annual investment - spread over the next ten years – is what is required to resolve the power crisis. Part of the CBN's money could provide the funding to float coal, wind, and solar power plants. The industry regulator, NERC, recently announced the award of two licences - one each for solar and coal powered generating plants. It was the first of its kind in the history of the country.

What the Nigerian Electricity Regulatory Commission should do next is to create the much needed awareness that will attract investors into the attractive energy power sector. However to boost investors confidence, there is need to reform existing laws in the electricity sector to make them more stable and ensure investors are able to recoup their investments without such fears that subsequent government's will reverse the policies that brought them on board. If there is any factor that has hampered investment in Nigeria's energy industry, it is the policy summersaults by government. Such scarring policies in the energy sector would not help actualize the government's vision 20-20-20 which seeks to place Nigeria as one of the top 20 economies in the world by 20202, as stable power remains the pivot through which the industrial and economic prosperity of any nation revolves.

Its gladdening to note that the power sector is now being directly administered by the Acting President Goodluck Jonathan. This raises hope of steady flow of funds as well as checks on the problem of graft, mismanagement and misapplication of funds earmarked for the energy sector. Lastly, the operation and performance of any energy facility - oil, gas, and electricity – is dependent on the existence of mutually beneficial relationship between the host community, the operators, and the government.

As witnessed in the Niger Delta, where host communities to oil and gas installations have taken up arms against operating firms, due largely to many interrelated problems - social, political, economic and environmental - which are provoked because of the intrusive nature of extractive industries, greater care has to be take by operators of these alternative energy plants to ensure that the needs and sensibilities of host communities are addressed and that they are made stakeholders in the projects.

As Mark Ward, Managing Director of ExxonMobil in Nigeria stated recently, the quest to effectively harness Nigeria's energy potentials for the benefit of its citizens must be pursued through a collaborative effort that pools together the resources of all stakeholders in the public and private sector for maximum results.

'A coordinated and consistent harnessing is essential to sufficiently strengthen Nigeria's economy and generate value for the Nigerian people. Corporate organisations and government must work cooperatively to make it happen,' Ward said on efforts to harness Nigeria's energy resources for national growth.

'We will need investments and innovation from the industry; we will need sound and stable government policies that lay the framework for sustained growth; and sustainable human and industrial capacity development is a critical plank on which the nation's future development depends,' he added.

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