Expanding Nigeria’s power grid

Guardian Nigeria

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00:00Nigeria's Minister of Power Adebayo Adelabu has announced plans to expand the national grid

00:06by an additional 150 megawatts of power before the end of this year, following the completion

00:12of phase one of the Presidential Power Initiative, also known as the Siemens Project.

00:17Oti Komeisi of Puritan Energy joins me now to discuss Nigeria's power grid infrastructure

00:22and journey to sustainable power supply. Oti, thank you for joining us today.

00:27Thank you, Esther.

00:30Let's start with your initial reaction comments to this pronouncement by the power minister.

00:40Okay. The Siemens Presidential Power Initiative

00:46project has now brought in, I think, a total of 10 substations and 10 transformers.

00:53And the idea is to expand and stabilize the grid. Unfortunately, we've had 12 grid collapses or

01:00partial collapses this year. So there are baby steps, and the minister indicates that we'll

01:09make – we'll get an additional 150 megawatts from this pilot phase. However, a few months back,

01:16we were actually expecting to end up at about 6,000 megawatts from the 4,000 or 5,000 megawatts.

01:24It should have been under 1,000 to 2,000 megawatts. So on that score, we are way behind

01:30the expectations. The project itself continues to be very slow. Yes, the German president was in.

01:38President Bollah Ameitinibu met with the chancellor in COP28 and earlier on in Germany,

01:47and before that President Buhari. But the whole initiative continues to be very, very slow.

01:52We continue to have grid collapses. So I think right now we need to have a senior technical

02:00advisor, a consultant specifically on transmission to work jointly with the presidency and the minister

02:05of power to address this issue. We've been doing the same thing for too long, and we're not getting

02:09the progress to expect. Right. I mean, speaking about transmission, where are conversations

02:14around decentralization? I mean, the issue around the TCN, and of course, we have the electricity.

02:21We had that bill. We have states now having the power to generate their own electricity. I mean,

02:27I knew that that – it would take a while, some time, to get the whole framework,

02:32regulator, and all of that up and running first before things can take shape. But what are your

02:37thoughts on that first, and also to what can we do, what can the government do as an immediate –

02:43in the immediate term to address this grid collapse issue?

02:50Yes. We've come up with the Electricity Act 2023 and updated in 2024. So close to 10 states now

03:00have ability to regulate the electricity markets. But as I've mentioned previously,

03:06electricity is a very capital-intensive business. It's not for the chicken-hearted or faint-hearted.

03:13And yes, while the states might have regulatory autonomy, but do they have the

03:23abilities and people have the misguided impression that the states are actually going to invest?

03:29We have states that are having challenges meeting their salaries and their emoluments,

03:34so where are they going to get this funds from? So basically, they will create the environment.

03:40Lagos State has taken a very good – a very good step in this regard. An important step in the

03:45Lagos State regulation is that all existing arrangements and laws will continue, because

03:51there's a huge issue of subsidies at the federal level, and the states are not going to be able to

03:56take this up at the subnational level. So this remains a key challenge. But yes, in terms of

04:04off-grid, smaller projects, the state – the regulation is a step in the right direction.

04:11But we must be aware a country like India has actually gone the other direction. Rather than

04:16decentralizing, they have one national grid. So we think they'll have the erroneous impression

04:21that having multi-forest grids is the solution. It's partial, but I don't think that

04:26is necessarily the slam dunk we're looking for.

04:29So we need something tailor-made for us. So what does that look like on the ground?

04:36Yes. There are three important things for the electricity market. One, we need to have

04:42regulatory certainty, we need to have commercial viability, and then we need to have technical

04:50assurance. In terms of regulatory certainty, an important development happened this year,

04:55late this year. It's not been well publicized, but the government – sorry,

05:01NEC renewed the license of NBET for three years. So the central trader, bulk trader license was

05:08renewed for three years, though that is for legacy transaction, because the generators and the

05:13transactions dealing with NBET need to have a counterparty, and that is important.

05:20In terms of commercial viability, the introduction of the Band-Aid tariff,

05:24which I was talking about before, is very vital. It is painful for all of us,

05:28but at least it gives the commercial tariff that enables investment. Where we are having

05:35the weakness is on the technical side. So it is still around the grid, so like I mentioned,

05:40we need – we are not satisfied with what is happening at TCN and even with the presidential

05:48power initiative. So at the national level, a senior technical advisor immediately on transmission

05:55and perhaps also on gas and power needs to be put in place, appointed, reporting jointly to the

06:01presidency and to the minister of power. And then we need to continue the process of the PPI

06:08on an accelerated basis, the Siemens project. All right. We have about a minute left. Just

06:12wanted to get your thoughts on the electricity subsidy that we are still paying. $2.4 trillion

06:18now is what the federal government said it expects to – that it would have paid by the end of this

06:23year. Going into 2025, is this something you expect to continue? The government does not

06:28want to continue this. What does that mean for consumers? Unfortunately, some elements of it

06:36will have to continue because the Band-Aid tariff are paying the commercial tariff,

06:41but the bands B, D, C, and E are paying – are being subsidized. And elements of this have to

06:50continue because we have to give some cushion to the less privileged in society. So some elements

06:55of that will continue, and I will recommend it continues at a federal level. Even when the states

07:01take over, there has to be clear arrangements between the federal government and the subnationals

07:06on how you manage this. We need to have a transition that makes sure that our citizens

07:11are able to have access to electricity. All right. Oti, thank you so much for talking

07:15to us today. We appreciate your time on the show. Oti Komise, CEO of Proton Energy,

07:20looking at the latest developments in Nigeria's energy sector.

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