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EU sheds light on Nigeria’s power sector
NIGERIA
THE European Union has highlighted Nigeria’s struggling distribution sector as a key weakness in the country’s energy systems.
Filippo Amato, head of trade and economics at the EU delegation in Nigeria, said in Abuja that the power sector was losing 1.3bn naira ($3.5m) per day, even though total EU had pro- vided €156.2m ($175m) through various fund- ing instruments in recent years.
“We have been able to fund di erent techni- cal assistance and infrastructural projects cutting across several areas both on and o the grid here in Nigeria.”
Amato admitted that the situation in the Nigerian power sector was “facing deterioration and a liquidity crisis,” what was keeping the sys- tem “under stress.”
“ e average operational capacity of the grid hovers around 4,500 MW and 5,500 MW, and cannot meet the needs of a growing population and industrial users.”
He highlighted that low grid coverage meant that o -grid diesel generators were still extremely common, especially in urban areas, even though they were both costly but and unsustainable from a climate change point of view. He said that power distributors, termed Discos in Nigeria, had a key role to play in making the distribution
network operate e ciently.
“ is they are supposed to do by reducing
their Aggregate Technical, Commercial and Collection losses. By so doing, they will be able to make good use of the available electricity from the grid to serve customers. is is one step in the right direction that Discos must take if we want to come out of this liquidity crisis that is a ecting the sector,” the EU o cial stated.
However, the key problem is cash, in addition to low income from bill payments and a complex legal regime. In May, the French Development Agency (AFD) said that Nigeria’s 11 regional Discos, which are all privately owned, needed $10bn worth of investment over the next ve years to make distribution more e cient.
is would reduce power cuts and connect more people and business to the grid.
“Innovative financing solutions must be devised, possibly involving new players,” said the AFD.
The agency stressed that investment had slowed down in recent years, leading to a revenue shortfall of $3bn per year for the Discos. It noted that the sector su ered from a lack of access to nance because of the lack of a cost re ective tari , customer dissatisfaction and the lack of performance in the power sector in general.™
RENEWABLES
RENEWABLES: Kenya set for new auctions
KENYA
KENYA is close to revealing details of its new auction system to support investment in new renewables projects, replacing the current power purchase agreements (PPA).The new system aims to reduce costs for the government, as PPAs has proved to be too expensive.
Benson Mwakina, director for renewable energy in the Energy Ministry, said that the mechanisms for establishing the auction system were outlined in the Energy Act 2019 and were now in the nal stages of formulation.
“The system involves establishing a demand-supply equilibrium and identifying projects on a need basis before inviting potential investors to bid for their development in an open auction,” Mwakina said.
Investors currently has to sign PPA with util- ity Kenya Power and then implement the project. e new policy brings Kenya into line with a number of countries where auctioning of pro- jects has become popular. e policy aims to build new green projects in a cost-e cient and
regulated manner.
e Energy Act , which came into force in
March, also sets up a new Rural Electri cation and Renewable Energy Agency and Energy &
Petroleum Regulatory Authority. Both these bodies will run the new auction system.
Meanwhile, Kenyan state-owned generator KenGen has won a $52m tender to develop geo- thermal wells in Ethiopia, its second such deal in Ethiopia in under four months.
KenGen business development director Moses Wekesa said that the company had reached an agreement with independent power producer (IPP) Tulu Moye Geothermal to drill wells as well as carryout geoscienti c surveys.
“We were the second-best evaluated bidder but the rst bidder fell o prompting the IPP to engaged us in discussion. We have negotiated and settled,” said Wekesa. KenGen will drill eight geothermal wells at a cost of $6.5m per well.
In February, KenGen secured a deal valued at $76m with Ethiopian Electric Power (EEP) for rig operations, drilling, and maintenance of geothermal wells.
“We have over the period developed a very solid experience in human capital especially in geothermal and we have been seeking opportu- nities to export our expertise,” said Wekesa.
Other geothermal expansion options for KenGen include Rwanda and Djibouti.™
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w w w . N E W S B A S E . c o m Week 24 19•June•2019