Chief Executive Officer, Proton Energy, Mr Oti Ikomi has backed the federal government’s plan to concession the Transmission Company of Nigeria (TCN) to allow for more efficiency.
According to the energy expert, the concession of TCN would transform its operations.
The TCN which is currently government-owned was among the 18 companies unbundled from the defunct Power Holding Company of Nigeria (PHCN) in 2013. The TCN also owns a transmission license which enables it to transmit and trade electricity.
Following the inefficiency of the transmission company, many have demanded that the company be privatized or at least concessioned.
The New Diplomat reports the Federal Government through the Bureau of Public Enterprise (BPE) had on Monday expressed its readiness to concesion the TCN in a bid to boost its efficiency and improve power supply.
Speaking at a conference on Monday in Abuja, Yunana Malo, Director, BPE Energy Department, said the bureau would hand it over to a private company in a concession agreement to derive maximum value, ruling out the privatization of the entity as being purported.
“The seemingly weak link is the transmission component. It is still 100 per cent owned by the FG. The idea is to think outside the box and bring in solutions that will make the transmission component service the value chain and make it more efficient,” Malo said.
Backing FG’s plan, Ikomi during an interview session with the CBNC Africa, said the concession of the TCN is a good initiative by the government.
According to the Proton Energy boss, transmission of electricity has been the greatest challenge disrupting the power sector, adding that the concession of the TCN is a stellar move that would provide necessary support structure, mitigate losses incurred during the transmission process and empower the role of the system operator.
In his words, “The concession of the TCN is a stellar move and it’s also coming at a very good time. We know that the adage goes, that the strength of a chain is only as strong as the weakest link. And the transmission segment of the power chain, you have generation, you have transmission, distribution, and then we the consumer then get the electricity. The transmission has been the challenge, you’ll find out that what is referred to as a ATCC Aggregate Technical Collection and Commercial losses is about 45 to 50% in the Nigerian power sector. So that means for every 100 Naira almost 50 Naira is lost to transmission collection and commercial losses, the translation component of that is almost about half, so about 21 to 25%. So for every N21 to N25 is lost from transfers attributable to transmission.
“So there’s a need as clearly articulated, there has been several attempts in the past, riderless models, but now at the webinar two days ago, organized by the BPE, the Nigerian exchange group and the Nigeria Investment Promotion Commission, both the Vice President and the DG of BP announced that yes, we’re now ready to concession this year. We will believe this will create the necessary impetus, the necessary support structure to reduce the losses, reduce the insufficient power being accepted from generation stations to transmission and also empowers the role of the system operator. So the system operator must take a very strong view and look out for the next 10 to 20 years from Nigeria.
“Clearly, the BPE is still going through this, but the way the BPE will normally walk is that they will appoint transaction advisors, transaction advisors will then come in and then there will be expressions of interest, one thing is very clear. It is a concession, It is not an outright sale because we have seen some restiveness from the labor movement. So it’s a concession, if you take an analogy, the hydro plants was concessioned, so there’s a certain amount of funds that comes to the government. And at the end of that concession of 20 years, 25 years, 30 years, the asset would return back to the government.” Ikomi said.
He continued: “That’s one model, and there are other models. But the key thing is that it will reduce costs in the transmission value chain, because right now we have the same as the initiative would then lead the CMS between Nigeria and the German government the presidential power initiative, which is about a $2 billion initiative. That’s another initiative by the central bank and initial power. So we have one of these initiatives but I must say that there’s been a bit of slowness in actual implementation.
“I think it is important also that we have a very key arrowhead driving a number of the thought processes and initiatives in the power sector. There’s a bit of a dichotomy right now. There are some elements that are driven out of the presidency, there are some elements that are driven out of our ministry of power, there are some elements within our Ministry of Finance, there has to be a clearer orchestration. And also, I want to say a centralized leadership around this effort to create success.
“They are all good and because we’ve had this for a while, but TCN is at the center of it. If you have an efficient TCN, then you don’t necessarily need all these various initiatives but one thing is also very clear that there must be very strong government support, government has to create an enabling environment, even for the concession. So we’ve done this in other countries, in Uganda, which is a distribution company, and foreign nations, and they are working fine with the law and what happens here is that sometimes we come up with a solution, we slow down in the concurrent order related initiatives.
“So, the TCN commercialization initiative is a good thing for all the other initiatives, particularly engineer ratio, and solution must continue. And I also want to emphasize that a certain amount of government’s intervention is needed around certain kinds of support, that must be given to the sector, until the sector becomes more fully self sustaining,” Ikomi, the Proton Energy Chief Executive stated.