As of today, the TCN has an installed wheeling capacity of over 8,100MW and can comfortably wheel out 6000MW of generated power thanks to these facility upgrades courtesy of the Siemens project as well as TCN’s internal projects. On the generation side, with the addition of the 700MW Zungeru hydroelectric plant which came on stream in the second quarter of the year, Nigeria’s national grid now has an installed power generation capacity of about 13,610MW.
Despite the 13,610MW generation capacity and the over 8,000MW transmission capacity, the total active distribution capacity of the 11 Discos in Nigeria is still hovering around 4000MW. Just last month, on September 2nd, a peak generation in three years was achieved but out of the 5,313MW generated and wheeled out that day, the Discos rejected almost 1400MW due to their systems’ fragility. These load rejections by Discos contribute to collapse of the national grid.
Cost recovery is the major challenge of Discos, which has hampered them from upgrading their distribution substations and facilities to accept more power for distribution to their consumers. This environment discourages investment in the sector. However, the Tinubu administration is tackling this age-long challenge headlong through the following:
a. Presidential Metering Initiative (PMI):
This initiative is aimed at eliminating estimated billings by ensuring every electricity consumer is metered within 3 years. Out of 12.82 million electricity customers, only approximately 5.7 million are metered leaving the remaining 7.1 million customers unmetered. FG is purchasing 3.5 million meters under the PMI this year and also released N20 billion to Discos (under the Meters Acquisition Fund, MAF) to procure meters for large users, whose tariffs were raised in April 2024 (Band A). The Tinubu administration in the June FAAC disbursement allocated N120 billion for the Metering Initiative (9% of the amount needed) as seed funding. The Nigerian Sovereign Investment Authority (NSIA) also agreed to inject a minimum of N250 billion annually for the three-year duration.
b. Cost-reflective tariffs for Band A Customers:
To increase the revenue of Discos, NERC in April 2024 approved cost-reflective tariffs for Band A customers who receive a minimum of 20 hours of electricity
daily while tariffs for the Bands B to E remained frozen at the 2022 rates. As a result of this Band A tariff review, electricity subsidy paid by the federal government reduced by N253.24 billion
in Q2 of 2024. It is important to note that as at the end Q1 2024, FG bore an electricity subsidy bill of N633.3 billion, representing 90.7% of total invoice due to Gencos as cost of electricity supplied to Discos. In Q2, the subsidy has reduced to N380.06 billion, representing 52.51% of NBET invoice.
c. $800 Million for Power Substations and
Distribution Upgrades:
The Tinubu administration has committed $800 million for the construction of new substations and distribution lines under the Presidential Power Initiative. $400 million is allocated for the construction of distribution substations for Lot 2 which covers the franchise areas of Benin, Port
Harcourt, and Enugu Discos. The other $400 million is allocated for the construction of distribution substations and distribution lines for Lot 3 (Abuja, Kaduna, Jos, and Kano Discos).
With the visible improvement seen in power supply across the country, it shows that the biggest challenge holding down constant power supply is pricing of power. The presidential metering initiative will increase the revenue collection of the Discos and further improve their ability to invest further in system upgrades to be able to receive more power.
The Tinubu administration is also working to decentralise the national grid. Already, the Electricity Act signed by Tinubu in June 2023 has opened the door for states to regulate intra state electricity transmission, distribution and even generation with NERC already transferring
regulatory powers to electricity commissions created by some states like Enugu, Ekiti, Ondo, and Imo. With a decentralised grid, it becomes easier to transmit and distribute any power including off grid powers produced in the states.
