Kola Adesina is the Group Managing Director (GMD) of Sahara Power Group, owner of Egbin Power Plant. In this interview, he says until the nation launches cost-reflective pricing regime for electricity consumption, it will be almost impossible to meter the way Nigerians desire to be metered.
What is the latest development from the Egbin Power Plant?
The latest development from Egbin Power Plant is that we are working at ensuring that we get and deploy the 1,320MW to the national grid.
With about 500MW currently being generated from the plant, how possible is this?
That is what is being evacuated to the grid. We have more than that. We can today do 880MW, but the limitation of evacuation is what is restricting us to 543MW as we speak. But as a company, power availability at Egbin Power Plant will be up to 1,320MW.
How is your relationship with gas suppliers?
The relationship is that of exploration in terms of looking for ways of ensuring that the required gas is given to us to enable us make power available to Nigerians. As I said earlier, we are striving towards ensuring that at the end of February, installed 1,320MW will be available to Nigerians. However, two major limitations that we have are usually that of gas supply and transmission evacuation. So, if those two constraints are there, it’s going to be impossible for us to deploy the 1,320MW. But as an organisation, we are determined, focused and dedicated and looking at ensuring that the 1,320MW is available.
How about funding?
We have done all that.
The Federal Government as at the last time we met was owing your company. What is the situation now?
The payment assurance scheme is helping a great deal to resolve part of the backlog of payment that we have suffered, but notwithstanding, government is still owning us over N100m, but the payment assurance scheme is the one we are still looking forward to, to ensure that the 100 per cent of revenue that we deserve we get from the system, but government is increasingly paying from the payment assurance scheme which we are benefiting from. When the gas suppliers are speaking, they are speaking on their contractual relationship, the contract they have with the generation companies, but the payment assurance scheme that the government is implementing now is helping the power sector. Gas suppliers are paid first and we are paid next. They get 100 per cent of their revenue, we get 80 per cent from the pool of funds that is made available by the bulk trader. When the gas suppliers speak like that, they are simply just saying that they are dealing contractually with us.
Is the plan to double generation ongoing?
It is not just to double, but to increase by another 1,900MW which will take it to 3,200MW approximately. So it is not just doubling. The second thing is that the level of technology we are deploying now is a combined circle power which uses less of gas and produces more energy than we currently produce from the current plant that we have. That is the arrangement. The plan is ongoing.
How far have you gone with the special power generation arrangement you have with Ikeja and Eko DisCos?
The arrangement is faced with the problem of the sector itself. There is a question I have asked a lot of times and I am yet to get the answer. What is the direct principle of Nigeria in terms of industrialisation and creation of prosperity? Because if industrialisation is what government is seeking, what naturally should happen is that the price of electricity should be made low. Now, the price of electricity can be made low through electro gas because Nigeria is a gas-centric nation. To that extent, we are the owner of gas; we own that comparative advantage of that commodity, we shouldn’t be using import parity pricing model for gas price in Nigeria. Government needs to find a way of intervening at that level such that the cost of electricity can reduce, such that industries can get electricity at an affordable pricing limit. But if we have the policy; which is equally another action we can explore, which is what we are exploring presently in terms of fuel subsidy, then we can say that the industrial and commercial users of electricity should pay more for gas for the purpose of subsidising customers on the streets. While that policy is good on its own, it has its own inherent disadvantage; which is that ultimately, the cost of electricity as high as it is, will be passed on to the consumer. So the higher the industrial and commercial users of electricity pay the more the price of the commodity and the services they produce. So it is a chicken and egg situation. You are asking yourself which one you should really follow through. But for me, by and large, electricity should still continue to be the central focus of government in terms of ensuring that there is industrialisation, creation of employment and there is reduction of poverty and a good climate for the people that are entrepreneurial in nature to seek ways of creating solution to better the quality of life of Nigerians.
Sahara Energy recently inducted 39 young engineers into the National Power Training Institute of Nigeria’s (NAPTIN) development programme. What do you intend to achieve?
We don’t want to get into the situation where we will have ageing workforce. The idea really is to renew ourselves, renew our strength and get on the stream, people that have the modern day capacity, knowledge and knowhow. You should equally note that technology is not static, so much is happening in the world today in terms of innovation and creativity around electricity supply. Hence, it will be nice, of any enterprise that wants to endure, to bring in young human capital similar to the ones we just recruited and learn from them, teach them and get them to have the positive human behaviour to help the human society.
What are you doing to ensure that the prepaid meter goes round?
The pre-paid meter is something that everybody talks about, but what I have always said is that pre-paid meter is the subset of a big system and until you redress the full systemic default and defect, it will be difficult if not impossible to isolate a sub-system and assume that you are going to change that and get the kind of result that you desire. Metering is a cost component for a distribution company. For the distribution company to truly meter, it means that the entire cost structure must have been properly taken care of, to ensure that the cost of supply of electricity is lower than the price of the commodity. Until we go into that fundamental, cost-reflective pricing regime, it will be almost impossible to meter the way Nigerians desire to be metered. Because metering is just a cost component of the entire system, so how do you meter if the price is not right?
The Federal Government said 108 companies have applied to supply pre-paid meters, what is the implication of this to the power sector?
Our own philosophy and reaction to that is that we support any initiative of government to help accelerate the metering of all consumers and customers in Nigeria. But what we are saying is that while that initiative on its own is good, put together with every other factor that govern the sector from the cost perspective, something is still defective; which is the tariff. We should all speak directly to proximate cause of the problem. Metering is the last thing actually in the chain of distribution business because before that, you have the feeder, quantity of energy lines, circuit breakers, transformers and so on. So, if anyone of those are not functioning properly and they are not adequately maintained and rehabilitated in a manner that makes sense and not upgraded, even if you meter the unit of energy you desire to see, meter will not be there. Meter is just a measuring instrument and nothing more. The only reason why we are speaking of metering as an issue in Nigeria is that there is a bridge of trust that needs to be crossed between the customers, consumers and the service provider in terms of estimated billings. And like I have said timelessly, there is no reasonable and responsible distribution company in the world that would want to rely on estimated billing for the purpose of measuring the unit of electricity they give to their customers because it is an act of irresponsibility; you don’t precisely know the quantity of energy your customers are taking.