ELECTRICITY DISTRIBUTION OPERATORS VIEW
Benin Electricity Distribution Company (BEDC)
Presentation Flow
o Nigerian Power Landscape
o Power Sector Reform
o Investment Opportunities
2Benin Disco
o Way Forward- Critical Issues for Success
o Investment Opportunities
oActions taken so far
oAbout BEDC
� Publicly-owned Utility
� Highly centralized vertically integrated ( Generation, Transmission and Distribution
under one structure)
� Poor Operational and Commercial Performance
Nigerian Power Sector – Pre 1999
� Dwindling FG funding from 1980 to year 2000
� No new electric power infrastructure commenced and completed between
1989-1999.
� The last transmission line built was in 1987 while distribution sector did not
receive any major investment
� Absence of a service delivery culture
� Significant Aggregate Technical Commercial and Collection levels in excess of 50%.
� Little impetus toward reform (significant resistance to change) despite the above3
Nigeria’s Power Situation is particularly precarious…
Nigeria’s per capita electricity consumption is one of the lowest in the world
accounting for only 3% of South Africa’s.
•As at October 2013, the
peak generation supplied
by Nigeria’s PHCN was
4,500MW for an estimated
High Cost of Lost
GDP
High Self
Generation Cost
Low Generation
capacity
• Self-generation of
electricity (from diesel and
petrol generators) is
conservatively estimated at
• Stalled expansion in
Nigeria’s capacity
combined with high cost
of diesel and petrol 4,500MW for an estimated
population of 150 million
people
− South Africa has 40,000
MW of grid-based
generating capacity for a
population of 50 million
people
conservatively estimated at
a minimum of 6,000 MW
i.e. more than twice the
average output from the
grid during 2009.
− The poor pay N80/kWh
− Manufacturers pay in
excess of N60/kWh on
diesel or LPFO
generation
− The rest pay N50 –
70/kWh on self
generation
of diesel and petrol
generation has severely
crippled the growth in the
countries productive and
commercial industries..
• If situation were to
persist, the cost by 2020 in
terms of GDP would be
around USD 130 Bn 4
� Passage of The Electricity (Amendment) Decree 1998 and the NEPA (Amendment)
Act 1998 , terminating the monopoly status of NEPA and inviting private sector
participation in the electricity sector.
� The Electric Power Reform Implementation Committee (EPIC) was inaugurated by
BPE and resulted in FEC approving the National Electric Power Policy in
September 2001, which recommended:
• Establishment of a sector regulator.
Nigerian Power Sector Reform
• Establishment of a sector regulator.
• Privatization of the electric power sector
• A market trading design and new rules, codes and processes
� In March 2005 the Federal legislature passed the Electric Power Sector Reform
Act. The Act outlined the framework of the reform as follows:
� Unbundle the state owned power entity into generation, transmission and
distribution
� Provide for the transfer of assets , liabilities and staff of NEPA to PHCN and
then to successor generation, transmission and distribution companies
� Create a competitive market for electricity services in Nigeria
� Set up an independent regulator
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Key reform activities for establishing an electricity market
Enabling Legislation2001-2005
Unbundling Process
Power Sector Reform: Reform Roadmap
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Regulation Process
Market Structure
Privatisation
� FGN privatisation of unbundled PHCN companies through core investor
sale of 60% of government equity in the 11 DisCos and 4 Therma GenCos
with granting of concessions to 2 Hydro GenCos.
� Multi Year (15) Tariff Order, MYTO 2, promulgated by the Regulator aimed
at:
Power Sector Reform: Privatisation So Far
� Incentives for rapid ATCC losses reduction
� Encouraging capital investment
� Cost recovery
� Return on Equity of 29%
� New owners took over on 1st Nov., 2013
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� Huge suppressed demand for electricity (as evidenced by the large amount of costly selfgeneration)
� Low Electricity production per capita (Currently at about 103.81kwk per capital
consumption)
Country Population Per Capital Consumption(kwh)
� South Africa 49 million 4,222.46
� Egypt 83.6million 1,383.71
� Ghana 24.6million 248.33
� Nigeria 170million 103.81
Growth Prospects of Nigerian Power Sector
� Nigeria 170million 103.81
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The rule of thumb for any developed industrial nation is that at least
1 gigawatt (i.e. 1,000 megawatts) of electricity generation and consumption is required for every 1 million head of population
� Investment in Generation
� Privatized 6 GenCos
� Privatized NIPP Assets
� IPPs
� Embedded Generation
� Renewable Energy
� Investment in Transmission
Power Sector: Investment Opportunities
� Investment in Transmission
� Strengthening of TCN network Infrastructure
� PPP Model – 5 major contract signed at the Power Finance Conference
� Investment in DisCos:
� Equity participation/Refinancing of the privatized 11 DisCos
� Investment in CAPEX for network rehabilitation and Refurbishment, network upgrade
and expansion
� IT Intervention and Automation
� Investment in Support Services like manufacturing of Poles, Transformers , Meters, etc.
Nigerian Local Content is being encouraged by the Regulator in these areas
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� DisCos are critical to the viability of the sector because revenue can only
be realized or collected through the distribution sub sectors .
� Issue of financial viability/ guaranteed income stream must therefore be
addressed at this level.
Distribution Sub Sector
� The investors are thus expected to ensure that the integrity of the
network is improved through maintenance and investment in
rehabilitation, reinforcement and expansion; invest in modernization and
technology upgrade especially Billing Systems, SCADA and GIS; expand
metering coverage as per agreed plan.
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Monthly Remittance to MO
• Eko
• Ikeja
• Ibadan
• Kano
• 97.65%
• 87.55%
• 65.37%
• 62.97%
DISCOBase Line Remittance
(% of MO Bill)% Power Allocation
� 11%
� 15%
� 13%
� 8%Kano
• Abuja
• PH
• Enugu
• Benin
• Kaduna
• Jos
• Yola
62.97%
• 53.5%
• 47.45%
• 41.24%
• 37.88%
• 33.16%
• 20.70%
• 0%
� 8%
� 11.5%
� 6.50%
� 9%
� 9%
� 8%
� 5.5%
� 3.5%
Current Landscape & Reality
NIGERIA
BENIN ELECTRICITY
DISTRIBUTION COMPANY
States- 36 state +FCT
Local Govt- 774
Households- 32 million
Population- 160 million
Electricity Customers- 4 million
State Involved- 4 Edo, Delta, Ondo, Ekiti
Local Govts - 77
Households - 4.6 million
Population - 13.2 million
Electricity Customers- 770,600
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Electricity Customers- 4 million
Access to power – 12.5 %
Energy Avail. – 2,500mw - 4,000 mw
24/7 Ideal Energy Avail - 160,000 mw
FGN Targeted 2020 Energy Avail- 20,000 mw
Current Average Daily Power
Avail. (hrs) – Less than 3hrs
Electricity Customers- 770,600
Access to power – 18.9 %
Energy Available- 625 mw
24/7 Ideal Energy Availability – 13,000 mw
Current Av. Daily Power Avail – 17hrs
ATTC Loss - 52%
Ave. Cost of Power - N13.86 per kwh
Ave Sale Price - N 7.89per kwh
Licensed IPPs
• Azura Power West Africa Limited
License: Generation On-Grid 450MW
• Contour Global Solutions (Nig) Ltd
License: Generation Off-Grid 7MW
• Delta Electric Power Limited
License: Generation On-Grid 116MW
NIPP Power Plants
• Ihovbor Power Station (NIPP)
License: Generation On-Grid 450MW
• Ogorode Generation Co. Ltd (NIPP)License:
Generation On-Grid 450MW
• Omotosho Power Station (NIPP)
License: Generation On-Grid 500MW
POTENTIAL POWER SUPPLY TO BEDC - Power Stations within BEDC Geographical
Coverage
• Ethiope Energy Limited
License: Generation On-Grid 2,800MW
• Nigerian Agip Oil Co. Ltd
License: Generation On-Grid 480MW
TOTAL IPP – 3853MW
PHCN Successor Generation Companies
• Ughelli Power Plc
License: Generation On-Grid 942MW
• Sapele Power Plc (NIPP Expanded)
License: Generation On-Grid 1,020MW
TOTAL NIPP - 3362
13In addition, BEDC is a transmission hub
This is out of a total of 5153 mw from Govt initiatives
� Located in Transmission Network Hub
� Allocated 9% but gets up to 12%
� Availability Uptime– Highest in the Country
BEDC Strategic Positioning
STATE 11KV FEEDER AVAILABILITY
DATE
STATE
AV. AVAIL.
(HRS)
EDO 12.17
� Largest Gas producing terrain- key source
of cheapest power- Delta State
� Has largest number of power plants –
Most Genco’s would prefer sales to closer
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EDO 12.17
DELTA 10.09
ONDO 7.60
EKITI 11.52
STATE 33KV FEEDER
AVAILABILITY
DATE
AV. AVAIL.
(HRS)
STATE
EDO 19.52
DELTA 19.89
ONDO 10.48
EKITI 19.44
Most Genco’s would prefer sales to closer
distribution companies to reduce
technical losses
• Network Condition:.– Aged, Undersized & over extended High Tension/Low Tension lines.– Overloaded Feeders and Transformers– Obsolete & faulty switchgears.– Poor maintenance practices– Poor Health and Safety Practice– High level of losses
• Customers issues:– Over Billing of customers– No service orientation to customers– Staff collecting money illegal from customers– Illegal Connection & stealing of power by customers– Inadequate metering
Status At Takeover
– Inadequate metering– Inadequate Power supply
• Technology & Automation intervention issues– Low level of Information Technology application.– Obsolete and non integrated ICT system in place.– Stand Alone Billing Centres – No Website, E-mail, Customer Information System, ICT tools available.– Absence of IT intervention like CRM, ERP, SCADA, DMS, OMS, GIS etc.
• Finance & Accounts:– Manual Accounting System– Decentralized Payroll System– Manual Audit & Internal Control System
• Conclusion– Net work is in deplorable state– Customer are not being served– Public is expecting value for money– Investors are expected to change things massively and
dramatically
Massive investment of over N 45billion is required over a
BEDC Challenges and Issues Cont’d
Massive investment of over N 45billion is required over a sustained period before positive results can start to be visible
� BEDC management focus is to address the rot in asset and to reposition the company in the path of :
� Providing good service to the customers
� Ensuring operational viability
� Ensuring financial viability
� Meeting the requirements of the regulators, especially NERC
� Having well trained, motivated and highly competent workforce
Management Focus
� However the problem of over 25years will take time to clear up
� This requires dedicated, honest, experience and competent staff who will put customer first and be ready to work hard.
� It is a journey that must show continuous improvement.
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� Customer Re-registration and Enumeration ( Know Your Customer- KYC) has commenced
� Call Centre and back-end complaint tracking solution currently being implemented.
� Website up with information to customers about BEDC an access to submit complaints
� The first publication of BEDC Digest, a fortnightly BEDC news already out
� The NERC Forum Office for lodging of complaints to the regulator currently being worked on and undergoing renovation
Action so far taken on Customer Care
� Customer Enlightenment program in major radio stations is ongoing
� Online Payment System to create payment convenience for customers on test run
� Improvement in power supply by monitoring of uptime and transmission related issues commenced; and setting turnaround benchmark on faults resolution also commenced
� Improvement in Safety Standards through better awareness for staff and public has commenced
� Regular line trace clearing and maintenance of injection substations to reduce power outage due feeder tripping has commenced
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� Technical Audit of High Value Customers has commenced
� Installation of Check meters and Boundary Metering commenced
� All Injection Stations in Edo States now metered
� Metering of Injection Stations in Delta States ongoing and expected to be completed this month
� Metering of Injection Stations in Ondo & Ekiti expected to commenced next month.
� Metering of Distribution 8000 Transformers is to commence in June, 2014
Actions taken on Technical & Commercial Loss Reduction
� Metering of Distribution 8000 Transformers is to commence in June, 2014
� Pilot Enumeration of Customers on a feeder along substations, Uprisers & Acct. Officers done. This will help reduce overloading and power theft
� Pilot Outsourcing of Revenue Drive ( Disconnection & Reconnection)has commenced
� Replacement parts and line materials identification for network maintenance and stocking up has commenced
� Intensify Preventive Maintenance for effectiveness and reduction in tripping is about to commence
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� Replacement and upgrade of overloaded power transformers and Installation/Commissioning of various power stations
� Out of 36 NIPPs projects existing, already commissioned 6 NIPP Projects within the network to improve supply availability and will soon commission another 3.
� Metering:
� HT Meter Replacement
Action on Loss Reduction Contd.
� HT Meter Replacement
� Selective Metering for Illegal Customers
� Mass Metering of Non MD customers to commence soon
� Criminalize Energy Theft with strict enforcement
� List of customers for name and shame currently being compiled and will be published
� Zero Tolerance for Non Payment of Bills & Vandalisation of Power Installations by any Community
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� In order to make progress customers need to pay for power used. Only 48% of power bill is currently being collected in Edo. High level of power theft and bypass is taking place.
� Over 8,000 backlog of meters paid by customers (in Edo, Delta, Ondo, Ekiti) under previous regime not serviced need to be sorted out
� Some Staff benefits existing without fund backing by previous management need to be sorted out
Challenges
� High volume (30%- 200000) of estimated billing need attention inherited need to be sorted out over time
� Contingent liabilities/ Judgment debts arising from pre takeover actions need to be sorted out
� Customer enlightenment on various issues need to be done eg,� Estimated billing
� Fixed Charge
� Obsolete meters
� AND MANY MORE…….
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� As at today:
� FGN /BPE have collected money- total of $ 2.6 billion from all investors (Gencos &
Discos) & is SMILING
� Most staff of PHCN have collected money- total of N 380 billion as severance pay & are
SMILING
� Union has collected N6billion to N7billion as their share of workers benefit & SMILING
� Core investors are out of money and paid for assets that they are only starting to know
about 9months after they should have had access. They are NOT SMILING
Conclusion
� Public is expecting drastic improvement in power availability overnight- They are NOT
SMILING
� Findings by all investors have indicated that several of the data given to the investors were
wrong and inflated (customer base, ATC&C Loss level
� The above applies that tariff structure was wrong and will eventually have to increase if
investment is to take place
� The current interim rule had to be introduced because several parameters for TEM is not yet
in place 22
� 6MONTHS SHADOW MANAGEMENT THAT WAS NOT ALLOWED TO START BASED ON AGREED CONTRACT IN FEBRUARY 2013 ONLY JUST BEGONE ON 1ST
NOVEMBER 2013 FOR ALL GEMCOS AND DISCOS
� ROT OF OVER 25 YEARS CANNOT BE WIPED OUT WITHIN A SHORT TIME
� PUBLIC OUTCRY IS EXPECTED TO FIRST INCREASE AS WE ATTEMPT TO REARRANGE THE SYSTEM
Conclusion
REARRANGE THE SYSTEM
� WE ALL NEED UNDERSTANDING AND SUPPORTIVE STAKEHOLDERS FOR ALL OF US TO MAKE A DIFFERENCE
� PROCESS IS A JOURNEY NOT AN OVERNIGHT RACE !!!!!!!
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