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Power System Collapses Four Times in Five Days

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  • Power System Collapses Four Times in Five Days

The frequency of system collapse in the nation’s power sector in recent times has resulted in prolonged blackout in many locations across the country.

Findings showed that between January 15 and January 19, 2017, the country recorded two cases of total system collapse and three partial ones.

Specifically, the total collapse of the power grid occurred on January 15 and 19, while on January 16 and 18, Nigeria’s electricity generation crashed to 108 megawatts and 49.2MW, respectively. The average electricity generation for Nigeria has always been around 3,500MW.

The daily industry operational report for January 19, 2017, which was obtained by our correspondent in Abuja, showed that a total system collapse occurred around 6pm that day.

It stated, “Total system collapse at approximately 1800 hours on January 19, 2017 – details pending. Alaoji NIPP is out of service due to gas constraints; condensate evacuation challenges limiting gas supply to Geregu, Sapele and Olorunsogo plants.”

Similarly, data from the industry further indicated a total collapse that occurred on January 15, after which seven power plants were restarted in order to fire up supply.

The operational report had stated, “Total system collapse occurred on 15th January, 2017; Ugwuaji/Makurdi 330kV line 1 (cct U1A) CB tripped at Ugwuaji transmission station on distance protection 3-Phases; the SOTF and trip relay operated.

“Poor generation, lack of units on spinning reserve/frequency response and lack of enough feeders on under frequency relay scheme were responsible for the collapse.”

The next day, seven plants were restarted and they included Transcorp, Sapele I and II, Afam VI, Omotosho I and II, Olorunsogo I, Geregu I, and Okpai.

Power consumers have continued to lament the sorry state of the industry as the development has led to prolonged blackout in various communities.

For instance, the Ibadan Electricity Distribution Company on Thursday explained that the blackout at Magboro/Mowe/Ibafo communities of Lagos-Ibadan Expressway in Ogun State was due to the limited supply of electricity allocated to the IBEDC.

The firm had said, “The IBEDC is a distribution company and we can only distribute the power that is delivered to us from the national grid. Any current power outage being experienced by these communities is as a result of the reduced power supply from the grid, which is not within our control.

“This is evident in the fact that the national grid has already experienced two system collapses within the first two weeks of this month. As we speak, power is still being supplied to Asese, Ibafo, Magboro, and environs on a daily basis. However, the quantum is dependent on our allocation, which has been extremely inadequate.”

Industry operators told our correspondent that aside from the issue of gas constraint to power plants, Nigeria’s electricity transmission network needed to be revamped.

They explained that many transmission infrastructural facilities were obsolete and could not take high electricity load from generation companies; neither could they transmit the power to distribution firms.

Although they noted that the government was working on the transmission network, they pointed out that gas constraint to thermal power turbines across the country was also a major limiting factor to electricity generation in Nigeria.

Late last year, the President, Nigeria Gas Association, Mr. Dada Thomas, told our correspondent that gas suppliers were owed over N100bn by power generation companies and that it was becoming difficult to supply gas to the firm’s due to their huge indebtedness.

The Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, had also stated that Gencos were also owed over N300bn by the electricity distribution companies.

On their part, the Association of Nigeria Electricity Distributors, an umbrella body for the Discos, also stated that its members were owed over N100bn by consumers.

ANEDs had earlier identified the military and government ministries, departments and agencies as their biggest debtors.

Operators had put the revenue shortfall in the sector at about N1tn and requested the Federal Government to intervene financially in order to avert a collapse of the entire power system.

This, however, was not heeded as the Minister of Power, Works and Housing, Mr. Babatunde Fashola, recently declared that the government would not provide any financial support to power firms.

He said the Federal Government had earlier provided N213bn as subsidy to operators in the sector and would not do that anymore.

“Subsidy appears in different forms. When I resumed in this sector, I was made to understand there was an existing CBN fund for the market. The CBN fund comes at a low interest rate; if that does not qualify as subsidy, then I don’t know what else qualifies,” Fashola had said.

Reacting to the development, a former President of the Association of National Accountants of Nigeria, Dr. Samuel Nzekwe, told our correspondent that instead of listening to repeated complaints by the power firms, the government should review the privatisation of the sector.

He said, “For how long are we going to continue like this? If the companies cannot deliver, why not review the privatisation exercise? The National Assembly highlighted this issue recently when it stated that the power firms had failed Nigerians. They come with high estimated bills even when there is no power supply and still complain that people don’t pay electricity bills.

“I understand why the government doesn’t want to revisit the issue of privatisation; it is about how investors will see Nigeria. But are we going to continue like this? I think something needs to be done to salvage the situation and improve power supply to enhance industrialisation in Nigeria.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco

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The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.

Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.

Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.

The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.

The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.

Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.

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Economy

Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead

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In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.

This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.

In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.

That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.

To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.

In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).

Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.

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Nigeria’s Economy to Close 2021 at 2.5% Growth Rate

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The Lagos Chamber of Commerce and Industry (LCCI) has predicted that the Nigerian economy will close its growth rate for the year at 2.5%.

This was said by the President of the LCCI, Toki Mabogunje at the 133rd Annual General Meeting (AGM) of the chamber in Lagos on Thursday, as reported by the News Agency of Nigeria.

The LCCI leader advised that Nigeria’s monetary and fiscal aspects of the economy should encourage policies that enhance growth and build confidence which would invigorate private capital flows to the economy to achieve the growth. She also encouraged a medium-term recovery plan which is anchored on local productivity, attracting private investment, developing physical and soft infrastructure, and ease of business.

Mabogunje disclosed that Nigeria’s inflation would be maintained at its double digit level within the short to medium term, due to food supply shocks, foreign exchange illiquidity, higher energy cost, social unrest in the Northern region, possible removal of fuel subsidy, and insecurity. She stated that these structural factors will keep on mounting pressure on domestic consumer prices.

She also added that in spite of the non-oil economy’s growth by 5.4%, insecurity problems in some areas of the country may lead to shrinking in production and a disruption of the supply chain. She states that the important drivers of the non-oil sector growth were finance and insurance holding 23.2%, transport and storage 20.6%, trade carrying 11.9% and telecommunications 10.9%.

Others include manufacturing, construction, real estate and agriculture with 4.3%, 4.1%, 2.3% and 1.2% respectively throughout the year.

Speaking on the decision of the Central Bank of Nigeria’s Monetary Policy Committee’s decision to retain policy parameters, she mentioned that although the apex bank has been keen to extend credit to the real economy as a way of supporting it, it is a fact that the provision of credit recently has proven ineffective in improving output growth and stabilizing consumer prices.

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