We Have Secured N567bn To Deliver 20,000MW Electricity – TCN Boss, Mohammed
Mr Usman Gur Mohammed is the Managing Director of
the Transmission Company of Nigeria (TCN) and also Chairman, West
African Power Pool’s (WAPP) Executive Board. In this interview, he
explains how the public utility will utilise a $1.57bn (about N567.3
billion) multilateral funding to raise grid capacity to 20,000MW in four
years.
You have been at TCN for over one year. Are there plans to expand the grid soon?
The first motivation for me to come to serve Nigeria is because of the president. The president was my governor in Borno State when I was in primary school and we know what he represents. We have always been learning from his qualities. So I am one of the Buhari students for leadership training.
When we came in February 2017, we inherited a TCN that was managed by Manitoba Hydro International (MHI) which has handled it for four years and Nigeria paid over $23 million for the three years it managed TCN. For one year, it means they had to pay one third of the money. But MHI mismanaged TCN to the extent that the company was at the point of total collapse.
We established the Transmission Rehabilitation and Expansion Programme (TREP). That programme contained four things that will stabilise and make the grid a modern one. The first is about achieving frequency control. Since June 2017, we have achieved frequency control of 49.5 Hertz (Hz) and 50.5Hz. This has not been achieved in the history of Nigeria; in the last 20.
The second is spinning reserve. The Nigerian Electricity Regulatory Commission (NERC) approved a competitive procurement of spinning reserve and we have advertised the procurement of 300 megawatts (MW) of spinning reserve. The ultimate should be 450MW; when we get 300MW, we will now increase it by another 150MW.
What are the other strategies for improved transmission?
The next thing is functional Supervisory Control and Data Acquisition (SCADA). Nigeria has failed attempts to have a functional SCADA three times. The last one was between 2006 and 2007, I was in the Project Management Unit (PMU) of TCN when the World Bank financed it and Nigeria spent about $46 million. But the SCADA that was completed had significant deficiencies that it cannot see more than 40 per cent of the network. As part of this programme, we established a review committee and held a conference in Abuja. The finding showed that we cannot start the procurement of the SCADA until we fix our communication backbone.
We also need to have critical investments in lines and substations and put N-1 which means having extra capacity to take in emergency. We have raised enough money ($1.57bn - N567.3 billion) to expand the grid to 20,000MW by 2021. We have also gotten programmes to enable us attract the best companies that will implement our projects. We are on track and TCN staff are highly motivated to do this job.
TCN has commissioned 29 transformers in about 16 months. How was this achieved?
We have raised $1.57bn from donors but that money is not flexible as it cannot finance a contract that somebody has awarded in the past. We looked at what we can do differently and we discovered that many contracts can be done by TCN engineers. The best and hardworking staff in Nigeria are in TCN. There are still some bad eggs spoilt by Manitoba Hydro, but majority are good engineers.
You have attracted the highest funding to TCN. Is it because you work with AfDB?
It is not because I am from African Development Bank (AfDB). My core area of competence is in contract management and I have been doing that before I went to AfDB. I have worked in the power sector for over 17 years and I was part of the reforms and the initiatives in the sector.
The only option is the multilateral donor funding; it is an area I know very well and the Federal Ministry of Finance was key to this funding sources and gave me all the cooperation I needed.
But before the donors could give money, they need to see the level of transparency at TCN. For the years that Manitoba Hydro spent, there was no audit of TCN - since 2012 when it was created. We worked hard to deliver the audit and there was about three days that I slept in the office to achieve this and we delivered 2012 to 2016 audit; the donors became comfortable with us after that.
Before we came, this place was just a farm. We had about 800 containers stranded but as at last week, we have recovered 696 containers and taken them to the sites where the projects were stalled.
TCN is managing a N72 billion fund to improve some distribution networks. Did TCN consult the DisCos before implementing that?
It is not the DisCos that say they don’t know about it. It is their association and we don’t deal with them because we have no agreement with them. The investment is an intervention by the Federal Government because of the failure of the DisCos to perform which is creating problems in the system. Government has 40 per cent share in the DisCos and the modality for repayment, whether as loans of shares for government, has not been concluded. But N72bn is small money compared with the investment needs of the DisCos.
When we did the investment requirement for TREP, we simulated that of the DisCos to be able to pick more load and they require over $4 billion investment for their injection substations.
However, we are working with all the DisCos where the project is situated because they know their networks.
Some energised TCN transformers are not serving consumers because the DisCos haven’t connected to them. Is that true?
The DisCos, like TCN, should reduce their excess cost and mismanagement and put the money in investment. There are some DisCos that have not installed their transformers under the NEGIP World Bank programme that started before the privatisation. Only about two transformers under TCN are undergoing installation, but that of the DisCos, none has been installed after the privatisation. Go to Niger Republic and see their networks, we give them 90 per cent of their electricity; what of Benin Republic and Togo where we give 80 per cent electricity, but they have stable electricity supply.
Some GenCos are benefitting from the eligible customer policy. Has TCN keyed into this policy?
Some DisCos are kicking against the eligible customer policy but in 2015 when NERC transferred the 132KV and 33KV customers from TCN to the DisCos, they did not complain because they were happy. From the Electric Power Sector Reform Act 2005 (EPSRA), a DisCo is any network other than 330/132KV network; hence that transfer was illegal but because it favoured them, they were happy.
Our Transmission Use of System (TUOS) is with Mainstream Energy, concessionaire of Kainji and Jebba GenCos who are supplying to five eligible customers. The customers posted Letters of Credit (LC) for three months’ payment in favour of Mainstream and the GenCo posts an LC in our favour to guarantee 100 per cent payment. This agreement has ‘Liquidated Damage’ such that if TCN fails to perform, we have penalty to pay, the same with the GenCo.
The DisCos can also be part of this because some eligible customers will pass through DisCos’ networks, and pay DUOS charges to the DisCo. The policy also provides for Competitive Transition Charge (CTC) to be paid to the DisCos for any revenue loss. What we need from the DisCos is cooperation because there is a win-win situation in this case.
You have been at TCN for over one year. Are there plans to expand the grid soon?
The first motivation for me to come to serve Nigeria is because of the president. The president was my governor in Borno State when I was in primary school and we know what he represents. We have always been learning from his qualities. So I am one of the Buhari students for leadership training.
When we came in February 2017, we inherited a TCN that was managed by Manitoba Hydro International (MHI) which has handled it for four years and Nigeria paid over $23 million for the three years it managed TCN. For one year, it means they had to pay one third of the money. But MHI mismanaged TCN to the extent that the company was at the point of total collapse.
We established the Transmission Rehabilitation and Expansion Programme (TREP). That programme contained four things that will stabilise and make the grid a modern one. The first is about achieving frequency control. Since June 2017, we have achieved frequency control of 49.5 Hertz (Hz) and 50.5Hz. This has not been achieved in the history of Nigeria; in the last 20.
The second is spinning reserve. The Nigerian Electricity Regulatory Commission (NERC) approved a competitive procurement of spinning reserve and we have advertised the procurement of 300 megawatts (MW) of spinning reserve. The ultimate should be 450MW; when we get 300MW, we will now increase it by another 150MW.
What are the other strategies for improved transmission?
The next thing is functional Supervisory Control and Data Acquisition (SCADA). Nigeria has failed attempts to have a functional SCADA three times. The last one was between 2006 and 2007, I was in the Project Management Unit (PMU) of TCN when the World Bank financed it and Nigeria spent about $46 million. But the SCADA that was completed had significant deficiencies that it cannot see more than 40 per cent of the network. As part of this programme, we established a review committee and held a conference in Abuja. The finding showed that we cannot start the procurement of the SCADA until we fix our communication backbone.
We also need to have critical investments in lines and substations and put N-1 which means having extra capacity to take in emergency. We have raised enough money ($1.57bn - N567.3 billion) to expand the grid to 20,000MW by 2021. We have also gotten programmes to enable us attract the best companies that will implement our projects. We are on track and TCN staff are highly motivated to do this job.
TCN has commissioned 29 transformers in about 16 months. How was this achieved?
We have raised $1.57bn from donors but that money is not flexible as it cannot finance a contract that somebody has awarded in the past. We looked at what we can do differently and we discovered that many contracts can be done by TCN engineers. The best and hardworking staff in Nigeria are in TCN. There are still some bad eggs spoilt by Manitoba Hydro, but majority are good engineers.
You have attracted the highest funding to TCN. Is it because you work with AfDB?
It is not because I am from African Development Bank (AfDB). My core area of competence is in contract management and I have been doing that before I went to AfDB. I have worked in the power sector for over 17 years and I was part of the reforms and the initiatives in the sector.
The only option is the multilateral donor funding; it is an area I know very well and the Federal Ministry of Finance was key to this funding sources and gave me all the cooperation I needed.
But before the donors could give money, they need to see the level of transparency at TCN. For the years that Manitoba Hydro spent, there was no audit of TCN - since 2012 when it was created. We worked hard to deliver the audit and there was about three days that I slept in the office to achieve this and we delivered 2012 to 2016 audit; the donors became comfortable with us after that.
Before we came, this place was just a farm. We had about 800 containers stranded but as at last week, we have recovered 696 containers and taken them to the sites where the projects were stalled.
TCN is managing a N72 billion fund to improve some distribution networks. Did TCN consult the DisCos before implementing that?
It is not the DisCos that say they don’t know about it. It is their association and we don’t deal with them because we have no agreement with them. The investment is an intervention by the Federal Government because of the failure of the DisCos to perform which is creating problems in the system. Government has 40 per cent share in the DisCos and the modality for repayment, whether as loans of shares for government, has not been concluded. But N72bn is small money compared with the investment needs of the DisCos.
When we did the investment requirement for TREP, we simulated that of the DisCos to be able to pick more load and they require over $4 billion investment for their injection substations.
However, we are working with all the DisCos where the project is situated because they know their networks.
Some energised TCN transformers are not serving consumers because the DisCos haven’t connected to them. Is that true?
The DisCos, like TCN, should reduce their excess cost and mismanagement and put the money in investment. There are some DisCos that have not installed their transformers under the NEGIP World Bank programme that started before the privatisation. Only about two transformers under TCN are undergoing installation, but that of the DisCos, none has been installed after the privatisation. Go to Niger Republic and see their networks, we give them 90 per cent of their electricity; what of Benin Republic and Togo where we give 80 per cent electricity, but they have stable electricity supply.
Some GenCos are benefitting from the eligible customer policy. Has TCN keyed into this policy?
Some DisCos are kicking against the eligible customer policy but in 2015 when NERC transferred the 132KV and 33KV customers from TCN to the DisCos, they did not complain because they were happy. From the Electric Power Sector Reform Act 2005 (EPSRA), a DisCo is any network other than 330/132KV network; hence that transfer was illegal but because it favoured them, they were happy.
Our Transmission Use of System (TUOS) is with Mainstream Energy, concessionaire of Kainji and Jebba GenCos who are supplying to five eligible customers. The customers posted Letters of Credit (LC) for three months’ payment in favour of Mainstream and the GenCo posts an LC in our favour to guarantee 100 per cent payment. This agreement has ‘Liquidated Damage’ such that if TCN fails to perform, we have penalty to pay, the same with the GenCo.
The DisCos can also be part of this because some eligible customers will pass through DisCos’ networks, and pay DUOS charges to the DisCo. The policy also provides for Competitive Transition Charge (CTC) to be paid to the DisCos for any revenue loss. What we need from the DisCos is cooperation because there is a win-win situation in this case.
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