A TIMELY INTERVENTION

August 6, 2018

I yield the blogpage to an astute engineer, Daudu Abdul-Aziz, who, in the following 1,966 words, reviews the book of a living legend, Engr Solomon Omorodion Uwaifo, FAEng., in which the entire cycle of inaction, rot, abuse, untapped opportunities, hope and possibility of redemption is clinically diagnosed and presented in 750 pages. The book, CONVERSATIONS IN ELECTRIC UTILITY ENGINEERING, was launched in Lagos recently.

“CONVERSATIONS IN ELECTRIC UTILITY ENGINEERING: A TIMELY INTERVENTION”
by Engr. Daudu Abdul-Aziz, FNSE, North South Power, Shiroro, 2 August 2018

“It is a great honour to be called upon to speak in front of this distinguished audience, on this momentous occasion of launching Conversations in Electric Utility Engineering, written by Engr. Solomon Omorodion Uwaifo.

The writing of this book wouldn’t have come at a more opportune moment, a time when a different approach is desperately needed to move the electric power industry in the desired direction. Engr. Uwaifo’s specialty is electric power distribution and he has written several books in the field. His book, Electric Power Distribution Planning and Development, has become the standard reference for students and practising engineers in this country. His other books about the Nigerian power industry have proved equally resourceful, for which the country will forever be grateful. This one we are launching here today is even more valuable as it seeks to unravel the knotty issues that have bedeviled the industry, post-privatisation, and show how to address them. It is a compendium of complex industry issues and their solutions.

Understandably, electric power distribution is Engr. Uwaifo’s main concern but the views he expressed in this book are industrywide and pertinent.
Engr Solomon Omorodion Uwaifo

Being from Generation, I’ll focus my attention on aspects of power generation covered in Conversations in Electric Utility Engineering, particularly the very topical issue of coal-powered generation.

It is often stated that electric power is the lifeblood of modern development. Generating enough electricity to power the country’s industrial development is something Engr. Uwaifo feels strongly about. But he insists it is not enough to generate power; it ought to be on commercial and cost-accounting basis, which will make it affordable.

Making electricity affordable, all things considered, depends on generating power economically and distributing it efficiently. The word distribution here is generic and connotes efficiency in utilization too. Efficiency of utilization increases with system load factor since in such case the large amount of expensive equipment, such as power plants, that would otherwise be kept on standby to supply rare peak loads is considerably reduced. A high system load factor normally obtains when a country’s industrial load is substantial. It is therefore economically desirable to have the larger proportion of system load to be industrial because it is those customers that should subsidize residential customers and keep their tariff low. In principle, end-user tariff should be cost-reflective and at the same time affordable. A high system load factor is thus sine qua non for attaining that dual objective.

Viewed from the perspective of competitive power generation, making power affordable will require having enough cheap renewable sources in the nation’s energy mix. Unfortunately, hydro, which is the most significant renewable energy resource in the country contributes only 20% of the electric power supply. Of course, that percentage will increase when Zungeru and Mambilla come on stream. I have not factored in contributions from small hydro, solar, wind and biomass in the equation.

Those of us that closely follow trends in the international electricity market will notice how greater RE penetration in some European power grids is forcing down the price of electricity to below production cost in the “spot market”. Here in Nigeria, the effect of its deployment on consumer savings in energy cost and on electricity access is beginning to be felt, especially with the government’s recent initiative to supply markets in some of the country’s major cities and institutions of higher learning with solar-powered electricity.

But the important question is, how best can cost savings on the 80% contribution from thermal generation, which is almost wholly gas-fired, be made? We are all familiar with the issues surrounding gas supply in Nigeria, of its OECD pricing mechanism and indexation to the US dollar, of take-or-pay PPAs, of pipeline vandalism. This is where Engr. Uwaifo believes part of the solution is to return to coal-fired generation. His pro-coal views are not strange, knowing the dominant feedstock in use for bulk power production when he joined the ECN. And as anyone who reads his numerous articles on the web pages of Electricity in Nigeria magazine will know, he is a staunch advocate of coal powered electricity in Nigeria.

Was coal just abandoned? Well, not really. As is well known, with the discovery of crude oil and subsequent development of petroleum resources in this country, natural gas replaced coal as the preferred fuel for electric power generation due to its abundance, simplicity and more environmentally friendly nature.

Undoubtedly, the switchover to gas was at a disadvantage to the nation; as experts are wont to say, the country let her huge assets in men and in equipment in the coalmine to die. In time, Nigeria’s experience in the application of coal mining technology became a distant memory.

So, why would a return to coal-powered generation become an issue? Nigeria, as the rest of the developing world, is simply victim of a hypocritical campaign against coal and similar fossil fuels by the leading industrialized nations of the world, supposedly for limiting GHG emissions, forgetting that a few of those countries use more coal than the rest of the world combined. Not only that, the industrial revolution was powered by coal. It is clearly a moral question.

And the industrialised nations are not alone. Environmental groups, too, have upped their campaign against coal. They are vociferous and have a well-coordinated network worldwide. Their own motivation is protection of the natural environment. These groups encourage the use of renewables as sole means of generating electricity, an unrealistic proposition.

Rightly or wrongly, these campaigns against coal have had the effect of indirectly influencing Nigeria’s energy policy decisions away from coal.

Nowadays, the environmental impact of coal-fired generation is more benign than during the years of solely pulverized coal due to the availability of coal gasification and more advanced pollution abatement technologies, which enables the plants to meet emissions limits set worldwide.

To be sure, “clean coal technology” has reopened the door for coal-fired generation in many countries around the world. Others still have strong reservations, insisting that clean coal technology is “not game-changing”, pointing out that an ultra-supercritical coal-fired plant “produces twice the emissions of gas-fired technology” as well as costing approximately twice more than a combined-cycle plant with the same output.

However one looks at the coal debate, a country’s approach to energy should be absolutely pragmatic and practical—and above all, dictated by her own national interest. Both renewables and fossil fuels should have a role to play in Nigeria’s energy production.

As the Australian Prime Minister Malcolm Turnbull, whose country is the biggest coal exporter in the world said the other day, “Treating this as an ideological thing where people say, “Renewables are bad” or “All fossil fuel is bad” is wrong. You’ve got to make sure you get the right mix.” I cannot agree more.

There is a groundswell of opinion that for Nigeria to meet the rising demand for power in the coming years, she will need a lot of coal-fired generation in the energy mix, deployed as baseload power in large capacity modules. This can have the effect of significantly improving system load factor and reducing end-user tariff which will subsequently make electricity more affordable.

Hope for a return to coal-powered generation in this country has risen with news that a Nigerian-based private coal mining company, the Eta-Zuma Group, has been granted a license by the Nigerian Electricity Regulatory Commission, NERC, to build a 1,200-MW coal-fired power station in Kogi State. It will be an investment worth US$ 6 billion, according to a report in ESI Africa magazine published on March 7, 2017, quoting Eta-Zuma Group’s CEO, Dr Innocent Ezuma.

In reality, it is not for lack of genuine interest that investors have been reluctant to build coal-fired power plants, or any type of power plant for that matter, in Nigeria. It is simply that the performance of the electricity market leaves much to be desired.

Projects developed by means of private capital are financed from debt or equity and unless there are adequate guarantees for a favourable internal rate of return, no investor will be willing to put their money in such venture. And neither will any bank manager be willing to lend their money to a project developer in the circumstance. Clearly, the prevailing situation where the GenCos are being owed loads of unsettled invoices does not inspire confidence.

The attitude of investors to new power projects in Nigeria is perhaps changing especially with the recent quick-success of the Azura Power Project in Edo State.

The liquidity in the market is insufficient. The N701 billion bailout by the FGN, i.e., the payment guarantee assurance by the CBN to NBET, is a welcome relief but still a stop-gap measure. It will come to an end this December. Unless the DisCos buckle up and improve on their revenue collection, we’ll be back to square one.

The anticipated resumption of coal-fired generation has brought another dimension to the fore. And that is to do with the support infrastructure outside of the power plant installation. It basically concerns the means of transporting the coal to the power plant.

This may not be a problem to Eta-Zuma since, from all indication, it is a “mine-to-mouth” power station. But it could be a big challenge if the coal had to be imported from a more distant location. Rail carriage would then be necessary. Which is why the current FGN efforts to revive existing and build new rail transport infrastructure in the country is timely and commendable.

To put things in perspective, we are not talking about small quantities of coal here. For this 1,200-MW plant, which for baseload duty is expected to be in operation for between 6000hours to 7000hours in a year, the quantity of coal required will be in the region of 500 tonnes per hour or 12,000 tonnes per day.

All said, the return of coal into the country’s power generation portfolio has so far cleared the first hurdle by securing a license but it is still a long way from accomplishment. The subsequent stages, like signing the PPA and the crucial one of financing, will determine how soon the project will get started or how fast it will progress.

Perhaps I should end this talk on a personal note. I first became acquainted with Engr. Uwaifo through the NSE Google Fellows Group in 2015 when he introduced an online magazine he had launched, www.electricityinnigeria.com to educate people about the recently privatised electricity industry.

I started reading the magazine and soon realised that it is different from the rest of its type. While those other magazines are little more than conduits for regurgitating stale, warmed-up overnight news word-for-word from regular newspapers, EIN devotes most of its content to educating consumers about the nature, complexity and cost of electricity supply as well as analysis of industry issues. Engr. Uwaifo single-handedly contributes almost 70% of the articles published in EIN. And they are not just ordinary articles. They are insightful and analytical, written in clear elegant prose.

The response of Nigerian engineers to EIN has been discouraging to say the least but Engr. Uwaifo remained undaunted and continued to sustain the magazine at great personal cost. Conversations in Electric Utility Engineering is the result of that decision to remain steadfast.

By the grace of God, Engr. Uwaifo is in good health. Quite remarkably for an 86-year-old, he has a lot of stamina; by virtue of what he has achieved, and the amount of work he produces every day, one can say Engr. Uwaifo has been able to squeeze-in several lifetimes in one, which is extraordinary.

I have not seen anyone more passionate about the Nigerian power industry. May God keep him for the sake of Nigeria.”

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