‘Regionalize national grid, replicate Geometric model’

He refuses to be defined by his roles as government’s policy driver and technocrat. Prof BARTH NNAJI is arguably the only Nigerian minister that has distinguished himself with successful business model to demonstrate his policy propositions. In this chat with Sopuruchi Onwuka, the former Minister of Science and Technology who was later called back to become the Minister for Power calls on government to adopt decentralized grid system and optimize trapped capacity in the upstream power sector to enhance electricity supply to homes and businesses. He points at the technical and commercial systems currently driving the Geometric Power as reliable models to replicate. The interview excerpt follows.

Geometric power is a unique case as the only Disco supplying directly from operated power plant. What is the challenge in running an integrated power supply chain?

The challenge is not in the production of power but in the distribution; and it is a challenge for all the Discos in terms of distribution. But one major advantage we have is that we produce adequate power, quite unlike some Discos that don’t get enough power.

In terms of distribution, we are addressing the challenges that exist for the Discos by building additional infrastructure and refurbishing existing ones.  We have built new substations, which is something a lot of Discos find difficult. We built four brand new ones.

We have also built new power lines. We built our own pipeline to transport gas from Shell to our generation plant.

So, these are the way we mitigate things that would constrain delivery of power to the consumer.

I see heavy investment in full scope facility development from upstream to downstream power chain. So, how are the commercial lines; How do you evaluate your ROI?

First, it is very important that you appreciate that there are actually two companies of ours operate the Aba Integrated Power Project. There is the Geometric Power Aba Limited which is separate from the holding company, Geometric Power. Then you have a distribution company, Aba Power, which buys th product from Geometric Power Aba Limited.

The business portfolios have to be separate because of regulatory rules. So there is a relay of business roles across the two and it works very well.

So commercially, there is no way you will have a business like this to grow without having your financial model on whether you have to put in all your costs or whether you are still going to be left standing. And that is what we have calculated, but a lot of it is still about being able to plug all the leakages and pilferages that go on in the sector. There is concern about reduction of average technical, commercial and collection losses. Without reduction of those losses, then a company like ours will run significant loss.

Given that regulation has been made flexible and robust on captive power; and with that do you envisage the possibility of expansion into proximate zones where your model of services would be needed?

It is important to know that Aba is a ring-fenced area. It is a distribution company, the 12the distribution company in Nigeria. It is a Disco, and in that area it supplies electricity to every consumer; whether you are company, a commercial entity, industry, private citizen, whichever. Everybody gets electricity supply from Aba Power in the area. So, that is the structure that we have. We expect that as we show that this is a workable model, it is either that we expand or that others will copy. That is how it is done.

With contact activation in the gas-to-power programme, how does commercial interface operate in your own model?

Oh, very well. Because we have a complete value system value model, the fuel producers sell fuel to us; that is natural gas. We have a 27 kilometre natural gas pipeline we built ourself to take the gas from Shell’s processing station in Owazza to our power plant in Osisioma in Aba.

So we have to pay for that gas. Then, we produce the power; and Geometric Power Aba Limited sells the power to Aba Power. And then Aba Power sells the power to the market. So, the Aba Power does the billing, collection and vending. That is all there is to that.

Other Discos suffer collection losses primarily because of billion disputes between them and their customers. And at issue in billing disputes is metering. How have you been able to manage billing integrity?

First, what we want to do is meter all meterable consumers in the network in the area; and we are aggressive about that right now. We believe that the meter is the fundamental agreement between the consumer and the supplier. So, we have to meter as many people as possible; and it is ongoing at the moment.

We have metering targets. In fact, our lenders have in the agreement we have with them that in each year we would have target number of metered customers. So, our goal is to massively meter all consumers.

Whose responsibility is that to provide the meters, because we have MAP which requires the consumer to procure the meters?

We supply our meters.

The industry suffers high redundancy at the upstream, very tight bottleneck at the transmission and low capacity at the distribution levels. How can the industry leverage upstream capacity to enhance volumes available for distribution at the downstream?

We have to replicate what we have done because what we have done reduces national grid problems by having the area semi-autonomous. We are still connected to the national grid; but, in our own case, only for the export of power out of the ring fence.

Currently we are in absolute terrible situation of all your power trapped in the grid system. So, we have to repeat that. It is a good model. It works effectively.

I would also advocate regionalization of the national grid so that we have multiple grids that are semi-autonomous but still connected to the National Control Centre (NCC). I believe it will be very effective because that is what actually works in a lot of countries.

In America, you have several smaller grids controlled locally, like the New York grid, Washington, Atlanta and so on. But they are all connected to the national grid that they can buy power from wherever the power plant is, so the national grid energized and the local grid is maintained.

As a matter of fact, regulation-wise you can have state regulatory systems as a result if this but still have a national regulator for the power sector.