“Manitoba mismanaged the company to the extent that the company was at the verge of collapsing. We had to come with a programme on how to move TCN forward.”
Isaac Anumihe, Abuja
Usman Gur Mohammed was appointed as the Managing Director of Transmission Company of Nigeria (TCN), in February 2017, after a stint in African Development Bank.
Having been in the power sector for over 17 years, it was not difficult for Mohammed to know the extent the former managers, Manitoba Hydro International, degraded the company.
So, his challenge on assumption of office, was how to make TCN deliver service to Nigerians.
He brought a lot of innovations to modernise the grid and improve efficiency.
Above all, the MD has been able to reduce the cost of awarding contracts in the system.
The first motivation is to serve my president. You know the president was my president when I was in the primary school and I know what he represents. We know the kind of quality he has and since when we were children we have always learnt from him. I tell you, I am one of the Buhari’s students of leadership. So, that is the reason I accepted to come.
Since we came in in February last year, we inherited a lot of things. First was TCN which was managed by Manitoba Hydro International for four years. And Nigeria was paying Manitoba for three years $23 million plus. Manitoba mismanaged the company to the extent that the company was at the verge of collapsing. So, when we came in, we had to come with a programme on how to move TCN forward. One of the things we did was to establish what we call transmission rehabilitation and expansion programme. That programme contains four things. What does that mean? It means for us to stabilise and make the grid a modern grid, we needed to do four things.
One of the four things is frequency control. By the Grace of God, in June 2017, we have achieved frequency control of 49.5 and 50.5. By the Grace of God this has not been achieved in the last 20 years. And when we tried to achieve this frequency control we were told that it would be temporary. But till today it is still on. It has not been changed. But the grid cord of frequency control is supposed to be 49.75 and 50.25. The wag cord is supposed to be 49.80 and 50.2s. We have established a plan to achieve 49.80 and 50.2 but we are waiting for the appropriate time to implement it.
So, that is one. The second thing we have to achieve is what we call spinney reservoir. If you check our daily broadcast, you will discover that our spinney reservoir is either zero or is 40. Now what is spinney reservoir? Spinney reservoir is putting generators on a mood in such a way that if there is a grid instability, the generator will trip off. It is an auxiliary service that we need to pay.
When we came last year, as part of this programme, we established a committee to review the reason we didn’t get spinney reservoir from those generators that we have signed contracts for. And the outcome of that committee is that the tariff we were paying for spinney reservoir was not good enough. So, we recommended the tariff that can intensify the generators. As God will have it, just about one month ago, we got the approval that we should go for the rekindling of the spinney reservoir. And we have advertised for the procurement of 300 megawatt of spinney reservoir. This is the first time in the history of this sector that we have done this kind of advertisement. Now, we have procured 300 and the ultimate actually is 450. When we get the 300, we will see how we can get another 150 so that it becomes 450 because this is supposed to be 10 percent of the total generation capacity. So, with the total generation of 4,500 to 5,000 we are supposed to have at least spinney reservoir of 4,450.
So, that is it. The next thing we have to achieve is that we need to have a functional scudder. It will interest you to know that Nigerians attempted to have a scudder and the three attempts to procure a scudder were not successful. The last one that took place between 2006 and 2007, Nigeria spent about $46 million. But the scudder that was completed had deficiencies that it can only see more than 40 percent of the network as we speak. Even the 40 percent that it sees, there are some areas that it cannot see very well because of communication and some other reasons. So, we established a committee to review and find out the reason why we failed three times to procure a scudder. And the findings of the committee include that we have a lot of deficiencies and our procurement was not point-to-point; we didn’t anticipate expansion and the communication network is very poor. Now when we got that report we now procured a consultant to get the scooping. The consultant is EDF (Electricity De Fence). EDF did the work and submitted their report in December. When we got the report, we still felt that it was not enough for us to collect the report like that. So, we subjected the report to international conference where we brought three power grids. The power grid of India who manages about 350 gigabits of electricity was brought here. The power grid of Ghana (Grid Co) and the power grid of Italy. We also brought all the original equipment manufacturers and all the experts of scudder in Nigeria and we gave them the report, three weeks before the time. They scrutinised the report and came up with their findings. The findings of that report have significantly improved the scooping report. But now it has become very clear from the conference that we held at Hilton that we cannot even start the procurement of the scudder until we fix our communication backbone. And that also reinforced that position we took that we had to cancel the concession contract that we met. It is consistent with the outcome of the report of the workshop. Power Grid of India, with all its capacity has never concessioned a single of its fibre to anybody because the fibre is actually good for communication. It is not for GSM or broadband. Of course, being a public agency we are supposed to support government by taking broadband to areas that are inaccessible because our transmission goes to other places. But the main objective is not for commercialisation. It is for control and management of the grid. So, the main objective cannot be met when you have a contract that places premium on the use of the fibre by GSM than the use of the fibre to manage the grid.
The most important thing we need to do to stabilise the grid, so that it becomes very modern, is that we need to have critical investments in lines and some stations. We need to expand the grid, both in line and some stations and put what is called M minus One. M minus One means that anywhere you have the need for 60 megawatt you put 60 times two. Anywhere you have a need for one, you build two lines. Let’s say if the line is supposed to be 1000 megawatt you are supposed to put two lines parallel or you build the lines in loop. That is M minus One. By the Grace of God, we have raised enough money to expand the grid to at least 20,000 megawatt by 2021. Not only that, we have also come with programmes that will help attract some of the best companies to come and implement our project. So, this is where we are.
I can tell you we are on track because even TCN staff are highly motivated to do the job.
MVA power transformers
Thank you very much. You know I told you that we are the president’s students and I believe that every Nigerian that wants to make this country good should learn the character of the president because once you don’t place your own interest above the interest of the nation, you do the right thing at any time. Now, if you look at the transmission, we are the most vulnerable in the power sector value chain.
The discos collect our money and give what they want to give. The gencos are supported by 701 payment assurances. The only one that is not guaranteed in the market is only transmission. Now, we have been able to raise a significant investment from donors. As we speak we have $1.57 billion. But the money can only finance investment. It is not only flexible, you cannot take that money to finance old contracts. It has to be on contracts you have agreed with the person and you cannot use it for operation. So, what can we do to do things differently? What we have done is that in the past most of the contracts that we actually awarded are done by the same engineers. So, they make them to work in the evening or on Saturdays. And my eyes were opened on some stations. You know that I am from Biu in Borno. Biu is one town that Boko Haram has not invaded. When people are attacked, they move to Biu. So, when security improves, they move to their place. We need to rebuild the substations destroyed by Boko Haram. So, I called for tender, and the tenders said that we needed to pay N228 million. So, I called the then ED transmission and told him that N228 million was too high. So, let’s call the general manager in Bauchi. Maybe they would have a cheaper way of doing things there.
We called him and asked him to bring two tenders and get three quotations from that side. The cheapest quotation was N20 million. The GM said that if he was the one installing, it would cost N15 million, and he would need an additional N3 million for security to guard workers as the work goes on. When we gave him the money, he completed the work within one month.
So, I now thought that all those places we have transformers sitting for more than 10 years should be fixed.
We have 6 MVA in Aba sitting more for than 10 years; we have 40 MVA in Umuahia sitting for more than 10 years; we have 60 MVA in Funtua; we have 40 MVA in Zaria; we have 60 MVA in Ajah; we have 40 mva in Ejigbo. I now asked the general manager to give the cost to fix those transformers and the transformers were fixed for less than 10 percent of what we normally give contractors.
So, from there, I started looking at some contracts that we have paid 10 percent advance payment and they refused to do it. For example, the 6 MVA in Bauchi. The contract is about 200 and something million naira. We have paid 10 percent. The contractor could not do the job. When we called Bauchi to give us the cost implication, he told us N16 million. That is the transformer we commissioned in Bauchi.
As I speak with you, TCN is building a sub-station in Lagos in a place called Ilaje. When I came here and I asked for the cost of the construction of the sub-station. It was about N1 billion. The job is about 95 percent completed now and what we spent is less than N100 million.