 Welcome once again to the breakfast here on Plus TV Africa. Our second conversation this morning is going to be moving to the power sector. This of course is a big concern for Nigeria and Nigerians in general. And every government of course that has come into power in the last couple of years, last couple of decades actually, you know, has made similar promises about fixing the energy sector and giving Nigerians a better, you know, a level of power supply. We're going to be joined this morning by Mr. George Etomi, who's a director at Echo Disco to have a, you know, very broad conversation about this. Mr. Etomi, good morning. Thanks for joining us. Good morning. My pleasure. And compliments of the season. Same to you. Thanks for making our time to speak with us this morning. So the conversations on the power sector, you know, I believe are in, you know, numerous directions. There's a lot of people who have shared their own analysis and of course if you look online, you would see different write-ups, you know, pretty much saying, you know, sometimes the same thing, sometimes a totally different, you know, thing. But from your perspective, what do you, what would you say is the biggest challenge with fixing Nigeria's power sector? Good morning. And thanks again for having me. The power sector privatization I've always said is often wrongly compared with the telecoms privatization. And the reason is very simple. In the case of telecoms, you were actually starting companies on a green field platform. In other words, you did not take the old nitel and then you, you then try to, to privatize it and make it work within its old existing structure. About the same time, the new technology came in and we had the mobile telephony. So that was how that privatization realized its objectives in a very short time. But in the case of the power sector, you're actually taking the existing, what was there before and you're seeking to rejig it. It was always, or it is always going to be a daunting task because you're looking at a sector that was lightly neglected for nearly 60 years of our independence. And you're, like you correctly said, everybody talks about how best to make it work. But you do not go to the fundamentals of a problem. One of the biggest challenges in the sector today is the liquidity issue. Because the product at the beginning of the privatization was designed to be sold at market value, but then through political considerations and other considerations, the regulator made the purchasers of the power sell at below the cost. And anytime you sell a product below its costs, they're going to have a problem. It means in the first place the entire sector is cash strapped, which is the reason the government has been doing this subsidy gain. And if you ask me, it's been very inefficient. It's inefficient for power, inefficient for petroleum, but power is a very emotional subject and because it directly impacts on the happiness of people, the policy and government tend to pander to it as opposed to going to the fundamentals, dealing with it. And then you begin to climb up slowly. It's like somebody who's been going downhill. You can't come up if you don't get to the bottom before it starts climbing back up. So we lost a little bit of time from the advent of this privatization in 2013 when we just did into all the things that were expected to be done under the multi-year tariff order so that tariffs could begin to slowly assume their true position. I have always postulated and because I am in the game now, I know that if Nigerians see electricity, they will pay for it. So at times you do not understand why the subsidies game is played the way it is being played and what is wrong with the subsidy game is that you do not expect investors who want to put in hard money in return for profit to now be the ones to subsidize the sector. This has been the mismatch, but that's like a year ago, up to a year ago. During this period, the presidential power initiative, the central bank intervention, they finally brought the sector together, which was lacking before and we now are beginning to see an alignment between generation, transmission and distribution. That alignment was never there before because what feeds the entire sector is the money collected by the distribution companies, which is then sent down the value chain to lubricate as it were evaluated. But as I told you, if that money, for example, if the product costs $50,000 and you say distribution companies don't sell for more than $30,000, the problem we instantly have is that whatever money is sent through that value chain isn't going to be sufficient to address the problems. And one of the biggest problems is the cost of gas. The cost of gas is roughly 60% of the power components if we're talking about the thermal plants. All right, Mr. Judge, we're going to get back to you, but at this point, we need to bring in Afalabi Akiro Gundey. Good morning, Mr. Afalabi Akiro Gundey. It's good to have you join us. Can you hear me? Hello, Mr. Afalabi. I'm sure we'll see. Yes, good afternoon. I can hear you clearly. All right, it's good to have you join the conversation. We're looking at the past sector. Of course, we're costing the year down. I mean, a few more days we're going to be talking about 2022. But let's talk about our capacity and generation. As a country and with the plants that we have, we have the capacity to at least generate about 12,522 megawatts. But currently, we're still grappling with 4,000 for a population of over 211 million. That's according to the data from the United Nations. How do you think that we're faring as a giant of Africa in terms of power generation? I think power generation is just one part of the problem. The problem is actually an integrated one. It's one that needs to be solved end to end. Because for generation, as far as we know, we have about 13 gigawatts. That's 13,000 megawatts. Transmission, we can take between 5 gigawatts and 7 gigawatts. Distribution is where it challenges, which is basically doing anything between 3 and 4 or 5 gigawatts, depending on what's happening within the disco systems. So you find out that at various ends of the power network, there are different capacities. So which was one of the reasons why the cement deal was struck a few years ago to unblock that transmission end, make it pretty much as much as from the 5 to 7 gigawatts up to the 13, so that you can transmit, you can generate 13, transmit 13, and then find a way to unblock the challenges downstream at the discos to enable them then to distribute that 13, such that we can then move from the 3 to 4 gigawatts we are distributing at the disco end to the 13. But the challenge also then still remains that even at the disco's end, they are basically losing 40% of what they are getting. So if they are getting 5 gigawatts, 4 gigawatts, they are losing as much as 30, 40% of that to key see and see losses, acquisitions, connections, commercial losses, and those are the challenges which they have, so such that even if you end up transmitting and generating all of that power down to the discos, if we don't solve the problem the discos have, we will still not solve the problem. So which is why I say that the challenge is an age to end challenge. It's something that needs to be solved with an integrated manner. Okay, Georgia told me, I believe that we can have these discussions and address the challenges on both the transmission, the generation, and distribution sectors individually and they all have their own individual challenges. I've spoken extensively with distribution companies and their representatives and they share a lot of challenges that they have, but I want us to focus a little bit on the distribution aspect of it. Do you think, you know, when the privatization started, do you think that the distribution companies invested enough in, you know, the facilities and infrastructure that was necessary? Do you think that there was a challenge with regards infrastructure for distribution companies and that is still one of the problems that we are facing in this whole power sector? No, I agree with what Afolabi said. You cannot isolate the various segments of the value chain and deal with them. You must deal with them holistically, otherwise you would, you would be making, you'll have leakages through any member of the value chain. But to your direct question, the distribution companies make enough investment. You need to understand how the sector works. You just can't take money and go and spend it. It needs to be approved by the regulator because whatever money you spend on capital projects must reflect in the tariffs and because the government wants to keep tariffs artificially down, that investment will not be approved. And if you go make an investment that's not approved, it's like throwing water down the drain. That's not what investors are there for. And most of the distribution companies cried about this because this was not the understanding at the beginning. But because tariffs had to be paid low, investment to necessarily had to be paid low. But that's, as I've told you, is changed now in recent months because we're finally having these alignment talks and all these things have been unlocked. And that also includes the segment initiated. So right now, the keepers of distribution companies has recently been approved. I know that for sure. And they are going to be massive investments in improving. I wonder the distribution facilities we're talking about here. You're looking at your feeders. You're looking at your transformers. You're looking at metering your customers down the line. These are the things that actually have caused the high losses, as all of you was talking about. If you begin to address them, which we will, then the transmission and needs to also be unlocked because at times, the vagaries of the grid system, because you know, we have a central grid cell, the vagaries of that system is such that if there is a difficulty in one end of the transmission chain, it affects everybody else. For example, the power of tick in one of the segments of the distribution area is not working. They can ask you who is not being connected with the problem to drop your load so that you can balance the grid, which is why you have this on off stuff that we see. That's not to do with distribution companies is transmission. So we need to come up with a long term plan for transmission. I agree that the cements then will help, but it really needs to get on board as quickly as possible. On the generation side, the problems are far less. It's just a strict question of, is there gas? Because there's a gas issue as well. If the generating companies don't have gas, they cannot generate. And at times, transmission says that I'm unable to transmit because I don't have the power from the generating companies. So it's a holistic solution. I understand why people concentrate on distribution companies. And that's because they're the face of the industry. They collect the money and there's nobody else you can hold about them. But the truth is that we must begin to look at everything holistically. And I quickly add that that process has started. And I believe that from next year, we will begin to see the benefits of this alignment, which should have been there if you ask me at least seven years ago. Okay. So let's also get back, Mr. Falavi, back online. It's okay that you said that we can totally just blame it on the generation. But the discourse have constantly made arguments that they cannot give what they don't have. And it's totally dependent because they're not in control of what is being generated. And so what is given to them is what they have to distribute. I want to find out from you, is this argument very valid, that the problem is not entirely, as much as we agree that, yes, the discourse have their own challenges as well as the, you know, other value chain. But the problem is totally on the generation. The problem is what is concentrated. But the three challenges remain. For example, you can do pretty much 40% more. The whole system today can support at least 40 to 60% more than what is doing right now if we sort out our discourse. Because right now you have situations where the discourse actually turns away power. That is given to them. Once they find out that they may not be able to actually generate revenue from this power, they turn back that power to the discourse. And so if you find a mixed quest to create a situation where those discourse can actually accept that power, the support within their system, of course, that will be a new, difficult improvement immediately. But as it is to today, the generation can generate more power than the discourse can, that the transmission system can take. The transmission system can transmit more power than the discourse can take. So you have a situation where the weakest link, so to speak, where every end of our system is weak. But the weakest link now is the discourse. Because right now, if you are using, if you are using 40% of every kilowatt that is coming into your system, it's going to be difficult for you to actually perform. So as of today, the weakest link is now, but the challenge is that it is an integrated channel. It needs to be looked at. Okay. Well, Ms. I told me, do you agree that the weakest link is the discourse? And I also read an article yesterday that says here, the Transmission Company of Nigeria is 100% owned and managed by the federal government of Nigeria. It is the weakest link in the Nigerian electricity network. So, Ms. I told me, do you agree with Ms. Afolabi that the discourse are the weakest link? I would have thought that was obvious. I don't agree with Afolabi and thought that the discourse are the weakest link. There's so much that goes into the grid balance. That's what I've explained before. Take a code discourse, for example, we require more power. We ask for it, but frequently we are told by the Transmission Company to drop look for whatever reason they may want to load dropped. So that's not correct. The only way discourse can make money is if they give power. So why would you not give the power? The reason some discourse reject power is because, as I mentioned earlier, it goes to their ATC and C losses. To balance the grid, TCN can ask, take power to an area in your franchise area. That's not giving you generating revenue. And you tell them, look, I don't want it there. Give it to me in Ekoi or give it to me in Leki, where I know I'll get my money. But to balance the grid, they must distribute that power. That's where the rejection I thought I was talking about is coming from. But these realignments like actually is going on now and that we're beginning to slowly see the need in the value to unlock what we have currently. If you leave it the way it is, and you simply just measure disco performance from reduction of ATC and C losses, we will miss the point. The point is that investments will require to get you power. Get power to the people needs to be made. And it's not going to be made if the tariff is not right. So it's all connected. I don't agree at all that the weakest link is the disco. In any case, I really want to get away from this blame game era. We just need to find ourselves on the path to solution. And like I said, this has started about a year ago through this process, where all the key players in the various segments of the sector are beginning to speak to one another. And we can begin to unlock these problems. All right. I think we'll have to wrap up here. In a different conversation, I hope that we can speak with you both again and get to expand further on what the Siemens deal is all about and what it hopes to achieve. But for now, I would say goodbye. Thank you very much. George Tomi is the director at Echo Disco. And of course, Mr. Foulabi, Akin Rubundi, thank you so much for your time this morning and for speaking with us. Thank you. All right. And yes, that's what we have for you on the breakfast this morning, just a little bit on the power sector and its challenges and where we're moving, how we're moving forward. If you missed out on any of the conversations, remember where to catch up. It's simply a plus TV Africa on Facebook and Instagram. Same with our YouTube channel and the plus TV Africa lifestyle also on YouTube. I am Osawa Gie, Ogboma. And I am Messi Boko. You'll have a great, great day.