THE EFFECT OF DISTRIBUTION LOSSES ON ELECTRICITY PRICING IN NIGERIA (A CASES TUDY OF ENUGU ELECTRICITY COMPANY)

ATTENTION:

BEFORE YOU READ THE ABSTRACT OR CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

INFORMATION:

YOU CAN GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL PROJECT COSTS N5,000 ONLY. THE FULL INFORMATION ON HOW TO PAY AND GET THE COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953, 08168759420

WHATSAPP US ON 08137701720

THE EFFECT OF DISTRIBUTION LOSSES ON ELECTRICITY PRICING IN NIGERIA (A CASES TUDY OF ENUGU ELECTRICITY COMPANY)

ABSTRACT

In recent year, electric power demand has increased drastically due to superiority of electric energy to all other forms of energy and the expansion of power generation and transmission has been severely limited sequel to limited resources, environmental restrictions and lack of privatization as can be found in the developing countries of the world like Nigeria, Togo, India, etc. No matter how the power system is designed, losses are unavoidable and must be modeled before accurate representation can be calculated. This paper focuses on the mathematical analysis of losses that occur in electric power system. The Depezo loss formula, loss factor, use of system parameters for evaluating the system losses, the differential power loss and power flow methods are explicitly illustrated. The B-losses coefficient, which expresses the transmission losses as a function of outputs of all generation, is also explained.

Electricity is the wheel for economic growth of any nation, which means to say that any form of problems confronting the electrical energy sector of the economy will definitely bring the country to its kneels hence nations endeavor to give it a place of priority in the budgetary allocation .The Nigeria Power System has been facing myriads of problems which could be traced to some thirty years before now. Thus this work gathered data and analyzed it using reliability index and other useful methods of seeking permanent solution to power system crisis in Nigeria. Electricity generation, transmission and distribution are three stages of delivering electricity to consumers. The delivery of electricity to consumers in Nigeria has

multidimensional problems.

This paper focused on capacity of electricity generation in Nigeria and the major factors affecting electricity generation, transmission and distribution in the country. The factors are none diversification of sources of energy used in electricity generation, poor maintenance culture, electrical power transmission line losses due to long distance between generating stations and load centers etc. Restructuring the Nigerian radial interconnected

electricity generation station grid system which has National Control Centre

at Oshogbo and replace it with a regional interconnected grid system in order

to reduce transmission line losses and improve reliability of the Nigerian grid

system among others was recommended.

CHAPTER ONE

1.0 INTERODUCTION

1.1 BACKGROUND OF THE STUDY

Electrical power generation, transmission and distribution are the three stages

of delivering electricity to consumers at residential, industry, commercial, and

administrative areas. The supply of adequate and stable electricity to consumers is

the back born of socioeconomic development of any nation. While inadequate and

unstable supply of electricity to consumers in any nation would definitely lead that

nation backward in terms its socio-economic growth. Like any other economic sector

in Nigeria, the power sector has its peculiar problems. In fact the sector has

multidimensional problems. This paper aims at discussing the major factors affecting

electricity generation, transmission and distribution in Nigeria. For convenience the

factors are group into two, namely factors affecting electricity generation and factors

affecting electricity transmission and distribution. Some of these factors are insecurity,

overloading of distribution transformers, non-diversification of sources of energy

(fuels) used to drive the electricity generating stations, bribery, corruption and

mismanagement of public funds in the execution and running of electricity power

projects. The objective of this paper is to sensitize the Government, the governed

and the organized private sector in order to solve the major problems affecting

electricity delivery to Nigerian consumers.

Electric energy occupies the top grade in energy hierarchy. It finds innumerable uses in homes, industry, agriculture, defense and of course in some nations, transportation. The fact that electricity can be transported practically instantaneously and the fact that it is almost pollution free at the consumer end makes it attractive as compared to other forms of energy. The per capita consumption of electricity in any country is an index of the standard of living of the people in that country .

In order to fulfill this prime obligation, the electricity industry is involved in a continuing planning process .Generation planning is one of the most crucial steps in planning the expansion of utility along side growth in population. Decision and commitment made at this stage have a tremendous effect on all phases of system expansion and dictate the financial posture the utility must assume .

The downturn in the global economy had no doubt served as a turning point for many countries to have a rethink on most acceptable approach to run the economic enterprises including electricity undertakings in order to keep the enterprise in pace with the general development.It is a fact that electricity supply business demands the following:

 Complex systems of generation

 Sophistry of technology.

 Vast network to distribute the power.

 And of course, wide disperse population of consumers.

Nigeria’s electricity situation was made worse by the advent of the military into the body polity of Nigeria with the serious attendant of break down of institutions that are referred to as the public utilities. Infact it got to a point that there was series of unrest in the power industry that the labour unionists among the workers were sent to prisons all over the country.

The purpose of this work is to take an intellectual look at the possible ways to remedy the Nigerian power system through a serious and rigorous analysis of what we are facing and best solution for us to get out of the wood.

Thus this work is as follows. Section 2 furnished information on effects of irregular power supply, Section 3 looks at the challenges being faced by the power sector in Nigeria, while section 4 discusses at the technical approach to survival of the electric power industry in Nigeria.It is concluded thereafter that there is number of vital decisions to be made .

The Nigerian power system network, like all other power system, waves about the entire country and it is by far the largest interconnection of a dynamic system in existence to date. No matter how carefully the system is designed, losses are present. Electric power losses are wasteful energy caused by external factors or internal factors, and energy dissipated in the system They include losses due to resistance, atmospheric conditions, theft, miscalculations, etc, and losses incurred between sources of supply to load centre (or consumers). Loss minimization and quantification is very vital in all human endeavour. In power system, it can lead to more economic operation of the system. If we know how the losses occur, we can take steps to limit and minimize the losses . Consequently, this will lead to effective and efficient operation of the system. Therefore, the existing power generation and transmission can be effectively used without having the need to build new installations and at the same time save cost of losses. Basically, losses in electrical power system can be identified as those losses caused by internal factors known as Technical losses and those cause by external factors are called non-technical losses. The Nigerian electricity grid has a large proportion of transmission and distribution losses – whopping 40%. This is attributed to technical losses and non-technical losses. Due to the size of the area the power system serves, the majority of the power systems are dedicated to power transmission. Generally, system losses increase the operating cost of electric utilities and consequently result in high cost of electricity. Therefore, reduction of system losses is of paramount importance because of its financial, economic and socio-economic values to the utility company, customers and the host country. However, low losses in transmission system could be achieved by installing generating stations near the load centers.

1.2 PROBLEM OF THE STUDY

The challenges facing the power industry in Nigeria ranges from generation to distribution of electricity. In the 1950s, the demand for electricity was below its supply. The industry was able to meet the country’s need at that period. The demand for electricity gradually increased and later outstripped supply as industrialisation come in. The estimated total installed capacity of the combined hydro and thermal power stations is 7,941.1 MW as at December 2008. Meanwhile the power generation capacity available is 4,428 MW of which 3,273MW is from PHCN while 1,155MW is from IPPs. Currently, it is estimated that the demand for electricity is approximately 10,000MW and it is expected to grow in the future. There are three hydro and seven thermal generating stations.

Ibitoye and Adenikinju stated that ageing of power plants, poor maintenance and dearth of funds are some of the factors that could be responsible for the sub-optimal operation in the power sector. According to Presidential Task Force on Power Project (PTFP)[16], the sector needs, on a yearly basis, N520 billion (US$3.5billion) to increase generating capacity from approximately 4000MW to 13000MW by 2013. Also, the transmission network is overloaded with a wheeling capacity less than 4,000 MW. There are significant line voltage and power losses, as high as 25% compared with 3% in the US and 0.5% in Japan, in the transmission systems due to the large average distances between 300 and 500km over which electrical energy is distributed.

Low transmission grid voltages, typically 330kV and 132kV compared with 765kV in developed countries also cause significant transmission and distribution losses. To worsen the demand shortage, Nigeria experiences a double digit transmission and distribution losses, which are quite large by international standards[18]. The losses could be attributed to the poor and obsolete state of the transmission network. Therefore, a robust transmission network would be vital in connecting to the north. Hence, Borenstein et. al[19] stated that an efficient transmission capacity would reduce market power, increase competition and thereby reduce regulatory interventions.

Electricity supply determines the economic strength of nations and hence in the absence of this electricity, then weaknesses are felt around the developmental growth of the nations. There are few effects of unstable power supply on a nation as Nigeria:

Inflation: Most establishment run on standby generators these days because of the irregularity in the supply of electricity and whatever the good and services delivered by these establishments the money would pass down to the consumers of such goods and services. The annual average total duration of power interruption to consumer was studied by comparing the internationally acceptable value with Nigeria’s System Average

Interruption Duration Index (SAIDI). And this has led to unprecedented inflation in our

1.3 OBJECTIVE OF THE STUDY

1. To evaluate the effect of distribution losses on electricity pricing in Nigeria focus on Enugu electricity company.

2. To evaluate the problem of electricity distribution in Nigeria especially in Enugu electricity company.

3.To assess whether privatization and liberalization of electric power sector can solve the problem of inefficiency in electricity distribution in Nigeria.

4. To know the prospect of electricity marketing in Nigeria.

5. To promote competition and facilitate more rapid provision of service throughout the country;

6. . To create a new legal and regulatory environment for the sector that establishes 6. level playing field, encourages private investment and expertise, and meets social goals;

7.. To restructure and privatize the National Electric Power Authority (NEPA); and,

8. To encourage the successors to NEPA to undertake an ambitious investment program.

1.4 RESEARCH QUESTION

1. What are the effects of distribution losses on electricity pricing in Nigeria focus on Enugu electricity company?

2. How can one evaluate the problem of electricity distribution in Nigeria especially in Enugu electricity company?

3. Can privatization and liberalization of electric power sector solve the problem of inefficiency in electricity marketing in Nigeria?

4. What is the prospect of electricity marketing in Nigeria?

4. Can this study promote competition and facilitate more rapid provision of service throughout the country?

1.5 RESEARCH HYPOTHESIS

H0: Distribution losses have no effect on electricity pricing in Nigeria focus on Enugu electricity company.

H1: Distribution losses have effect on electricity pricing in Nigeria focus on Enugu electricity company.

H0: One cannot evaluate the problem of electricity distribution in Nigeria especially in Enugu electricity company.

H1: One can evaluate the problem of electricity distribution in Nigeria especially in Enugu electricity company.

H0: It is impossible to evaluate the problem of electricity marketing industries in Nigeria especially in Enugu electricity company..

H0: Privatization and liberalization of electric power sector cannot solve the problem of inefficiency in electricity marketing in Nigeria?

Hh1: Privatization and liberalization of electric power sector solve the problem of inefficiency in electricity marketing in Nigeria?

H0: This study cannot promote competition and facilitate more rapid provision of service throughout the country.

H1: This study cannot promote competition and facilitate more rapid provision of service throughout the country.

1.6 SIGNIFICANCE OF THE STUDY

This study comes at a key juncture for the world’s economic area. Economic growth is proceeding rapidly, and it is projected that by the year 2020 more than half the population of the developing world will live in cities and towns (the world bank, 1996). Yet even as cities increasingly become the nexus of economic and population growth, they do not deliver on the promise of a better quality of life to the extent they could. Millions of economic residents in Nigeria do not have access to potable water near their homes, basic sanitation is often lacking, electricity and power supply is epileptic, roads had deteriorated with pot-holes, and access to health services and education pose serious problems in many cities.

It is view of above and more that the researcher is carrying out this study entitled “financing economic infrastructure and services in development of Nigeria an empirical study of selected Nigeria cities”. It is hoped that the study when completed will disclose various ways economic infrastructure and services are financed in Nigeria.

The study when completed will equally find out the role played by the governments towards the provision of economic infrastructure.

It is hoped that this study will indicated the extent institutional arrangement had helped in economic infrastructure deliveries in Nigeria.

It is also hoped that this study will analyze overall problems inhibiting the present arrangements in Nigeria towards economic development programmes.

Lastly, it is hoped that the recommendation of this study would be of empirical relevance to Nigeria government in several fields in economic infrastructures development programme, towards restoring economic Nigeria. Furthermore, the relevance of this study is inexhaustible as it will equally map out strategies and issues regarding economic infrastructure and services in Nigeria, all aimed at restoring economic infrastructure and services, better economic services and economic financial management in Nigeria.

1.7 SCOPE OF THE STUDY

This study is centered on the effect of distribution losses on electricity pricing in Nigeria using Enugu electricity company as a case study.

.1.8 LIMITATION OF STUDY

Despite the limited scope of this study certain constraints were encountered during the research of this project. Some of the constraints experienced by the researcher were given below:

i. TIME: This was a major constraint on the researcher during the period of the work. Considering the limited time given for this study, there was not much time to give this research the needed attention.

ii. FINANCE: Owing to the financial difficulty prevalent in the country and it’s resultant prices of commodities, transportation fares, research materials etc. The researcher did not find it easy meeting all his financial obligations.

iii. INFORMATION CONSTRAINTS: Nigerian researchers have never had it easy when it comes to obtaining necessary information relevant to their area of study from private business organization and even government agencies. Staff of PHCN Enugu electricity company find it difficult to reveal their internal operations. The primary information was collected through face-to-face interview getting the published materials on this topic meant going from one library to other which was not easy.

Although these problems placed limitations on the study, but it did not prevent the researcher from carrying out a detailed and comprehensive research work on the subject matter.

1.9 DEFINITION OF TERMS

• NEEDS: The National Economic Empowerment and Development Strategy (NEEDS) is there sponse to the development challenges of Nigeria. The goal of NEEDS is to mobilize the resources of Nigeria to make a fundamental break with the failures of the past and bequeath a united and prosperous nation to generations to come.

• Transportation: Transportation is concerned with movement of people or goods for some particular purpose.

• Infrastructure: The basic systems and services that are necessary for a country e.g.

transportation, buildings, water and power supplies.

• INFRASTRUCTURE: It refers to the major structure of component parts of the

transportation system offering the bedrock or the provision of transport services and operations

e.g. rail tracks, roads, air and seaports.

• Private Sector: This includes individuals or companies operating independent of non-statutory government rules or control in running their businesses.

Infrastructure: social goods such as road, electricity, water supply, sewage, drainage, solid waste collection, telecommunications, public housing, transportation, educations, and health facilities.

Development of Nigeria :- sometimes known as LDCs (Less Developed countries), they comprise those countries which for some reasons have been backward in developing their economic resources with the result that their peoples have a much lower standard of living.

IDF – Infrastructure Development fund

SPO- Standing payment other

FMF – Federal ministry of finance

CBN – Central bank of Nigeria

SEC – Securities and exchange commission

Federation account – account of the federal government where all collectable revenues are deposited.

UDBN – Economic development bank of Nigeria federal statutory allocation- allocation made to levels of government through the federation account. FMW&H – Federal ministry of works and housing.

PIU – Project implementation units.

PFI – Participating financial institutions.

Population – number of inhabitants of an area.

GDP – (Gross Domestic product) the money value of all the goods an services produced within a country but excluding net income from abroad.

GNP – (Gross National Product)- the money value of all the goods and services produced in a country during one year at factory cost, i.e excluding taxes such as VAT.

NUDP – National economic development policy.

HOW TO RECEIVE PROJECT MATERIAL(S)

After paying the appropriate amount (#5,000) into our bank Account below, send the following information to

08068231953 or 08168759420

(1) Your project topics

(2) Email Address

(3) Payment Name

(4) Teller Number

We will send your material(s) after we receive bank alert

BANK ACCOUNTS

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 0046579864