Business planning and change in Nigeria

BPI was appointed by the World Bank to work alongside the Transmission Company of Nigeria (part of the Power Holding Company of Nigeria). The work required the development of a short and medium term business plan, covering technical, operational, financial and human resource aspects; and the preparation and design of a Management Information System (MIS); and support on delivering performance improvement to the newly formed Transmission Company of Nigeria (TCN).

The Federal Government of Nigeria (FGN) had taken the first major steps towards the restructuring of the Nigerian power sector in an effort to establish an electricity supply system that is efficient, reliable and cost-effective. The initial stages in the restructured power sector involved the unbundling of the Power Holding Company of Nigeria (PHCN), to form a number of electricity generating companies; distribution companies and the transmission company TCN. The consultancy work was to support TCN’s transformation from being a part of a nationalised industry to a viable stand-alone corporate entity.

TCN has responsibility for the asset management of the high voltage transmission system as well as the system operations and the generation dispatch functions. It operates as a provider of open access transmission services on the basis of regulated transmission tariffs and of non-discriminatory system operation and economic dispatch services, all within a regulatory framework implemented by the Nigerian Electricity Regulatory Commission (NERC), the Grid Code and the Market Rules.

TCN’s transmission system operates nominally at 330kV and 132kV. There are a number of generation projects that are currently being constructed with further generation plant planned. To support this additional generation, a number of additional 330kV and 132kV transmission lines are under construction and more lines are planned both to meet system demand and to improve security of supply, which is currently well below international standards.

As part of a vertically integrated, unregulated monopoly business, transmission had no separate identity and consequently no requirement for any financial accounts or budgetary discipline. End user tariffs have historically been insufficient to cover day-to-day operating costs, let alone depreciation, asset replacement and future expansion of the system. The shortfall has been provided by the government.

The technical work included technical studies of the transmission network to identify constraints, the preparation of recommendations for improvement, the planning and evaluation of developments necessary to accommodate additional generation and the development of long term investment plans. The Human Resources work stream included a detailed review of the manpower resources, organisation and capacity building activity. The financial work included the development of financial projections with a particular focus on identifying the tariff revenue requirements and the implications for tariff negotiations with the regulator. The work on the MIS involved the design of suitable financial models and MIS with reporting, prequalification and bidding documents; and assistance in evaluating bids from potential suppliers.

A central requirement of the contract was to assist in the procurement of a suitably experienced international management contractor to take managerial responsibility and control of the entire day-to-day operations of TCN for an initial period of three years. BPI developed a contract framework, incorporating the scope of works and performance criteria, and managed the procurement processes though to identification of a suitable contractor.

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Case Studies