The Company Presentation February, 2011 The Company Presentation 2011.
The Company
description
Transcript of The Company
The Company
Bureau of Public EnterprisesTransmission Company of Nigeria
Transmission Company of NigeriaTransmission Company of NigeriaThe Role of The Management Contractor For TCNThe Role of The Management Contractor For TCN
The Company
Brian Wales and Geoff StottBrian Wales and Geoff StottPrincipal Consultants, British Power International29 November 2011
The Company
1. An overview of TCN
2. Power sector reform
3. Rationale for a management contract
4. The role of the management contractor
5. Governance
6. Conclusions
The Role Of The Management Contractor for TCN 2
AgendaAgenda
The Company
One of the 18 successor companies ‘unbundled’ from PHCN; set up as a corporate entity in 2006
A national strategic asset, to be retained in state ownership for the time being
Owns the transmission system, 132kV and above, responsible for its efficient operation, maintenance, expansion and reinforcement. Capital programme 2011- 2016, between 618 and 823 billion Naira
Performs three principal functions Market Operations (MO), System Operations (SO) and Provider of Transmission services (TSP)
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An overview of TCNAn overview of TCN
The Company
SOEfficient scheduling and dispatch
Demand forecasting, system and operational planning
Grid Code compliance
Fault management and restoration
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Three Principal FunctionsThree Principal Functions
MOSettlements (energy and cash balancing)
Payments (collections from discos, payments to gencos)
Bulk metering
TSPDesign, specification, commissioning, construction of assets
Inspection, preventive and planned maintenance
Connections
Field workforce
Project management
The Company
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Key lever for power sector reformKey lever for power sector reform
GenerationSuccessor Gencos (6)IPPsNIPP Plants
Direct supply to large customers, international interconnections
TCNMarket OperationsSystem OperationsTransmission System Provider
Distribution Successor Discos (11)
Customers/ end users
NBET
EPSR 2005EPSR 2005Licence(s)Licence(s)Market RulesMarket RulesTariff Oder (MYTO)Tariff Oder (MYTO)Grid and Metering CodeGrid and Metering Code
Governed by:Governed by:
The Company
Roadmap 2010 - the lack of a management contractor is … one of the eight principal obstacles to achieving the objectives of the 2005 Reform Act1
Prof Bart Nnaji 2011 - appointment of a management contractor for TCN … one of the nine key levers for successful power sector reform2
TCN IM 2011 - the appointment of a management contractor … critical step in introducing a commercial orientation and facilitating the essential investments in Transmission3
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Why it is important?Why it is important?
1. Road Map for Power Sector Reform August 2010.2. ‘An Overview of Power Sector Reforms in Nigeria’, 25th May 2011.3. Information Memorandum November 2011.
The Company
Injects expertise in capital programme planning and delivery – success in this is critical to sector growth
Provides clear targets and incentives to deliver (by design of the management contract)
Brings in experience on market development and the evolution of the MO, SO and TSP functions – essential to smooth sector evolution
Enables knowledge transfer to, and development of, national staff
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Basic rationale for the MCBasic rationale for the MC
The Company
Those submitting bids will make their own assessment of risk. Considerations include
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Risks and mitigationRisks and mitigation
RiskRisk MitigationMitigation
Funding network investment Review of funding by FGN underway
Regulatory and tariff MYTO
Governance Supervisory Board, SODA
Labour Sector wide settlement being negotiated
Contract length Contract terms, break clause
The Company
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Appointment processAppointment process
2006-7 initiative aborted
High level due
diligence of TCN -
Diagnostic Report
Management contractor selection strategy
Preparation of
RfPMCIM
Conduct selection process
Appoint management
contractor
September – November 2011 December 2011 – January 2012
The Company
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Role of the management contractorRole of the management contractor
The Company
Contract structure
Goals and Objectives
Milestones
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Role of the management contractorRole of the management contractor
The Company
Documents developed based generally on WB model and best practice
Contractor is incentivised to deliver Network and financial performance improvement Regulatory compliance Formal milestones (including essential transitions
to facilitate reform) Up to five year term Break clause (FGN objective is a long term
concession)
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Management contract structureManagement contract structure
The Company
To transition the Company into a financially sustainable, stable, self-sufficient and market driven company that transmits generated energy throughout Nigeria and that is available 24 hours a day, 365 days a year
A key prerequisite in attaining this goal is to develop the capacity of local personnel such that, by the end of the contract period, they can capably assist the holder of the proposed concession with the efficient and effective ongoing management and operation of the Company
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The GoalThe Goal
The Company
Objective 1: to ensure a reliable, cost effective network for the supply of electrical energy and help facilitate the increased availability of electricity throughout Nigeria
Objective 2: to build the capacity of local personnel such that they can capably assist the holder of a potential long-term concession with the efficient and effective ongoing management and operation of the Company.
Objective 3: to develop the Company’s capability to build for its long-term future and sustainability.
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Objectives (1)Objectives (1)
The Company
Objective 4: to improve financial management and increase profitability in line with modern business practices ensuring the commercial viability of the Company and creating an environment conducive for private sector investment
Objective 5: to separate the activities of the three principal functions of the Company (MO, SO and TSP) to enable them to operate as distinct viable business units
Objective 6: by introducing appropriate modern business practices and effective application of information and communications technology improve the overall efficiency and skills of the local personnel so that they may fully contribute to the effective management, operation and performance of the Company
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Objectives (2)Objectives (2)
The Company
Base Year Data Report
Performance Benchmark Monitoring System
The Company’s Organisation
Market Operator (MO) and Market Procedures
System Operator (SO) Operating Procedures
Transmission System Provider (TSP) Operating Procedures
Transmission System Security and Quality of Supply
SCADA and Operational Communications Plan
Safe Operation and Security
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Milestones (1)Milestones (1)
The Company
Health and Safety (H&S) and Environmental
Emergency Response Plan
Geographic Information System (GIS)
Transmission System – 10 year Rehabilitation and Upgrading Plan Review
Management Information System Plan (MIS Plan)
Financial Management
Human Resource Plan (the “HR plan”)
Transfer of Knowledge and Know-how
Handover of the Management of TCN
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Milestones (2)Milestones (2)
The Company
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GovernanceGovernance
The Company
Supervisory Board
Non Exec 5 Exec 3 + MC by invitation
Company Secretary
Independent Functions
PR Audit Legal
Regulation Contract Management
Specialist Advisors
Management Contractor
F&A MO TSP SO
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GovernanceGovernance
The Company
A high performing TCN is central to Extending the network and improving reliability
and security of supply (n-1) Facilitating market development
The MC selected will have the capacity to Deliver the major capital programme and improve
network performance Set up TCN to provide autonomous functions as
MO, SO and TSP Establish local staff training, transfer of
knowledge and developing a succession plan
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ConclusionConclusion
The Company
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Management contractor for
TCN
Successor Gencos
Successor
Discos
NERC
(regulation, tariffs, licences)
NBET market
rules
NELMCo Funding for
network investment
The Company
Thank youThank you
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Brian Wales and Geoff StottBrian Wales and Geoff StottPrincipal Consultants British Power International
29 November 2011