WAPP

WAPP appears to be just another case of “learning to jump before you can walk”. Perhaps, there is a silver lining in this; the “pre-mature” death of the current WAPP could be an opportune time for member countries to pay more attention to resolving their gapping electricity shortages individually before trying to form a new WAPP alliance in the future. Ultimately history will tell but we might all collectively look back and think “Thank Goodness for the unbundling of PHCN, it saved us all from going through with that ill-timed WAPP idea”.

At the bottom of the homepage of the West African Power Pool (WAPP), there is a collection of logos of its member Utilities; these are different Utilities across the Economic Community of West African States (ECOWAS) that have signed up to part of the regional pool. The first two logos are those of the Transmission Company of Nigerian (TCN) and the Power Holding Company of Nigeria (PHCN) respectively. Well, therein lies the problem; PHCN does not exist anymore and all its assets (except its transmission assets) have been privatised.

Currently, none of the successor GENCOs or any of Nigeria’s Independent Power Producers (IPPS) has signed up to be a part of WAPP, which begs the question: How will the privatisation of PHCN affect Nigeria’s commitment to WAPP and the success of the WAPP initiative as a whole?

So, what is WAPP? WAPP is essentially an attempt to harmonise the power sectors of the ECOWAS member states. Its vision is to “integrate the operations of national power systems into a unified regional electricity market, which will, over the medium and long term, assure citizens of ECOWAS member states a stable and reliable electricity supply at competitive cost.” Although it was created in December 1999, WAPP was not officially launched and accepted as an ECOWAS specialised institution until January 2006. WAPP’s activities concentrate on the harmonisation of only the power generation and transmission sectors of all member states without affecting distribution/supply.

Without doubt, Nigeria is the largest member of the ECOWAS group in terms of population, GDP and concomitantly electricity consumption, with over 50 percent of the regional total in all categories. Although Nigeria is only on the edge of the region (geographically), its level of regional dominance suggests that it will be a very important component in the WAPP jigsaw if the programme is to flourish as hoped.

Like ECOWAS, WAPP is a very interesting entity; it does not possess any express regulatory powers and is headed by the general assembly, a collection of its member Utilities. In an ideal world, WAPP should view the whole West African region as ONE BIG state especially in terms of capacity expansion planning and transmission asset investments. This is where the problem arises; WAPP’s lack of control over Utilities not subscribed to it means that WAPP’s influence is minimal at best.

It goes without saying that WAPPs’ ambitions and those of privately owned GENCOs are starkly different. Like any multilateral entity, WAPP is committed to communal prosperity. On the other hand, most private companies are primarily driven by profits. While the like-mindedness of the government-owned PHCN and WAPP meant it was only natural for PHCN to sign up as a member utility, the difference in objectives of private Utilities and those of WAPP would suggest that these private companies will have little to no interest in joining WAPP.

Also, WAPP’s ability to successfully develop an equalised regional electricity market will depend on the ability of each ECOWAS state to develop their local electricity markets and trade electricity at rates that are similar enough to allow the electricity trade for a “universal” price. This is something WAPP cannot really impose because it can only control its member Utilities. Proverbially, WAPP has one hand tied behind its back.

The issue of a universal price is important because if electricity is traded at markedly different prices in the each ECOWAS state, the poorer countries will likely struggle to be competitive in the regional electricity market and hence will likely remain in darkness.

It goes without saying that WAPPs’ ambitions and those of privately owned GENCOs are starkly different. Like any multilateral entity, WAPP is committed to communal prosperity. On the other hand, most private companies are primarily driven by profits. While the like-mindedness of the government-owned PHCN and WAPP meant it was only natural for PHCN to sign up as a member utility, the difference in objectives of private Utilities and those of WAPP would suggest that these private companies will have little to no interest in joining WAPP. To Nigerian private GENCOs, WAPP membership is a “much to lose and little to gain” gamble.

From the viewpoint of ECOWAS and WAPP, the question then becomes, how do we get the Nigerian GENCOs onside? Frankly, there are only two routes; incentivisation or good old brut force. The implementation of the former is very difficult to picture because it is hard to the see how ECOWAS will be able to structure and offer the financial incentives these companies will need right now; the various national electricity markets are simply not strong enough.

With virtually none of the ECOWAS states having enough capacity to cater for their local demand, it would appear that WAPP is being founded on the assumption that combining many small problems into a bigger one and then trying to solve the big one is a good idea. It is pretty clear that this is not logical. As a wise man once said “You cannot tear a whole book at once, but you can tear the book page by page.”

On the coercion side, it would appear that a great opportunity has been missed. ECOWAS could have guaranteed the participation of the successor GENCOs in WAPP by encouraging the Nigerian government to insert clauses in the PHCN-asset sale contracts. With the force majeure fiascos that have consistently played put between the DISCOs and the Nigerian government, it is hard to see how the government can coerce GENCOs into doing things against their will.

Indeed, these are critical times for the WAPP programme. If Nigerian companies are allowed to abstain, as they seem to want to, it would probably spell doom for the entire WAPP programme for now at the very least.

With virtually none of the ECOWAS states having enough capacity to cater for their local demand, it would appear that WAPP is being founded on the assumption that combining many small problems into a bigger one and then trying to solve the big one is a good idea. It is pretty clear that this is not logical. As a wise man once said “You cannot tear a whole book at once, but you can tear the book page by page.”

WAPP appears to be just another case of “learning to jump before you can walk”. Perhaps, there is a silver lining in this; the “pre-mature” death of the current WAPP could be an opportune time for member countries to pay more attention to resolving their gapping electricity shortages individually before trying to form a new WAPP alliance in the future. Ultimately history will tell but we might all collectively look back and think “Thank Goodness for the unbundling of PHCN, it saved us all from going through with that ill-timed WAPP idea”.

Yusuf O. Ali is a doctoral candidate in the Department of Engineering, University of Cambridge; you can reach him on e-mail at: yoa20@cam.ac.uk, and Twitter: @YalyAli