Making Power Sector Work

The Managing Director of Schneider Electric for Anglophone West Africa, Mr. Christophe Begat, was recently reported to have said that about 90 per cent of Nigerians lack access to safe and efficient electricity.
Begat’s disclosure which was made at his firm’s 2019 Digital Innovation Day in Lagos, raises serious concern as it came from an expatriate who expectedly spoke from a professional standpoint rather than a politician whose argument is wont to be laced with unnecessary propaganda.
To be sure, Nigerians had previously bandied figures to illustrate the prostate state of the nation’s power sector but none has been as frightening as the latest rating from a firm that is deeply engaged in the development and management of minigrid power supply systems, especially in Nigeria’s rural areas.
It is sad to observe that Nigerians would find themselves in this near hopeless situation six years after the nation’s power supply structure was unbundled and privatised. As at the time of the September 30, 2013 privatisation, the country had six electricity generating companies (Gencos), 11 distribution companies (Discos), the Transmission Company of Nigeria (TCN), the Nigerian Bulk Electricity Trading Plc (NBET) and the Nigerian Electricity Regulatory Commission (NERC) as the regulatory authority. Unfortunately, these efforts have only yielded a marginal improvement in the power situation.
Prior to 2015, the maximum daily power output across the country was said to be between 1,500 and 2,750 MW. This saw an initial push to 4,000 MW after a genuine attempt was made by the Federal Government to upgrade the existing power infrastructure. But it did not take long before electricity output and supply relapsed to about 3,125 MW, principally on account of a drop in water level, gas supply shortfall and weak transmission lines.
According to Vice President Yemi Osinbajo, while commissioning a power project in his native Ogun State, recently, Nigeria currently has an installed capacity of 13,427 MW of which about 8,340 MW is available whereas the grid has the capacity to transmit only 7,000 MW. But some power sector analysts have quickly countered by saying that the nation currently struggles to produce an average of 5,000 MW out of which about 7.5 per cent is lost in transmission and 30 per cent rejected by the DISCOs.
The epileptic supply of electricity in Nigeria has led to many foreign industrial players relocating their activities to countries where power supply is more predictable. And this means loss of employment, taxes, rents, technology transfer, corporate social responsibility benefits and high cost of goods hitherto produced within. Those who chose to stay back are forced to rely mostly on private electricity generators for their power needs while having to cough out estimated monthly bills for whatever little supply (if any) that may come from the public power source.
The Federal Government was said to have realised $2.5 billion from the power sector privatisation, virtually all of which sum went into the payment of disengaged staff of the defunct Power Holding Company of Nigeria (PHCN); but we are also aware that there have been several government financial interventions in this industry. The latest being the Finance Minister’s announcement of the approval of a $3 billion loan by the World Bank at the just-concluded Bretton Woods institutions meeting in Washington, DC.
Of course, this is outside similar interventions by the Central Bank of Nigeria (CBN) and foreign development agencies like USAID, JICA of Japan, GIZ of Germany, among others. In fact, the CBN recently revealed that it had advanced a total credit of N1.695 trillion to the nation’s electricity industry since the privatisation exercise. Where all this has gone into still beats the imagination us as there is hardly any evidence on the ground to explain such humongous outlay.
The Tide is also not unmindful of the fact that the nation’s power investors are operating under very difficult circumstances. These are businessmen who borrowed hugely at the prevailing foreign exchange rate of N155/US Dollar to pay for the acquisition of power facilities in 2013 only for the Federal Government to devalue the Naira to the level of N360/US Dollar in 2016. However, we think that embarking on a sustained metering process alongside the aforementioned government interventions would have enhanced their capacities to repay such loans than the option of estimated billing. Even their resistance to attempts at eliminating this billing method via the maximum demand customers’ option and the ongoing meter asset providers (MAP) has proved futile.
On its part, the Federal Government should endeavour to reduce its overbearing influence in the power sector. NERC is already a government agency, TCN is wholly owned by the government and NBET Plc is equally a state outfit despite its nomenclature. Let whatever tariff that is approved for the sector reflect the prevailing market situation in so far as every electricity user is metered as to pay for exactly what they consume.
Finally, government and, indeed, the private sector should sustain efforts at diversifying the nation’s energy mix from hydro and gas-powered systems to include solar, wind, coal, biomass/biofuels and nuclear. Off-grid clusters should continue to be developed for Micro, Small and Medium Entreprises (MSMEs). In fact, government needs to declare an emergency in the power sector if Nigeria must take full advantage of the recently signed African Continental Free Trade Agreement (AfCFTA).