Where does this leave our country?
It remains unimaginable to me that darkness in Nigeria has come to stay. Nigeria has always been a leader to other African countries in the past, but lately the country has been living on past glory with its lackadaisical attitude towards things that propels progress. Darkness has gained momentum and Nigeria continues the unrealistic ambition of building a modern industrial state with energy from generators humming in homes, shops, offices and every imaginable human location, it is like having a fairy tale that doesn't work in reality. Since independence, the government continues to introduce policies and programs they claim are for the benefit of the citizenry but which if properly examined, would compound sufferings of the masses while fortunes of political leaders multiply. Since those in authority are largely not accountable to the citizenry, the latter lacks the courage to effectively challenge the former to account for their stewardship. A case in point is the sorry story of our power sector.
The federal government in 2001 launched a set of power reforms in the country, which subsequently led to the unbundling, and privatization of electricity generation and distribution companies. Prior to the privatization of the power sector, the National Electric Power Authority (NEPA) was the government regulatory body solely responsible for the generation, transmission and distribution of electricity in Nigeria. NEPA was, however, characterized by infrastructural decay, lack of sustained investment, inadequate funding, government monopoly, corruption and an under-skilled workforce.
The government of Nigeria then inaugurated the Electric Power Implementation Committee (EPIC), which drafted the National Electric Power Policy (NEPP) in 2001 and, in turn, led to the enactment of the Electric Power Sector Reform Act (ESPR Act) in 2005. As part of the ESPR Act, the Nigerian Electricity Regulatory Commission (NERC) was established as an independent electricity regulatory body while the Power Holding Company of Nigeria (PHCN) was incorporated as the initial transitional holding company of the 18 successor companies (including 6 generation companies, 11 distribution companies and 1 transmission company) created from the defunct NEPA. Subsequently, between November 2013 and November 2014, the privatization of all the generation and distribution companies was successfully completed, while the government retained ownership of the transmission company. The NBET buys electricity from the generating companies (Gencos) through Power Purchase Agreement (PPA) and sell to the distribution companies (Disco) through vesting contracts. The Transmission Company of Nigeria (TCN) wheels this power to the 11 distribution companies across Nigeria who then distributed to home and businesses. This Chain, however, is fraught with challenges. Gencos who sell to the Nigerian Bulk Electricity Trading plc. (NBET) barely get 30 percent of their market invoice, which constrains their ability to buy gas from companies, fix faulty turbines and make additional investment. Discos who buy from NBET and sell to end-users, including residential building and factories remit far less than they collect. However, recent assertions from the press reveal that it was sold to friends and people without the capacity and expertise to run such critical sophisticated enterprises.
Lately, there have been talks on the increase in electricity tariff; the bill was signed into law last year to take effect from April 2020. Electricity tariff has increased by more than 300 percent in the last four years, according to a recent investigation. Although the government has always predicated increases in tariffs on the need for the appropriate cost for better service delivery to the citizens, consumers continue to rue poor services. Within the period of time, electricity generation has remained poor while distribution has been even poorer. At some times too, the national grid had collapsed completely several times. This shows increased electricity tariffs without conscious efforts by service providers to effectively maximize their resources, as well as embark on sustainable debt recovery initiatives to improve their financial positions and there is no guarantee they will meet the yearnings of consumers for improved service delivery. The various tariff reviews for all categories of consumers – except those consumers classified as residential (R1) – ranged from 59.7 percent for consumers in Ikeja to 77.6 percent in Enugu. Under the new order, electricity consumers in Ikeja who used to pay about N13.34 per kWh since under the 2015 MYTO, when the last review was carried out, will from April 1 this year pay N21.80 per kWh, the same as their R2 counterparts. Their counterparts in Enugu, who used to pay about N17.42 per kWh, will, under the new order, pay about N30.93 kWh from January 1. Their R2 and R3 counterparts, who paid about N19.31 and N27.11 per kWh since 2015, will now be paying N34.28 and N48.12 per kWh. Residential (R2) and R3 consumers in Ikeja, who have been paying N13.34 and N26.5 per kWh since 2015, will now pay N21.30 and N21.80 per kWh. Residential consumers are those categorized as those using singe phase and three-phase meters and electricity consumption of about 50 kWh on-premises with flats exclusively for residential purposes.
Recently the power sector has come under huge criticism from different quarters. The General Secretary of National Union of Electricity Employees (NUEE), Joe Ajaero, at the Union 6th Quadrennial 11th National delegates conference warned of imminent collapse in the power sector next year. To avert the collapse he said there is a need for a review, noting that Nigeria's power sector reform was a mere cliché and a context for grand corruption; the reform is not driven or guided by a patriotic motive, but by selfishness and greed. The general public is made to believe that NEPA/PHCN was unable to work efficiently because of the incompetence and corruption in its staff, but this is to benefit few people as the sector still remains in crisis. The Vice President, Prof. Yemi Osinbajo, had earlier last year expressed dissatisfaction over the performance of electricity distribution companies in the country, stating that there was need for a substantial change of strategy in order to meet electricity needs of homes and business, while TCN believes that power outage is due to gas constraint, transmission wire issue and low demand by electricity consumers.
December last year, there was a round table on Nigeria energy crisis organised by the Senate, the Senate president, Ahmed Lawan said "from the electricity power reform of 2005 to the privatization of the Gencos and Discos and what is happening today, we know that everything is fraud and if we continue to play the ostrich over the next ten years, we would remain where we are". This statement reveals crystal clear that the power sector is in a quagmire. I have tried to consider that for over 59 years, all the Military heads of state and President who have ruled this country have not won the war against darkness, and more painfully it has become a colossal hindrance to our progress. In fact, our president recently said that electricity in Nigeria has been a generational problem.
Despite spending about US$20 billion in the last 16 years in the electricity sector, Nigeria is only able to generate less than 4,000 megawatts of electricity for a population of over 200 million people. In contrast, South Africa with a population of 52 million people generates 44,000 megawatts; Ghana generates 2,300 MW for it's 30 million people, while Brazil generates a total of 150,338MW for its 211 million people. These were countries that ones had power outages but know are better than Nigeria, for instance, Ghana recently celebrated 20 years of uninterrupted power. In Nigeria most transformers are old and malfunctioning it takes eternity to replace, you pay heavily for one and all through that year there would be more power outage than ever before, and since prepaid meter have not been equally distributed, which by right every flat is supposed to have, is like adding more petrol to the fire of Nigerians problem.
The poor power infrastructure in Nigeria has resulted in multiple nation-wide outages with the national grid collapsing at least three times in the second half of 2019 alone. He (Ahmed Lawan) added: "We know the consequences. Even our citizens who have the capital would rather relocate to Ghana produce whatever they want and bring them back to Nigeria to sell. Where does this leave our country? It leaves our country in a mess, in fact, a dumping ground that it is already. Consequently, businesses which rely on generators to operate, say about 30 to 40 percent of their cost of production is tied to sourcing alternative power sources. How would they survive? Most of the Small and medium enterprises are running on losses, also the poor maintenance and health costs, policy inconsistency, non-availability of gas, infrastructure vandalisation, and sabotage are some of the reasons that have contributed to the failure of the power sector. Consequently, per capita electricity usage in Nigeria remains 136 kilowatt/hour, which is one of the lowest electricity consumption on a per capita basis in the world. The World Bank reported that companies in Rwanda were said to have incurred the least losses in business when power went of, compared to $29 billion that our economy loss due to erratic power supply last year.
The oil and gas, according to analysis of the NBS revealed that since 2016, foreign capital has slumped by 51 percent at an annual average, also accounting for a paltry 0.44 percent of total foreign investment in the first 9 months of 2019 for an industry which is the major contributor and cause of growth to the Nigeria GDP, boosting capital inflow through bold reforms in the sector is the key to unlocking its potentials. The reality within these industries and foreign exposures into Nigeria further buttresses the reason why we are still lagging behind fellow African peers. Stock market is not looking viable for investment and structural challenges facing the Nigerian manufacturing sector due to our deplorable state of infrastructure, outlook for capital is still bleak. Only 41.1 percent of the country's 200 million people have access to electricity and 51.4 percent of this population residing in rural-urban areas, the World Bank survey reports that as many as 322 organized private sector companies in Nigeria shut down between 2009 and 2014. With this reality staring at our face, one must ask - Are consumers King in Nigeria? What has happened to all the money put into power, even for Mambila power station alone, that have taken 40 years and yet not able to function? Why do citizens pay more, and the government wants them to still pay more by increasing tariff whereas the ones paid have not been supplied. What was signed in 2013 (the privatization of PHCN) was it for the good of Nigerians or who? What are they fighting for; I mean those in the value chain? After the splitting of PHCN, We were promised that power generation would increase to 12,000MW, yet we only generate between 3000 to 4000MW, I rest my case, it's time for the 9th Senate to do the needful or posterity will judge.
Victor is a 300 level student of the department of Mass communication, University of Nigeria, Nsukka. He can be reached at [email protected] .