NIGERIA’S intractable power sector crisis is worsening by the day. For the umpteenth time, the national electricity transmission power grid collapsed last weekend, plunging the country into darkness. Frequent collapses have been bad enough; the persistent inability of transmission and distribution infrastructure to take and distribute 12,522 megawatts of the country’s generating capacity has been equally distressing. The plunge to just about 9.0MW on Sunday was particularly terrible, depicting the long-running tragedy that has befallen Africa’s largest economy.
Seven years in office, the President, Major General Muhammadu Buhari (retd.), has made no improvement to the mess he met, content to continue blaming his predecessors. In the meantime, the abysmal performance of the power sector aptly sums up the perilous state of the entire economy.
The sector is in distress, darkness envelopes the country, some industrial activities grind to a frustrating halt and small and medium-scale enterprises are gasping for breath. In the past five months, the national grid has collapsed 15 times. This is disgraceful. The latest reflects the shame of Africa’s bumbling ‘giant.’ Quoting data from the Nigeria Electricity Grid Operator, The PUNCH reported that the grid crashed from its peak of 3,703MW on Sunday to a ridiculous 9.0MW! For a country requiring a minimum of 15,000MW-25,000MW to meet business and household demand, this is beyond incredulity.
Inevitably, Nigerians observed their June 12 Democracy Day in darkness. Although reports said Transmission Company of Nigeria technicians had restored transmitted power to 2,744MW by Monday, a public holiday, most homes remained without power throughout and up till Tuesday.
As the frequency of grid collapse has increased; so, have generating plant shutdowns starved of gas supply amid intermittent gas shortages. Two weeks earlier, power generation had plummeted to 1,936.9MW, down from 3,647MW. This is because 20 gas-powered power plants are currently underperforming. Nigeria has 23 power generating plants with combined 11,165MW capacity connected to the national grid. These plants are managed by generation companies, independent power providers and the Niger Delta Power Holding Company. Out of the 23, two are hydro-powered plants, while the remaining are gas-fired plants that are currently either generating below capacity, shut down due to lack of gas, or undergoing maintenance.
Good news is scarce in the power sector. Media reports said that by the fourth quarter of 2021, the total shortfall in the power sector had reached N1.6 trillion. A shortfall arises whenever the DisCos and GenCos are unable to recoup investments made in projects. For instance, tariff shortfall occurs when DisCos are unable to collect the total tariff revenue for electricity provided to consumers. Shortfalls result in debts, which inhibit further investments in the sector.
For Africa’s largest economy, it is shameful that power generation is less than 4,000MW though the total national generating capacity is about 12,522MW. Nigeria needs between 25,000MW and 40,000MW to guarantee uninterrupted supply. Egypt that less than a decade ago was also afflicted with power shortages has raised generating capacity to 59,000MW, displacing South Africa as the continent’s highest. South Africa has meanwhile raised capacity from 42,000 MW to 58,000MW.
Data from the Federal Ministry of Power indicate that the highest peak power ever generated and transmitted was 5,802MW delivered on March 1, 2021. Nigeria’s 144 kilowatts per capita power consumption, says the World Bank, is 3.5 per cent of South Africa’s. Moreover, it said 90 million Nigerians lacked access to electricity in 2019, the world’s worst; below Congo DR’s 70 million and Ethiopia’s 58 million. The International Monetary Fund says Nigerian businesses bleed by about $29 billion annually due to power shortages.
The International Energy Agency identifies inadequate power as a major constraint to economic growth that contributes about 45 per cent to Nigerian manufacturers’ costs who are forced to self-generate electricity with the attendant economic and environmental costs.
The problems of the power sector are multifarious. Years of underinvestment combined with obsolete infrastructure, mounting debts and inefficiencies have been compounded by the haphazard, corrupt way the privatisation of the generation and distribution subsectors were handled. The auctions of these critical national assets were manipulated in favour of ill-prepared, incompetent firms hurriedly put together by officials. Lacking the requisite financial power and technical know-how, they have floundered badly.
The Electric Power Sector Reform Act, 2005 and the succeeding Roadmap for Power Sector Reform 2010 set out to comprehensively transform the power industry through privatisation, raise output to 40,000MW by 2020 and attract investment and the global best players into the market. Regrettably, by mismanaging the privatisation, the milestones have been missed. The government has also failed to review the post-privatisation performance targets despite the glaring underperformance of the operators.
Despite the billions of dollars pumped into the power sector since 1999 when Nigeria returned to civil rule, the situation is deteriorating. The sector is buffeted by frequent system collapse, while the firms owe banks, each other, and system operators.
Buhari should act now. The Federal Government owns 40 per cent of the firms and has not lived up to the agreed terms by funding them. The government should let go of the firms and completely privatise the industry. The regime needs to overcome its unhelpful aversion to privatisation.
It should undertake a thorough review of the power sector and encourage capable new investors to bring in money and expertise to turn it around; the telecommunications sector was efficiently liberalised, and the country is the better for it today. Nigeria must upgrade and get the sector working; electricity power system is not a new technology; the country only needs new investments to change the present scenario.
There is also a need to diversify the power sources from hydro and thermal to wind, solar and other renewable sources.
The distribution system, which is considered the weakest link in the entire power cycle, requires immediate, radical intervention. Pre-paid metering should be compulsory, while the transmission system should be decentralised, and mini grids established under a liberalised environment that would give the private sector the lead role.