IT is disheartening that the initial optimism that greeted government’s efforts to revamp the crisis-torn power sector has turned into profound gloom and untold misery in homes and businesses across the country. This is in spite of billions of dollars invested in the sector. Even the privatisation of the sector almost four years ago, which led to the handing over of its key components to private investors, has not led to any significant improvement in electricity supply in the country.
The latest figures from the sector clearly indicate that it is facing imminent collapse if urgent steps are not taken to address its problems. Electricity supply dropped from the 4,884 megawatts recorded in December 2016 to 2,200mw on January 21, 2017. Experts say that anything below 3000mw causes system collapse, with many unpleasant consequences.
The present output of 2,200mw is, unarguably, one of the worst in recent times. It is far below Nigeria’s reported installed capacity of 11,165.40mw and network operational capacity of 5,500mw. The energy crunch has grave implications for the economy. It could worsen the suffering of Nigerians who are already hard hit by the economic recession, as inflation spirals to an all-time high 19 percent, according to the National Bureau of Statistics (NBS). Also, thousands of Nigerian workers face imminent layoffs, as many companies are struggling to stay afloat in the face of biting power shortages and high cost of diesel, gas and other production materials, and scarce foreign exchange. There are reports that some companies have shut down some of their production units because of poor electricity supply.
Generally, the manufacturing sector is grossly hampered by the energy crisis. This is made even worse as some of the power distribution companies in industrial cities such as Lagos, Enugu, Aba and Kaduna complain of grossly inadequate supply of electricity from the national grid. For instance, in Lagos, the Ikeja and Eko Discos say they currently receive about 200 and 206mw respectively, as against the former 1,500 and 2,000mw. This implies that other discos across the country receive much less.
What this suggests is that, as Mr. Tony Elumelu, Chairman of Transcorp Power Holding and one of the biggest investors in the energy sector, said last week, the power sector has become a “walking corpse that may collapse soon if urgent steps are not taken”. Many Nigerians agree with this grave concern and want the relevant government agencies to act quickly to avert a collapse. Sadly, this is one concern we have repeatedly called government’s urgent attention to.
The power sector holds the key to the country’s economic development. Yet, the government is never short of excuses for its unending poor performance. Last week, the Minister of Power, Works and Housing, Babatunde Fashola, blamed the declining electricity supply in the country on liquidity problems, pipeline vandalism and shortage of infrastructure. He explained that government is yet to fully pay gas suppliers and Generating Companies (Gencos). Besides, he held militants accountable for the sabotage at the Escravos and Forcados export terminals, forcing their sudden shutdown. Over 45mw of electricity is said to have been trapped at the Afam V power station in Rivers State following a recent fire incident in which the Transmission Company of Nigeria (TCN) protection and control equipment were reportedly destroyed.
While these explanations may be true, Nigerians have heard similar excuses over the years. They have become worn out and, therefore, no longer acceptable to justify the continuing darkness that has descended on the nation.
Once again, we call for a comprehensive roadmap on the power sector that will articulate and address the problems frontally. There has been so much talk and little action to put the sector on a sound footing. Unless government does something urgently on the problems of the sector, coming out of the current recession in the country may take much longer than expected.
It is becoming evident that the Discos whose emergence in 2013 gave an initial glimmer of hope are either not capable of meeting the nation’s electricity needs, or are overwhelmed by the enormity of the problems they met on ground.
As a way forward, we urge government to meet with gas suppliers, (some of which claim being owed N50bn each) on how to settle their debts. Gas is like fuel which the power plants need to function. Nigeria is well endowed with gas. It remains unclear why gas shortages are always said to be responsible for the persistent energy crunch in the country. In addition, government should speed up the completion of ongoing transmission substations across the country.
We are also not averse to other measures deemed necessary to revamp this critical sector. For instance, government says it is considering a contractor-financing model for the expansion of the nation’s electricity transmission network currently operated by the TCN.This plan is in line with last year’s proposal by the Bureau of Public Enterprises (BPE) to concession part of the power sector to a Canadian energy firm, Manitoba. There are also reports of a five-year tax holiday for proven power sector investors in any part of the country. We urge due diligence on all these proposals.
Overall, there is need for healthy competition and a reasonable tariff regime in the power sector. If government can revamp this sector, it would have succeeded in solving one of the nation’s most intractable problems.