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Introduction
Last week, we traced the history and trajectory of ECN, NEPA or PHCN. It has been further broken down into Discos. It appears as if, the more reforms we bring in, the more moribund it becomes. There is virtually no light. Yet, we pay for darkness. Where you argue or demure, you are immediately disconnected. We have no voice at all.
Challenges in the power sector
The challenges in the power sector are gargantuan. Let us discuss some of them.
Generation
Nigeria has an estimated population of 216.1 million people as at June 18, 2022, by UN projection. Nigeria is located on the Gulf of Guinea, with dense rainforest and rare primate habitats. She has 19 dams and is one of the countries with the highest gas reserve, which is estimated at 206.53 trillion cubic feet. This was discovered accidently while Nigeria was searching for oil. In the United States, it was reported that natural gas was the largest source, about 40%, of U.S. electricity generation in the year 2020, while coal constitutes 19% of the source of electricity. Nigeria also holds 379 million tonnes of proven coal reserves as of 2016, ranking 44th in the world.
As at 2016, Nigeria holds 37,070 billion barrels of proven oil reserves, ranking 10th in the world. She also has great potential to develop solar power energy due to high amount of sunlight. These are means of generating electricity. Thus, when I stated at the introduction to this article that Nigeria’s potential for growth was unquantifiable, I was not mincing words. Nigeria’s installed electricity capacity stands at 18,000 megawatts.
Global analysis of electricity generation
From the data derived from the official website of the International Trade Administration, Nigeria’s power generation is mostly thermal and hydro, with installed capacity of about 12,522MW. Out of this meager capacity of hers, she generates just 5,000MW. In the Punch’s report of June 21, 2018, the executive director, Association of Nigerian Electricity Distributors, Mr. Sunday Oduntan, noted that Nigeria must generate at least 180,000MW of electricity to have adequate and stable power supply. He noted also that South Africa, with 60.7 million people, generates 48,000MW and is working to increase the generation to 79,000MW. Electricity production in South Africa is expected to rise to 19,300.00 Gigawatt – hour.
Nigeria is among the countries lagging behind in terms of power generation capacity. Egypt, for example, with a population of about 106.107 million people, has power generation capacity of 59,530MW. In a magazine published by Egypt Today (April 14, 2021), it was reported that Egypt was able to jump 68 ranks in terms of electricity production from the 145th rank to the 77th, and the success was attributed to public investments directed at upgrade and expansion in the sector. According to USAID (United States Agency for International Development), Ghana, with a population of 32.37 million, currently has over 5,300MW of installed generation capacity. Rwanda, on the other hand, has a population of about 13.6 million. According to USAID, Rwanda has only about 218MW of installed generation capacity. Tunisia, with a population of 12.046 million people, has a power production capacity of 5,65MW installed in 25 power plants.
The United Kingdom has a population of 67.44 million (2021). From statistics gotten from the Department for Business, Energy and Industrial Strategy (2021), installed capacity for electricity generation in the UK increased gradually between 1996 and 2018, from 73.6 GW to 101.2 GW. However, in 2019 and 2020, total capacity fell following the closure of several large coal-fired plants, and the mix of plants shifted towards renewable technologies. Overall, there has been a decline in conventional steam, outweighed initially by an increase in combined cycle gas turbines (CCGT) and more recently by an increase in renewable. CCGT capacity increased almost threefold over the period 1996-2012, from 12.7 GW to 35.5 GW. In 2020, the electricity sector’s grid supply came from 55% low-carbon power (including 24.8% from wind, 17.2% nuclear power, 4.4% solar, 1.6% hydroelectricity, 6.5% biomass), 36.1% fossil fuelled power (almost all from natural gas), and 8.4% imports. Renewable power is showing strong growth, while fossil fuel generator use in general and coal use in particular is shrinking, with historically dominant coal generators now mainly being run in winter due to pollution and costs, and contributed just 1.6% of the supply in 2020. In 2020, the U.S. net electricity generation stood at approximately 4 petawatt hours, more than double the generation reported half a century earlier. The North American country is the second largest electricity producer worldwide, ranking only behind China. While its annual electricity output has remained fairly stable in the past decade, the U.S., with a population of 332,403,650, currently generates 1,143,757MW of electricity. This is about 1.14 billion kilowatts. Compare this with Nigeria’s 5,000MW, with a staggering population of 216.1 million people!
Transmission and distribution
The challenge in the Nigerian power sector is not only seen in the area of generation but also in transmission. There have been serial reports of grid collapse in Nigeria. The Guardian (May 13, 2021) had reported another incident of national grid collapse; and noted that the development made it the 29th time in the last three years that the country had experienced grid collapse. On August 23, 2021, Punch reported another case of national grid collapse for the second time in less than a month, worsening the blackout being experienced by households and businesses in parts of Nigeria. According to Nairametrics, data gotten from the year 2020 from the Transmission Company of Nigeria (TCN), from 2013 when the electricity sector privatization was completed to 2020, showed that the grid failed 84 times and partially collapsed 43 times. Nigeria is literally hanging out there in darkness.
Exorbitant prices
The continuous rise in the prices of electricity tariffs and the unaffordable nature of electricity units have been an issue bemoaned by many Nigerians in their homes and businesses. This is worsened by the fact that the amount of usage by these households and businesses do not seem to adequately equate the prices paid to these power holding companies for the provision of electricity. Most Nigerians cannot afford this with their non-living wage. Businesses are relocating to neighbouring countries on a yearly basis. Nigeria now even imports from companies now domiciled in these neighbouring countries, but which used to be in Nigeria. It is so pitiable.
Factionalization of unions
Workers are forever threatened with downsizing, rightsizing, rationalising and other terms that connote retrenchment of workers. This characterized the privatization regime. The aim of privatization was actually to maximise profits by reducing cost as much as possible through plugging of leakages and retrenchment of workers. The idea of divide and rule thus came in. This negates the idea of gainful employment and the provision of jobs by any responsible government; or at least create a conducive environment for such privatisation created poverty and has impacted negatively the unemployed in the society, while enriching the foreign actors, rather than the Nigerian economy as initially planned.
Corruption and capitalist exploitation
The idea behind privatization of electricity in Nigeria was originally largely to de-monopolise the power sector and diversify ownership from the Nigerian government. This was however not a full diversification, since the government through some companies still maintained shares in the power sector. This has unfortunately given way to many corrupt practices by staff of these power holding organisations. Because the main aim of capitalism is profit, these companies are not affected by the negative effects they wreak on the society. They are basically interested in how much profit can be generated by their companies. This is why these companies continuously increase tariff rates and also reduce the quality of their supply so as to achieve such grotesque profits at the expense of the members of the society who become their victims.
Strikes and continuous threats on subsidy
The Nigerian government holds some quantum of shares in the power holding companies, these companies are viewed more as public companies, rather than as private companies. This has caused more harm than good to the Nigerian power sector. This has led to increase in strikes and threats of further strikes. The result is that the power holding companies have held Nigerian governments and the Nigerian people in a strangulating chokehold. They do not allow for effective growth in the power sector. Constant strikes on grounds of fighting issues of subsidy and subsidy-related matters have also caused a deficit in the power sector and brought it to its knees.
Privatization of the power sector in Nigeria
Major issues within the Nigerian power sector, principally concerning power outages and unreliable service, had forced the Nigerian government to take radical steps. It enacted the Electric Power Sector Reform Act, 2005, which called for unbundling the national power utility company into 18 successor companies: six generation companies, 12 distribution companies covering all 36 Nigerian states, and a national power transmission company. The Act stipulated that ownership of these companies be granted to the Bureau of Public Enterprises (BPE), the privatization arm of the federal government; and the Ministry of Finance Incorporated. This unbundling paved the way for an ambitious privatization programme to be carried out by the BPE in Nigeria. In 2007, the BPE hired CPCS Transcom Limited, an international consulting firm based in Ottawa, Ontario, Canada, to give expert advice about the best ways to move forward with the privatization of the country’s then 11 distribution companies and the six generation companies. In 2010, CPCS was consulted again to provide advice on the Nigerian government’s privatization programme.
Following the privatization process initiated on September 30, 2013, by the President Goodluck Jonathan regime, PHCN ceased to exist. In its stead, the Nigerian Electricity Regulatory Commission (NERC) was birthed. This independent regulatory agency, as provided in the Electric Power Sector Reform Act, 2005, was tasked with monitoring and regulating the Nigerian electricity industry, with issuing licences to market participants, and with ensuring compliance with market rules and operating guidelines.
Thought for the week
“We cannot be mere consumers of good governance, we must be participants; we must be co-creators.”
(Rohini Nilekani)
