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Nigeria’s ailing power sector: How FG’s projections failed



As 2022 winds down, a retrospective look at the power sector holds a bleak hope. It has been a circle of stunted growth and shamble of failure from the transmission, generation and distribution subsectors. Like Nigeria’s economy, the power sector has refused to progress due to lack of investment and managerial competence. There is a nexus between the power sector and industrialization. Indeed, one cannot do without the other; an adequate electricity supply is instrumental to the growth of businesses, especially Small and Medium Enterprises.

Nigeria needs an estimated 25,000MW to 40,000MW capacity to serve its 218 million population. Still, currently, the installed generating power capacity is about 12,522MW, and transmission and distribution infrastructure can only deliver an average of 4,000MW to businesses and homes.

President Muhammadu Buhari, on his resumption of office in 2015, brought forth a renewed vista for the power sector; however, as he prepares to leave Aso Villa on May 29, 2023, the industry remains a playground of embarrassment.

Nigeria’s power industry is multidimensionally challenged, afflicted by under-investment, outdated infrastructure, debts and inefficiencies. Power shortages have crippled SMEs, stunted the growth of productive sectors and made the cost of local products uncompetitive.

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 privatization, raise output to 40,000MW by 2020 and attract investment and the best global players into the market. Regrettably, the lofty milestones have been missed because of the age-long decay occasioned by mismanaging privatization.

Some 90 million Nigerians lacked access to electricity by 2019, the world’s worst, below Congo DR’s 70 million and Ethiopia’s 58 million, the World Bank said. The International Monetary Fund says Nigerian businesses bleed by about $29 billion annually due to power shortages.

Every approach to rescue the Nigerian power sector has hit the rock as most Nigerians live without 24-hour electricity.

Consequently, current power generation stands below 3,800MW, and the per capita electricity usage is 136 KW/h, one of the world’s lowest. In Libya, it is 4,270 KW/h; India, 616KW/h; China, 2,944KW/h; South Africa, 4,803 KW/h; and Singapore, 8,307KW/h.

DAILY POST highlights four significant events that impacted Nigeria’s Power industry, namely: The incessant national grid collapses, Electricity Distribution Companies’ Liquidation crisis, and the unsuccessful National Mass Metering Project, NMMP.

National Grid Collapses

Incessant national grid collapses marred the period under review. Although the Nigerian Electricity Regulatory Commission, NERC, still needed to compile data on system collapse in 2022, the grid’s performance and various updates from DisCos showed that Nigeria’s power grid had collapsed about eight times by September this year.

For instance, on September 25, 2022, grid collapse occurred when power generation on the system crashed from over 3,700MW to as low as 38MW.

On July 20, 2022, Nigeria’s power grid saw the sixth collapse in 2022, while on June 13, it was also reported that the grid collapsed. The nation’s power system collapsed twice in March (The same period TCN said it recorded a peak of 5,615.40 MW) and twice again in April this year.

2022 Electricity Bill

The Senate passed the Electricity Bill 2022 in July to boost the reforms in the power sector; however, President Muhammadu Buhari is yet to assent to the Bill. Senator Gabriel Suswam, Chairman Committee on power, said the Bill sought to provide an ideal legal and institutional framework for the industry. He further stated that the Bill would correct the imbalances in the existing transmission infrastructure in Nigeria.

DisCos’ Liquidation Crisis

It has been ups and down for the Power distribution companies in Nigeria. The debt burden, poor balance sheet and lack of investment are hallmarks of challenges facing DisCos. Still, the problem of distribution infrastructures has continued to affect the subsector. Upon privatization in 2013, Nigerians thought the development would herald a new vista, but the reverse is the case. Minister of Power, Abubakar Aliyu said nine out of the eleven DisCos are on the verge of bankruptcy. Aliyu further disclosed that the situation had forced the Nigerian Government to mandate banks to find serious investors interested in buying its 60 per cent equity in Abuja, Kano, Kaduna, Benin, Ibadan and Portharcourt DisCos.

National Mass Metering project

In 2022, the Federal Government promised to provide Nigerians with free meters via the National Mass Metering Project; however, this is yet to be achieved. The Central Bank of Nigeria Governor, Godwin Emefiele, stated that the bank disbursed N47.8bn for about 865,956 meters across the country. However, with the implementation of projects by DisCos and Meter Asset Providers, MAPs have yet to achieve the expected results of providing free meters to Nigerians.

Presidential Power Initiative-Siemen Project

The Nigerian Government, in 2019 signed the Electricity Road Map agreement worth €63 million with the German-based Siemens aimed at modernizing the country’s national grid and achieving 7,000 megawatts by 2021, 11,000 megawatts by 2023 and 25,000 megawatts by 2025.

The Federal Executive Council, FEC in December last year okayed the project with the hope of driving improvement in the nation’s power sector; however, the first target of achieving 7,000 MW by 2021 has been missed, while the 2023 and 2025 years’ targets of 11,000 MW and 25000 MW respectively are obviously unattainable.

The Minister of Power, Abubakar Aliyu had announced the delivery of the ten morbid power transformers to be situated across the country, but on Wednesday, the former Managing Director of Transmission Company of Nigeria, TCN, Dr Usman Mohammed disclosed that the Siemen-FG deal cannot achieve 7000 MW.

Expert React

Reacting to the performance of Nigeria’s power in 2022, energy expert, Mr Eleojo Joseph said the industry had been a colossal failure.

He disclosed that the electricity transmission in Nigeria should be localized to address the issue of National grid collapse.

“The power sector in 2022 is a colossal failure. We have never experienced this amount of national grid collapse in Nigeria. It was as if the national grid was a switch that got turned on and off. The Transmission Company of Nigeria should be disbanded, and electricity should be localized. We are wasting material and financial resources in running the TCN.

“Why are we struggling to generate more than 5,000Mw? The answer is simple. Mini and small electricity generating companies should be encouraged and given necessary financial assistance towards ramping up generation. Imagine a situation whereby 2,000 mini and small companies are generating from 200Mw to 2,000Mw across the length and breadth of Nigeria— using the sun, water, wind and other resources?

“Regarding distribution, let the Government revisit the privatization of the DISCOs one more time. Let competent organizations come on board, and the narrative will change drastically. See the telecommunication sector as a reference point. The DISCOs are doing what they like because NERC, as the regulating body, is not effective and efficient. The war will continue between consumers and DISCOs due to the dog-eat-dog situation between them. Why on earth should consumers buy poles, meters and transformers for DISCOs?

“On the whole, the Government should declare an emergency in the power sector and bring reputable international power generation and distribution companies to step into this critical sector. Without electricity, we are doomed as a nation.”

Also, he stated that “local manufacturers will continue to wallow in pain, and the economy will continue to nose-dive”.

Similarly, dissecting the power sector in an interview on Wednesday, Dr Usman Mohammed said the nation’s power is the worst of today.

He said the sector retrogressed instead of progressing with the billion naira intervention by the Nigerian Government.

As a way forward, he suggested that whosoever emerged as president of Nigeria in the forthcoming election must personally champion Nigeria’s power sector reforms.

He also stated that the key to unlocking the sectors’ potential is adequate investment across the three subsectors: Transmission, Generation and Distribution.

Usman said a competent managerial team should be engaged if the Nigerian power sector desires change in the coming years.

Indeed, no matter the direction of the power industry today, Nigerians hope that the country will head on the right path in the future.

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