Amidst initial hopes, power sector interventions fail to spike optimism
Four years after Muhammadu Buhari took over as the nation’s President, and Babatunde Fashola as Minister in charge of Power as well as Works and Housing, many stakeholders rate the power sector’s performance below expectations. As Nigerians await a new cabinet, stakeholders in the sector demand urgent interventions to address the sector’s woes. KINGSLEY JEREMIAH writes.
The failure of the power sector to perform optimally despite previous privatisation exercise raised expectations from Nigerians, who had hoped that with Buhari and Fashola in power, the much needed reform to address inherent loopholes that existed under the previous administrations would be properly tackled.
Four years after, stakeholders insisted that poor economic indexes in the country, characterised by growing poverty, unemployment, rising debt profile, growing generator economy, relocation of investors from the country as well as the harsh business environment were indications that power supply did not improve.
Former Chairman of the Nigerian Electricity Regulation Commission (NERC), Dr. Sam Amadi, who rated the current administration poor in terms of promises in the power sector, said the model for privatisation was unrealistic because it hinged so much on the private sector, and didn’t think of a holistic government reform.
“Performance in the last four years has been very underwhelming. The government did not lead the sector away from the errors or underperformance of the last administration,” Amadi said.
He added that the challenges in the sector included structural arrangement, market operation, metering, weak infrastructure, market governance, capacity input, leadership, finance, stranded power, historical public sector inefficiency and gas related problem.
Amadi noted that there was a need for the new cabinet to urgently address the sector’s challenges by bringing back Presidential Taskforce on Power to keep traction on minor projects to optimise supply, adding that this would be an inter-ministerial team that would ensure consistent and high-level executive attention on the electricity crisis.
Amadi equally canvassed that DisCos’ performance should be benchmarked for six months, and those who fail the trial should have their territory split to ensure effective management, stating that this would be a regulatory process that is transparent and credible, and therefore would not be a political intervention.
“In the long term, consider unbundling distribution so that retail of electricity can be competitive. It is competition not privatisation that will lead to efficiency. Ultimately bring back state investment in electricity. It is a joke to believe that with the present risks in the electricity market we can expect private sector to grow the power sector significantly. No government should socialize the investment risks and allow private sector management power facilities under special arrangement,” he said.
Indeed, the deteriorating situation in the Nigeria Electricity Supply Industry (NESI), became worse that revenue collection was insufficient to pay power generation cost, leading to growing industry losses at a rate of at least N474 billion yearly.
Recently, French Agency for Development (AFD), in Abuja, said nothing less than $10 billion is required in the next five years to offset investment shortfall in the 11 electricity distribution companies (DisCos), stressing that the entire sector was at verge of collapse.
Instead of progress, most stakeholders noted that the challenged power sector has been enmeshed in a blame game, which further saw the Buhari-led administration compounding the situation.
A former Director-General of the West African Institute for Financial and Economic Management (WAIFEM), and professor of Economics and Public Policy, University of Uyo, Akpan Ekpo, said the power sector could increase GDP by almost one per cent if inherent challenges were addressed, adding that the current administration only performed marginally in the sector.
He insisted that the new cabinet must fix the sector, stressing that the country has all it takes to address the woes in the sector.
“No country develops with generators. Right now, we are running a generator economy and that cannot take us anywhere,” Ekpo said.
National President, Association of Public Policy Analysis, Princewill Okorie, equally insisted that the sector does not deserve pass mark in the power, especially with the poor treatment of consumers and the lack of performance by NERC.
Calling for an urgent review and proscription of NERC’s public affairs unit, Okorie said: “I find it difficult to really rate this government to have done well in the power sector. This is because the regulators have been grossly inefficient. NERC has been grossly inefficient and it is an abuse on the anti-corruption policies of this government.
“Consumers are suffering. The regulators that issued licenses to DisCos cannot live up to agreements. DisCos operated as if there are no regulators”.
Pioneer Managing Director, Nigerian Bulk Electricity Trading (NBET) Plc, Rumundaka Wonodi, insisted that the current administration was compounding challenges in the sector, especially in the area of leadership, stressing that some power agencies were currently without boards, or have cloned their boards.
“I think the leadership of the sector has not been consistent and steady, especially after the change of administration. The fact that most of the boards of the agencies like TCN, NBET, were never constituted is not good enough, as government is not talking as one. We found out that different arms or agencies were not aligned under the power sector recovery programme of the government, therefore implementation has been elusive,” Wonodi told The Guardian.
Project Director, Taleveras Power Ltd, Belije Madu, listed the mistakes of the current administration in the sector to include the lack of stipulated tariff reviews along with changing economic variables based on the requirements of Multi-Year Tariff Order (MYTO), lack of improvement in power sector efficiency as well as capacity charge on a volumetric basis, which is not working must be revisited.
“Industry contracts are not enforced. There is visible lack of coordination and engagement between sector players. Investment decisions are made without consultations with the boards of distribution companies (DisCos). Investment processes are not well structured. There is need for strong cross-cutting corporate governance across sector and consistent cross-sectoral communications across the value chain.
“Nigeria’s electricity supply industry is experiencing policy incoherence and gaps. Several organisations are currently making policies for NESI, without any over-arching policy harmonisation, thus resulting in policy bottlenecks. Rural Electrification Agency (REA) is making policies on off-grid electricity supply for underserved areas. Transmission Company of Nigeria (TCN) is making policies on levels of electricity supply (TCN Expansion Plan). Eligible Customer policy has been declared, but not been implemented,” Madu added.
While distribution companies were mandated to meter consumers, industry regulator, the NERC, reported poor performance by the DisCos. In fact, a new programme called Meter Asset Provider (MAP), which was set up to fast-track bridging of the gap has not achieved desired objectives.
Partner, Nextier Power, Emeka Okpukpara, had said the distribution companies who were the link to the consumers do not have adequate asset to meter not only consumers, but also transformers.
“Due to aforementioned lack of assets, consumers are billed arbitrarily under the context of estimated billing, which has eventually eroded consumer confidence in the sector. With high incidences of energy theft coupled with consumer apathy in electricity bill payment, the sector is stuck with an eye-popping market shortfall of nearly N2t ($5b),” he noted.
According to him, the sector currently lacks effective contract management, compliance to industry regulations and governance codes, which is within the overall co-ordination of an independent regulator – NERC.
Executive Secretary of Association of Power Generation Companies (APGC), Dr. Joy Ogaji had also noted that there was no significant improvement under the current administration, informing that GenCos were unable to pay gas debt due to the liquidity challenge in the sector. She added that the inability to pay for contracted gas led to the immediate cutting off of gas supply to some power plants.
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