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Nigeria’s slumbering power sector awaits Tinubu’s ‘magic’

By Kingsley Jeremiah, Abuja
10 September 2023   |   4:27 am
With the masses and business owners scampering to share a meagre 3,500 megawatts load offtake in the Nigerian Electricity Supply Industry (NESI), President Bola Ahmed Tinubu may be starting on a very sluggish note in the power sector...

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With the masses and business owners scampering to share a meagre 3,500 megawatts load offtake in the Nigerian Electricity Supply Industry (NESI), President Bola Ahmed Tinubu may be starting on a very sluggish note in the power sector, despite the push by some stakeholders for a state of emergency.

With a politician as a minister in a sector that appears to have defied efforts of the best brains, and linked to a spiritual battle by one of the known star boys in the previous administration, Babatunde Fashola, there are indications that the nation’s electricity sector would be business as usual, if not worse under the Tinubu government.

Nigeria’s power sector, described by many as a kingdom of more tariff, less service delivery; where consumers pay fåor electric poles, metres, wires, transformers, and even oil for servicing of transformers, the suffering masses, including small businesses and manufacturers may continue to pay about N876.6 billion yearly for unreliable electricity .

While this ugly scenario characterised the previous administration’s handling of the sector, Tinubu in his inaugural speech promised to prioritise the sector, but stakeholders, yesterday, lamented that thus far, the declaration remains without substance.

This is coming as key players have started to lobby the Tinubu government to look away from the 10-year review window due in the next two months over fears that most of the non-performing distribution companies and other investors may be rusticated.

Without concrete policy direction that would have given life to a recent law that would enable the generation and distribution of electricity by states and other investors, power generation, yesterday, stood at 4,500 megawatts, while only about 3,500 megawatts are being wheeled to end-users.

While Nigeria’s electricity grid demand was estimated at 17,556MW in 2020, and expected to grow to 45,662MW by 2030, gas supply shortage, transmission and distribution constraints, as well as, commercial challenges have kept consumers in perpetual darkness, with over 26 power plants currently dormant.

As of 2022, only nine electricity generation plants were active and accounted for 72.4 per cent of the total electricity generated within the period.

Between 2015 to 2022 (just about 10 years after privatisation), the distribution companies have only achieved 56 per cent of their expected capital expenditure.

While they were expected to invest N465 billion, they only invested N258 billion with the bulk of the investment happening only in 2021 primarily because of the Central Bank of Nigeria’s loan to the utility companies.

Similarly, the Transmission Company of Nigeria (TCN), according to a report by the Nigerian Electricity Regulatory Commission (NERC) has only been able to meet 28 per cent of its expected capital investments from 2013 to 2020, as it invested N181 billion instead of N655 billion.

With mass metering programme, especially the latest intervention of the World Bank in limbo, about seven million consumers are at the mercy of arbitrary billing, despite initial promises that the service-based tariff would lead to transparency in the billing system .

Renowned energy scholar and Executive Director of Emmanuel Egbogah Foundation, Prof. Wunmi Iledare said that the repeated promises without concrete actions to fix the power sector now constitute a syndrome

“Matching words with deeds has not been easy for nearly every minister of power since the time of Bola Ige,” the professor emeritus stated, adding that decentralisation of the power sector is the key to resolving the perennial non-performance.

Iledare who said that he expected the new Electricity Act to rationalise governance in the sector, however, regretted that his hopes have been dashed.

He, however, expressed optimism that “the amendment of the constitution to allow states to participate in the institutional governance of the electric power value chain is a great beginning to disavow the central planning approach to power management in Nigeria.”

He warned that the constitutional amendment must not become a call for states to create a NEPA-type monopoly.

In November (barely two months away), the Federal Government will have the opportunity to review the power sector and correct anomalies that have hindered the gains of privatisation.

A legal practitioner and President of Nigeria Consumer Protection Network, Kunle Olubiyo, alleged that some vested interests were already lobbying the administration to ensure that the review is not carried out.

Although it has about 13,000 megawatts generation capacity, the Transmission Company of Nigeria and the 11 DisCos have weak infrastructure, and as such dispatch of power to homes and the industrial sector has remained a mirage.

Most manufacturers and business owners have been relying on off-grid and mini-grid solutions as the TCN-controlled grid continues to fail consumers.

Olubiyo said that although the current administration may have good intentions to address niggling issues in the power sector, there are no clear signals on how the reform would be carried out.  He insisted that a review of the power sector remained sacrosanct, adding that there is a need for non-performing entities in the sector to be evicted.

For legal practitioner and Executive Coordinator, NEPA Wahala, a power sector consumer awareness and protection initiative, Emeka Ojoko, little has changed in the energy sector thus far, adding that while the new minister’s inaugural speech was heavy on promises, it is light on implementation plans.

Ojoko who expressed doubts over the new minister’s capacity to turn things around, stated: “I would have been more convinced about the administration’s commitment to improving generation and distribution of electricity if a person with demonstrated capacity and cognate experience in the business of electricity energy (as against finance and administration) had been appointed as minister.”

Ojoko while admitting that the minister’s resume suggests that he is an intelligent, accomplished individual in his field, noted that he may succeed if he is a quick learner and an adroit man-manager.

Stressing that the new Electricity Act is long overdue, Ojoko, expressed the belief that it may take about five years for the country to feel the effects of the legislation if the right steps are taken by all stakeholders.

“Only three states presently have the legal infrastructure to take advantage of the law. The others should very quickly take steps to design the structure of their electricity markets. Consumers will be the biggest beneficiaries when some form of competition is triggered in the electricity market,” he stated.

The former President and Chairman of the Council of Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola, noted that the government’s stance on improved electricity supply is deserving of mention.

According to him, the desire to pursue the new law empowering states to go into power business, and the move to make GenCos, DisCos, and NERC more efficient and responsible would go a long way in improving the sector’s performance in no distant future.
Ajibola said that states must challenge themselves to do everything possible to improve the electricity generation, transmission, and distribution in their respective jurisdictions.

The Chief Executive Officer of the Centre for Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf, said that the delay in putting together the cabinet meant that no serious action would have been taken.

He noted that the first shortcoming of the administration was the delay in constituting a cabinet, adding that with the cabinet in place, there is a need to begin prompt implementation.

According to him, the absence of a Federal Executive Council affected promises that may have been made.

“On the policy side, by now we should have seen some fiscal incentives to make some of the commitments a reality. Energy is critical. We need government support including subsidies that cannot be abused. Sometimes even DisCos are not taking energy because of remittance. There is a need for the government to provide more support to investors in the energy sector because the sector affects every other sector of the economy,” Yusuf said.