2022 expectations from Nigerian power sector
With a fortnight gone from this year 2022, it’s time to ruminate on Nigeria’s expectations from its’ power sector. Insecurity in Nigeria is still very high. Life expectancy remains as low as 55 years and economic growth stands at 1.5 percent. Moreover, Corruption Perception Index is 143, poverty rate is 43 percent but inflation is galloping by the day though on record, it’s 15.4 percent. As at the fourth quarter of 2021, unemployment rate inched up to 14.2 percent according to the National Bureau of Statistics.
Among reasons for the surge in insecurity are staggering poverty with Nigeria taking over from India as headquarters of world poverty. Carrying along with the foregoing is out of school children which are now more than 10.5 million people. You may as well ask what has electricity has to do with all of these? The answer is that uninterrupted power supply is the panacea to poverty, economic development and optimum employment.
When the representative of the United Nations Development Programme (UNDP) in Nigeria Mohammed Yahya opined that military could not end insurgency, he meant poor power supply is a factor of unemployment which is breeding insurgency. Which is why we must tell government what they must do to achieve uninterrupted power supply in Nigeria. On the electric power sector, it is noteworthy that the tenure of the commissioners of the Nigerian Electricity Regulatory Commission (NERC) ends this February. Thus, it’s the best time to revitalize the commission by injecting new blood into the Nigerian power sector.
Poor power supply has led to various companies to flee Nigeria for it has led to high cost of doing business in Nigeria. Therefore, new leaders for NERC board will invigorate efforts to improve the current epileptic power supply in Nigeria today. Thus, we expect electric power distribution improve in areas where people pay for electricity supply as against some areas where consumers don’t pay. Distribution companies (DisCos) must adopt new strategies, particularly franchising models such as metering, billing and collection.
The NERC guidelines allow DisCos to enter into third party agreements with another DisCo, making it easier to manage some specific functions through franchising. This mitigates some of the problems many DisCos face concerning metering, power distribution and bill collection. Happily, the movement toward integrated grid with efficiency working in tandem with consumption for mutual benefit is making progress. Other improvements include the deployment of small scale units of power or mini grids which can operate locally and connect with larger power grids at the distribution level.
Nowadays support for mini grid development has increased. According to our electricity laws, mini grids are stand alone power generation systems. They have capacity to provide electricity to multiple consumers through a distribution network. They are different from independent power plants connected to the central grid at the distribution level. By the same token, mini grids are more available, reliable and customer friendly compared to other alternatives.
Indeed, the mini grid regulation of 2016, is designed to promote investments in rural electrification. It will also provide a framework for engagement between mini grid developers, rural community stakeholders and existing distribution companies, private tariff arrangements and compensation for developers in the event of operational expansion by the distribution company licensed to cover the relevant community.
The available mix is an evolving landscape for solar, wind, battery storage and new technologies in the power sector. This allows the incorporation of new technologies for power generation. The year 2022 is the time the German electric company Siemens promised to create a new and improved power sector infrastructure. The challenges of power supply are negatively affecting industrial and agrarian growth and hindering the industrialization of the Nigerian economy.
Therefore, in an effort to bridge the huge infrastructural gap in the power sector, the FGN in July 2021 signed an implementation agreement with the Siemens Company of Germany. In the agreement, Siemens promised to create an electrification roadmap in a bid to resolve existing challenges in this sector and expand Nigeria’s capacity to manage her future power needs. Thus, Siemens is to deliver 7000 megawatts of electricity by 2022.
This three phase agreement spans six years from 2020 to 2025. The various projects are to be implemented between Siemens and the Bureau of Public Enterprises (BPE). Of course BPE is a parastatal of the FGN. While FGN controls transmission through the Transmission Company of Nigeria (TCN) the generation segment is controlled by the private sector with BPE holding shares in distribution companies. It is expected that this arrangement will improve power supply to the country.
If existing transmission and distribution problems are resolved and customers pay for services rendered, it is expected that the power sector will thrive better. However, the planned sale of five power plants under the National Integrated Power Projects (NIPP) this year will boost efficiency and augment effective power supply to Nigerians. Additionally, some concession programmes are ongoing in respect of some government owned energy assets. These are expected to be concluded by the third quarter of this year.
In conclusion, it takes 20 years for a country to migrate from agrarian or poverty stricken status to an industrial nation. That much was what took China, South Korea, Taiwan and Japan to transit to industrial societies. Thus, if we refused to fix our power sector now, as the lynch pin of industrialization, it may take another forty years for us to break loose from poverty. In such length of time, Nigeria cannot sustain unity in poverty for another ten years.