Coker: Electricity reforms: A promise fulfilled by Jonathan
WHEN President Goodluck Jonathan made Power reform central to his administration’s Transformation Agenda as the catalyst for economic growth of Nigeria, he did not seem to be saying anything different from what Nigerians had heard in the past. His fellow countrymen had become familiar with the undignifying phenomenon of broken promises, especially from government officials.
Time has, however, shown that, for President Jonathan, the vow to change the electricity supply landscape was, and is still, a bond between him and Nigerians.
Electioneering campaign time is stocktaking time, one way or the other. So, many would want to ask: Did Jonathan fulfil the reform promise? The first part of an attempt to answer that question would be to say that the President has, so far displayed a high level of sincerity, seriousness, boldness and political strong will, in addressing the issues that kept the sector down for decades. The challenges were many. But now, the achievements are open secret and incredible.
With the Launch of the Roadmap for Power Sector Reform in 2010, Government had a clear plan for the implementation of the Electricity Power Sector Reform Act (2005); a reaffirmation of the commitment to resolve the power supply question. A check on the roadmap shows that Jonathan and his team were faithful in implementing the provisions of the document.
Some of the major benefits of the reform would include the following:
• The reinstatement of the Nigerian Electricity Regulatory Commission NERC. The regulatory body was strengthened with a new Chairman and Commissioners sworn in for the purpose of providing appropriate regulatory functions for the electricity market.
• The Jonathan administration unbundled the Power Holding Company of Nigeria (PHCN) into 18 successor companies for greater efficiency and effectiveness in power generation and distribution.
• Creation of the Nigerian Bulk Electricity Trading Plc. The President inaugurated the CEO and Board of the Nigerian Bulk Electricity Trading Plc (also known as the Bulk Trader) in August 2011. The requisite environment for private sector investment in the Nigerian Power Sector has been created by establishing a credit-worthy off-taker of power, NBET Plc, who provides confidence to the power generating companies that they will be paid for power produced.
• The Jonathan administration launched the Energy Efficiency and Energy Conservation Lighting Scheme. This is to promote and encourage the use of energy efficient bulbs and lighting systems in order to create an energy conservation culture.
• The Federal Government entered into an MoU with world leaders in the power industry General Electric. The MoU stipulates that General Electric will invest up to 15 percent equity in power projects in the country summing up to 10,00MW capacity by the year 2020. General Electric also proposes to establish local packaging facility for small aero-derivative turbines in Nigeria which will promote job creation.
• Signing of a Memorandum of Understanding with the U.S.- Exim Bank. The Exim Bank of the United States of America signed an MoU with the Federal Government of Nigeria to provide an investment window of up to $1.5 billion for investors willing to invest in the Nigerian Power Sector. This is the first time such quantum of money will ever be made available by the U.S. Exim Bank for a specific sector in Africa.
• The Goodluck Jonathan administration has improved the power generation from around 2000 megawatts to 4502 megawatts , the highest since Nigeria returned to democratic rule in 1999. This is besides electricity now being generated from solar energy projects, especially Operation Light Up Rural Nigeria projects. Over 200 projects by the Jonathan-revived Rural Electrification Agency are completed and awaiting commissioning.
• All 10 Power Plants under the National Integrated Power Projects (NIPP) scheme are built. At the moment, majority of them have reached 95 per cent completion stage, while two have already been commissioned by the President. Infrastructure for gas supply to NIPP plants (overlooked by an earlier administration), have now been put in place.
• Improved power supply levels have been recorded in part by the emergency declared in the Gas sector last year by President Jonathan. At the time gas supply was insufficient. But now, thanks to the intervention by Mr. President, Nigeria now produces more gas than is required for domestic consumption, with positive impact on electricity generation.
• For more efficient power supply, the Jonathan administration has privatized the power generation companies (GENCOs), and distribution companies (DISCOs) under a most transparent bid process. Apart from initial teething problems, not unforeseen, the Managements of the firms have mostly shown a commitment to making a success of the business in the now thriving transitional electricity market. For example, Egbin power plant has been restored to its installed capacity with an additional 220mw from the recently revamped 6th Turbine of the plant, which had been out of use for up to nine years. The new owners of Ughelli plant have achieved a near 300 per cent improvement in generation, post privatisation.
• Transmission infrastructure (hitherto, aged and weak) has been strengthened, with injection of the needed funding. This has pushed wheeling capacity up to 5,300MW, and reduced System Collapses by 60%.
• Today, large parts of many cities and towns across the country are enjoying 14 to 16 hours of power supply, except in some areas where localised problems of power distribution network have created bottlenecks for smooth transmission.
• Manpower issues were also addressed, as a Presidential approval saw the employment of one thousand young engineers to fill a yawning gap in the sector. This is to be sustained through the world class capacity-building programme of the National Power Training Institute of Nigeria NAPTIN.
The power reforms and privatization exercise have been acclaimed by many industry players to be the boldest in the world so far. Gladly, it has succeeded, and produced a vibrant transitional market, expected to mature with speed.
Lead Energy Specialist with the World Bank, Dr. Eric Fernstrom, put the issue in a perspective: “I think that what we need to keep in mind when we talk of the power sector reform in Nigeria is where we are coming from and how far we have come and what this reform process compares to in an international context? Because we have a power sector in Nigeria that was suffering for decades like any Nigerian would know and whenever you have infrastructure and there is under investment, you have a long-term decline of that infrastructure.
“I think that the direction that the reforms have taken is the right one. We are very supportive of that. I think that the last three years of progress is quite remarkable on many fronts. It is always difficult for government to do the type of comprehensive market reform that is tried here, both in terms of tariffs, and in terms of the privatization which entails labour issues, a lot of quite difficult transitions, both for people, for the market environment of having new stakeholders that act differently, and also for government.
“If I look back at these three years since the launch of the Roadmap, the major milestones achieved are the privatization process, the reform, although lighter but still important, of TCN, and I think, also, a reform of government strategy and policy.”
Indeed, no one needs remind the other of the better gone days of the monopoly called NEPA that was in charge of generation, transmission and distribution of power, all within one integrated company owned by the government.
Revenues in the value chain were not adequately collected and accounted for. Some of the power that was generated was lost in transmission. Some was lost in distribution and the general attitude was that nobody seemed to care whether all the proceeds of sale from power were adequately collected. Many government agencies and many private individuals were consuming power without paying for it.
In fact, for many government functionaries, it was a status symbol not to pay for power. And because the revenues within the sector were not being collected, there was no build in of capitals, so there could not be additional investments. So, most of the growth was stunted. There was very little investment in power. Most of it was consumed in recurrent expenditure of an over bloated parastatal. For 50 years, we did not have more than 6000megawatts of installed capacity.
Today, the story is different. The determination of the President has ensured that the Sheriff has come to town to run the bad guys out of town and put smiles on the face of the ordinary people.
It can only get better.
• Coker is an Abuja-based energy analyst.
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