The new power deal with Siemens
President Muhammadu Buhari’s new power deal with the German energy giant, Siemens, should ordinarily present a new ray of hope for the wobbling power sector but for that same expectation that has long been deferred. Can the government, faithfully, execute this agreement and give Nigerians a new lease of life? This is where the answer always blows in the wind.
Our problem is not in reaching an agreement with would-be investors but in execution. We have had a catalog of similar ambitious agreements reached on various alternative sources but have also fizzled out. The government is always setting deadlines, just as the new deal has set 2023 to generate 11,000 megawatts of electricity. This time around, the government should guard against failure. It will be one too many.
Doubtless, Nigeria’s power sector has become a national embarrassment. More than five years after the power sector was privatised, the electricity situation remains crippled, unfortunately. The investors who took over the six-generation companies (Gencos), and eleven distribution companies (Discos), continue to grapple with the old problems.
The critical challenges, according to the Transmission Company of Nigeria (TCN) include gas constraints, low load demand by Discos, limited transmission line capacity, huge metering gap, electricity theft, and high technical and commercial losses, among others.
The total power generated in the past weeks, for instance, reportedly stood at 3,372 megawatts. This is against the installed generation capacity of 12,910 MW according to the Nigerian Electricity Systems Operator. The available capacity is put at 7,652.60MW; transmission wheeling capacity at 8,100MW and peak generation ever attained at 5,375MW.
Since the power sector was privatised on November 1, 2013, the power grid has reportedly suffered over 100 collapses (total or partial). This is shocking. Incidentally, the grid was not privatised but is managed by the TCN, a Federal Government agency.
According to the Nigerian Electricity Regulatory Commission (NERC), the financial viability of the electricity supply industry remains the most significant challenge threatening the sustainability of the power sector.
And so, in a bid to fix the transmission and distribution infrastructure, the Federal Government and Siemens, the other day, signed a power deal with the aim of modernising the nation’s electricity grid. This is cheering but not new. We have had similar agreements and MoUs with General Electric, among others with nothing to show in the end.
The two parties signed a Letter of Agreement on the Nigerian Electricity Roadmap, which, reportedly, resulted from the meeting between President Buhari and the German Chancellor, Angela Merkel last year.
While the Director-General of the Bureau of Public Enterprise (BPE), Dr. Alex Okoh signed on behalf of the Federal Government, the Chief Executive Officer of Siemens, Mr. Joe Kaeser signed for his firm.
President Buhari reiterated, during the signing, that more work needs to be done to upgrade the transmission and distribution system, adding that the government was initially reluctant to intervene following the privatisation of the distribution sector.
He decried the fact that there have been many attempts at solving the electricity problem by the previous governments, including what he described as “the ill-prepared National Independent Power Projects.”
Furthermore, he observed that the various interventions by the government have yielded an imbalance between the amount of power generated and the amount available to consumers. These considerations should spur the government to seek alternative method of power supply of which renewable energy should be a viable option. This is not a time for the blame game. What people need is a result: electricity.
Buhari urged the principal actors – Siemens, Discos, TCN, and the electricity regulator, to work hard to achieve 7, 000 MW of reliable power supply by 2021 and 11, 000 MW by 2023. Most stakeholders, including the manufacturers, believe that this is not ambitious enough given the need that has been put at 76, 000 MW to serve the vast country.
Under the new deal, phase one would ensure that whatever capacity is stranded in the grid now, which is about 2, 000MW, would be evacuated to achieve 7, 000MW of power. Phase two would enable further expansion of the grid to evacuate 11, 000MW and phase three would ensure that whatever balance of power generation and expansion of the grid to achieve 25, 000MW capacity will be delivered.
The target is to achieve 25, 000MW in the third and final phase after fixing the transmission and distribution system bottlenecks. This is a tall order that can only be achieved with dedication and commitment. The government should fight the cankerworms that have been thwarting well-intentioned government policies in the power sector. There seems to be massive corruption in the sector. This too should be tamed this time.
The importance of electricity in the economic development of the country cannot be over-emphasised. Without a reliable power supply, nothing would work; productivity will stagnate.
Therefore, whatever action is needed to give electricity to the country should be supported. The project, if successful, would have a massive positive impact on the economy. It would drive economic growth and industrialisation.
However, the project should not foreclose the emerging focus on renewable energy. A good energy mix is required to break the power supply jinx.
Finally, there is a need to decentralise the power supply system. We should do away with the highly centralised model of power generation and distribution. There should be power sector federalism too. Overcentralisation has killed initiative in the sector. Relevant laws should be amended to accommodate flexibility.
A lot more attention should be paid to off-grid solutions. There should be better policies on renewable energy to make it affordable to the citizenry. The new owners too should not just wait for Federal Government intervention before investing in upgrade of critical infrastructure.