The warning on power sector collapse

The frequent collapse of the national grid for the supply of electricity in the country has become a recurring nightmare. Nigerians have now been forced to regard such frequent challenges in the power sector as the “new normal.”

Many have seemingly resigned to fate or made alternative arrangements as much as they can. It can be recalled that the supply of regular power supply to the Nigerian consumer was one of the electoral promises made by the ruling All Progressives Congress (APC) when soliciting votes prior to the 2015 general elections. The wobbling performance of the power sector is another area of woeful failure for the Muhammadu Buhari administration. Hopes were raised and dashed in this regard.

As things stand, many stakeholders have warned that unless something drastic is done to salvage the sorry situation, the power sector would face an imminent collapse. The facts on the ground are quite obvious.

Available data indicate that there are 23 power generating plants with 11,165 megawatts capacity connected to the national grid. These are managed by generation companies (Gencos), independent power producers and the Niger Delta Holding Company with only two of these being hydro plants, namely the Jebba and Shiroro plants. Currently, all the plants have one form of challenge or the other.

The two hydro plants currently have limited or no generating capacity due to poor water management. For the remaining 21 generating plants, the problems they encounter are myriad.

The gas-powered are generating below expectations due to lack of gas, technical faults, or under some form of seemingly unending maintenance, among others. These include plants at Omotosho, Olorunsogo, Omoku, Delta, Afam, Ihovbor, Sapele, Odukpani, Okpai, Geregu, Alaoji and Egbin.

The Egbin plant which is the country’s largest power generating plant of 514 megawatts and the largest supplier of power to the national grid is currently off the grid due to perennial faults and technical problems.

It is clearly obvious that the Buhari administration has lost control in the management of the provision of power to the Nigerian populace. The usual passing of the buck by the administration to the previous administration is no longer amusing to the generality of Nigerians. If the privatisation programme undertaken by the Jonathan administration is faulty, the Buhari government has had over seven years in office to correct whatever it found inappropriate. What Nigerian need is the enhancement of the efficient functioning of the sector and not some unending blame game or rhetoric? This situation in the power sector is a clear case of incompetence by the current government. Hence the recent statement by the Ministry of Power apologising to the Nigerian public and stating that the partial shutdown of the Oben gas plant for the repair of critical gas processing equipment was responsible for the recent fall in power generated is not good enough.

The problems in the power sector cannot be disconnected from the developments in the macro economy. Once the country’s economic fundamentals are addressed, the power sector would experience some form of relief. First, the assertion by some stakeholders that the major challenge affecting the sector is the acute shortage of foreign exchange for end-users in the economy cannot be discountenanced.

According to them, almost all materials in the sector are purchased in foreign exchange including the cost of maintaining facilities. As long as the current challenges in the foreign exchange market persist, the power sector may not get the desired reprieve. Second, the need to address the supposed challenges related to the privatisation of the sector under the last administration cannot be over-emphasised. Instead of the government to keep lamenting on the obstacles to the resolution of the problems in the sector, it needs to get to work and address them in order to bring the desired succour to the sector. Whether they are legal in nature or relate to financial capacity of the new owners of the plants or even operational, they should be frontally addressed. This should include issues relating to transmission and distribution as well. For example, the distribution companies are operating as if they are government agencies. The firms in the sector should run as private companies that need the patronage of the public for their survival. These companies, rather than maintain infrastructure are still depending on government to do so

The effects of lingering power outages on the economy are enormous. Manufacturing firms are worst hit as it has added to their cost of production and fuelled inflation through the increase of the factory-gate prices of their products. This is due to the fact that many of these industrial firms rely on diesel for their internal power generation, a situation that has been worsened with the current escalating price of diesel. Many firms have consequently reduced the size of their labour force thereby increasing the spate of job losses and unemployment in the country. Some firms have even closed shop. That is not how the Nigerian economy can grow.

Government should work hard to avert this imminent collapse of the power sector. The Buhari administration does not seem to have added any value whatsoever to the growth of the sector since it came into power in 2015. In attempting to chart the way forward, effort should be made to fix the exchange rate problem, diversify sources of energy (wind, solar and others) and, ultimately, decentralise power generation and distribution by adopting true federalism that will enable states to venture into the sector. Also, the privatisation programme should be revisited, particularly as it affects the generation and distribution companies. Unless the problems of the power sector are addressed, the quest to grow the Nigerian economy and enhance the living standards of the people would simply turn out to be a mirage.