A Review of the Nigerian Energy Industry

Nigeria SMEs task govt on power

Power distribution transformer.
Power distribution transformer.

14 August 2015, Lagos — As the supply of electricity continued to improve in the country, operators of small and medium enterprises have called on the Federal Government to make sure that the trend did not stop until Nigerian businesses could depend fully on public power supply and stop spending money on electricity generators and diesel.

Operators of small and medium scale enterprises in the country have said that, though there has been a significant improvement in electricity supply, leading to a reduction in the amount of money they spend on fuels, there was the need to do more to reduce the amount they spend to buy generators and diesel.

They said the cost of borrowing funds from the banks was high, adding that if the supply of electricity was adequate, the huge sum of money they spend of generators and fuels would be channeled into their businesses.

However, the Permanent Secretary in the Federal Ministry of Power, Godknows Igali, said on Wednesday that electricity supply nationwide had reached 4,600 megawatts.

Igali disclosed this to State House correspondents after briefing President Muhammadu Buhari on the current state of power in the country.

He told them that the volume was a great improvement in the sector, adding that electricity supply was one of the most discussed topics in Nigeria because it is fundamental to the country’s social-economic development.

He said, “Where we stand is that we are doing over 4,600mw of power on the grid and we can do better but then this is a big improvement from about 3,000mw. The other time we attained 4,000mw, but because of pipeline disruptions, we went down to 3,000mw, then to 2,000mw. But consistently in the past two months, we have been over 4,500mw, now we are reaching close to 4,700mw.

“We briefed him (President) on that and the effort we are making to improve on that figure.”

Igali said that distribution remained a challenge because it was where the consumers felt the impact of power supply most.

He, however, said the ministry was tracking a lot of distribution companies (DISCOs) to make sure that what was needed at the distribution level was achieved.

“They must improve on their network; they must improve on the availability of transformers and on the supply of meters because Nigerians are tired of estimated billing,” he said.

The permanent secretary said that the Nigerian Electricity Regulatory Commission (NERC) had sometimes fined the DISCOs to enable them to carry out their responsibilities to the customers as required.

He said the ministry was looking into the issue of estimated billing because of the concerns of consumers, adding that very soon NERC would come out with a position.

Igali said the ministry would also brief the Senate on how the process or the value chain of the power supply operates.

“The fact is that electricity supply is mostly in the hands of the private sector. This means that the private sector people must bring in copious investments into the sector.

“If they must bring investments, it also means that they must earn revenue.

“If power supply situation must improve, especially at the distribution level, they must provide transformers, they must provide switch gears, they must provide meters; all these are investments,” he said.

According to him, while a single phase meter costs about N18,000 and a three-phase costs about N35,000, the ministry did not expect the consumers to pay for them.

“The DISCOs are supposed to provide these meters and if you are looking at a town of about 100,000 people or 200,000 and more, not to talk of a city of one million or two million who do not have meters, that is a whole lot of money,” he said, adding that payment for power was necessary for the smooth operations of the sector.

He, however, observed that the nation had a very sad situation where Nigeria was one of the highest in electricity theft in the world.

“A lot of people don’t pay for electricity,” he said.

According to him, the few Nigerians who pay end up subsidising the millions of people who do not pay but still enjoy free electricity.

He also explained that those who were given high estimated billing also subsidised those given low estimated billing, adding that those were the issues in every post-privatisation exercise everywhere in the world.

Igali said he was happy that Nigerians had acknowledged the improvement in power supply and expressed the hope that the problems associated with the distribution of power would be addressed.

The permanent secretary said that Buhari gave the ministry a directive to work harder while acknowledging the improvement in supply.

He, however, said that the bane of power supply was vandalism, which was discussed extensively at the briefing.

“While we are sleeping in the night, people go to blow up the Escravos line, the Forcados line and the Trans National line, and that has been taking us up and down. Now, there is stability for some months,” Igali said.

On the review of the privatisation in the sector, the permanent secretary recalled that the President had said repeatedly that the exercise was being looked into to improve on what had been done.
*Ikechi Nzeako – Daily Independent

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