17 April 2016, Abuja – At a two-day retreat of the National Economic Council, President Muhammadu Buhari noted that Nigeria’s privatised public power system had continued to fail despite the promises that followed its reformation. He consequently set a 10,000 megawatts (MW) target to be achieved in three years. Chineme Okafor in this report examines the President’s target
“Nigerians’ favourite talking point and butt of jokes is the power situation in our country. But, ladies and gentlemen, it is no longer a laughing matter. We must and by the grace of God we will put things right,” said President Muhammadu Buhari when he delivered a keynote address at the opening of the National Economic Council’s retreat recently.
In observing that Nigeria’s poor electricity supply system had remained a butt of jokes among Nigerians, Buhari at the event which held in the old Banquet Hall of the Presidential Villa in Abuja, promised to change the story in three years.
He subsequently disclosed that his government had resolved to pursue a new power generation and distribution target of 10,000 megawatts (MW) within the period. The president further explained that the target would adopt a gradual model and that within this year, an additional 2000MW would be added to the country’s current fluctuating generation profile.
“In the three years left for this administration, we have given ourselves the target of 10,000 megawatts distributable power. In 2016 alone, we intend to add 2,000 megawatts to the national grid,” he stated.
“In our determination to change, we must and will, Insha Allah, put a stop to power shortages,” Buhari added as he ascribed the sector’s current challenges to the classic dilemma of privatisation which sees public interest compete with profit motives.
According to him, “we are facing the classic dilemma of privatisation: public interest versus profit motive.” He, however, noted: “Having started, we must complete the process. But the National (Nigerian) Electricity Regulatory Commission (NERC), the regulatory authority, has a vital job to ensure consumers get value for money and overall public interest is safe-guarded.”
Clearly identifying what he thinks would help him achieve his 10,000MW target, the president said: “Government to fast-track completion of pipelines from gas points to power stations and provide more security to protect gas and oil pipelines.”
The president equally recognised that there would be roles reserved for other key stakeholders in the sector in his new target when he said: “Power companies should be encouraged to replace obsolete equipment and improve the quality of service and technicians.”
The Feasibility of the President’s Target
While promises of improvement in Nigeria’s electricity had in the past been made by the federal government without any real results from such, operators in the sector’s downstream end, the distribution companies (Discos), feel that Buhari’s latest target was reasonable.
They, however, said that certain conditions would have to be met before the president’s target could become real. The Discos under their operational umbrella, the Association of Nigeria’s Electricity Distributors (ANED), also warned that considering three years as long enough to meet the target would be the president’s greatest undoing, hence, the need for some good urgency in executing his plans.
Speaking through their representative, Mr. Sunday Oduntan, the Discos said that a quick completion of extant works and recovery of the idle capacities of power generation plants built under the National Integrated Power Projects (NIPPs) as well as other generation plants, but starved of gas to power their turbines, would be a big boost to the president’s target.
While stating that the Discos would be able to distribute the targeted 10,000MW, having upgraded and still upgrading their networks in some circumstances, Oduntan however warned that the transmission network which currently has about 7000MW wheeling capacity, would have to be subjected to pragmatic improvement works otherwise it would be practically incapable of transmitting the target capacity when they come up.
“We need a lot of money for investment, we also need to be aware of what it takes to get there. It is not cheap at all but it is attainable. That is exactly what I am trying to say,” said Oduntan.
He further explained: “It is very attainable, in fact we achieved 5075MW several weeks ago but in terms of capacity to do more we have some stranded asset all over the country which if we put them together can give us another 5000MW.”
Oduntan explained that fixing the chronic gas supply challenges to power stations, closing up extant issues that currently affect the commercial layers of the market, vis-à-vis opposition to cost reflective retail tariff; cutting down of commercial and technical loss incidences (revenue losses from debts owed Discos for power supplied); as well as, providing flawless access for operators to leverage on the N213 billion at 10 per cent interest rate, 10 years repayment timeline which the Central Bank of Nigeria (CBN) has provided for the sector, would also add immensely to Buhari’s target.
But Labour Thinks Otherwise
But electricity workers under the aegis of the Nigerian Union of Electricity Employees (NUEE) think that Buhari’s 10,000MW target over the next three years was unrealistic.
NUEE reportedly said that Buhari’s target was quite empty on the basis that it lacked any actionable components but promises.
Its General Secretary, Mr. Joe Ajaero, reportedly said recently at the third Triennial Conference of the union in Ibadan, the Oyo State capital that he wondered whether the president picked the 10000MW as a figure or it was based on verifiable evidences.
“I have not seen construction of power plants to the tune of 10,000MW, even if it is being built I have not seen the transmission network and half of the transformer are bad presently,” Ajaero said.
He also said: “I have once challenged the Minister for Information, Lai Mohammed, to a debate as the spokesperson of the government to address Nigerians on why we are not having power and how they aim to solve power the problem in the country.
“We need to know their policy base on power because Nigerians need to know how the government intends to resolve the problem.”
Ajaero also based the worker’s doubt of Buhari’s ability to achieve his targets on the unending pipeline and assets disruption, which the last government of President Goodluck Jonathan could not fully solve and which has again reared up in the Buhari regime.
According to him, “30 years ago till now we are still talking about vandals and no solutions to it. Who are those people breaking pipelines? And when they do, the government will award contract for it to be fixed again. Why can’t government identify who is breaking it and how much is being used to repair it again?
“Let government come out to tell us how much they are using to repair broken pipelines and who are the sponsors of pipeline vandalism? When these questions are answered then there will be solution to it.”
Other Miscellaneous Conditions
While it would be necessary for the government to address the sector’s challenges, it would also be necessary to highlight the fact that government may fail to achieve the 10,000MW target if it fails to address critical institutional challenges in the sector.
The government has since December 2015 snubbed the statutory roles and independence that the sector’s regulator, NERC, and thus refused to appoint commissioners into its board after the tenure of the last sets of commissioners expired in December 2015.
Three months after the tenure of the last NERC board headed by former chairman, Dr. Sam Amadi, ended, Buhari had yet to see the need for the privatised electricity market to have a properly constituted and recognised regulatory agency to oversee the affairs of the market.
This singular act, which also sees the president consistently sidestepping a Parliamentary Act which establishes the NERC and stipulates the constitution of a board, means that the uncertainties in the regulation of the market may scare investors who are desperately needed to achieve Buhari’s 10,000MW target.