28 March 2016, Sweetcrude, Abuja – Dramatic increases and collapses are not altogether strange in the Nigerian power sector, but nothing matches the number of system failures that have occurred in the sector over the past few months, throwing large swathes of the country into darkness every now and then. Reports emanating from the Nigerian System Operations, a department of the Transmission Company of Nigeria (TCN) have shown at least five such drastic system let-downs in power generation in the country in the past two months alone, an average of one system failure every couple of weeks.
The week before President Muhammadu Buhari took power in May 2015, power generation fell to a record low of 1,327 megawatts (MW) amid a national black out and biting fuel scarcity. Power generation in the country had hit an all-time high of 4,810.7MW on August 25 this year after hovering around 3,500MW for about a year, according to figures from the Presidential Task Force on Power but fell to 4,453.9MW as of September 16.
Findings by SweetcrudeReports showed that power generation had peaked at 4,655.2MW on September 9, but this was not sustained due to vandalism of electricity and gas infrastructure, as it fell to 4,453.9MW seven days later. In fact, the daily average energy produced by the power generation companies as of September 16 was 3,896.08MW/hour, while the daily average energy sent out was 3,808.86MW/H.
Peak generation capacity was 7,588MW while the forecasted peak demand for the country was put at 12,800MW.
The Federal Ministry of Power, the Nigerian Electricity Regulatory Commission (NERC) and some key agencies in the sector had attributed the brief rise in power generation to the non-interruption of oil and gas pipelines. The rise, however, was short-lived as it lasted for about three months, after which electricity generation commenced a sharp descent.
On March 1, 2016, power generation fell to a record nine-month low, landing at 2,800MW. However, the latest figures from the daily report of the of the Transmission Company of Nigeria (TCN), has shown that power fell to 1580.6MW last week.
Even as the drop in output from power generating plants in the country continues almost unabatedly, government officials have resorted to vapid, empty promises such as the recent pronouncement by President Buhari that his administration will generate 10,000 megawatts, MW before the expiration of its term in 2019.
Not surprisingly, the President’s declaration was greeted with lots of skepticism from various stakeholders, who argued that it was a mission impossible given the current state of the Nigerian power sector, which is characterized by weak and obsolete systems and poor investment.
TCN stated that the Federal Government’s target of 10,000MW was not feasible, stressing that former President Olusegun Obasanjo had also made the same promise in 2010 but never came to pass. It advised that to achieve the set target by 2019, 3,333MW must be generated yearly for the next three years.
In the meantime, industry watchers have warned that the modest gains recorded in the power sector over the past few years are being threatened by the activities of pipelines vandals, which have led to the fall in electricity generation by 356.8 megawatts within the last three weeks.
The country’s electricity transmission grid is under threat as a result of the vandalism of a tower in Delta State, which has led to a fall in power generation by 480 megawatts, the TCN has said.
TCN, however, observed that the challenges meeting this target are that the weak transmission network, which cannot wheel that amount of power, given that the much talked about transmission grid has not been constructed.
It stated that “The transmission system in Nigeria comprises 330 KV and 132 KV circuits and substations and the highest maximum daily energy wheeled nationwide was the one-off 109,372MWH, which was attained when generation output hit a record 5,074MW on February 2, 2016.
“Also, except new capacities come on stream, all the existing power plants in Nigeria cannot generate 10,000MW, while the 11 existing distribution companies, DISCOs, cannot accommodate the 10,000MW due to weak tools and equipment.”
Special Adviser to the President on Media and Publicity, Femi Adesina, said Nigerians are the ones sabotaging the efforts of the government. He noted that “On the issue of power, it seems Nigerians are their own problems. You can recall about four weeks ago, the power ministry came out to say that the megawatts we had was 5070, which is an all-time high for 16 years.
“A few days after, some people blew installations in Bayelsa; we lost about 1600 megawatts
immediately. After that, installation was blown in Delta and we lost another 1,000 megawatts. What would the government do in that kind of circumstance? If the people who should be provided power are the ones sabotaging installations, they can’t turn round to say the government is not providing power. Nigerians need to determine what they want.
Adesina added that “If South Africa has about 50,000 megawatts, it is because their own people are not sabotaging their installations, they are not going to blow up the lines. If Nigerians continue to blow up and sabotage, then they can’t come around to say that there is no power.”
It is an indisputable fact that Nigerian has one of the most problematic electricity sectors in the world, with an estimated installed electricity generation capacity of 8,644 MW, and available capacity of only approximately 3,718 MW, to cater for the needs of a population of over160 million. By comparison, South Africa, with a population of just 50 million, has an installed electricity generation capacity of over 52,000 MW.
On a per capita consumption basis, Nigeria is ranked a distant 178th with 106.21 KWh per head, – well behind Gabon (900.00); Ghana (283.65); Cameroon (176.01); and Kenya (124.68). The historic gap between the demand for electricity and the available capacity has led to the current widespread power shortage and inefficiency and, consequently, self-generation of power by both industrial and residential consumers.
The Manufacturers Association of Nigeria (MAN), and the National Association of Small Scale Industries (NASSI), have estimated that their members spend an average of about N2billion (about $12 million) per week on self-power generation. To this end, the Nigerian power sector presents immense opportunities for private investment in the electricity power sector. It is self-evident that the poor performance of the electricity power sector in Nigeria has been a significant barrier to private investment in the country, the overall development and economic growth.
The sector’s market structure like most economies of the developing world used to be dominated by the state-owned power entity – Power Holding Company of Nigeria (PHCN), formerly the National Electric Power Authority (NEPA) – in a monopolistic, vertically integrated business model. The dissatisfaction with the performance of PHCN, symptomized by its low capacity generation; high costs; inadequate distribution of electric power; inability to finance new or expanded infrastructure; and inadequate machinery for effective billing and collection of bills fuelled the debate on the theoretical and empirical justification for its involvement in Nigeria’s electricity power sector, and became the driving force behind liberalization.
Many analysts have argued, however, that since the much-touted privatisation in the sector, it has been a case of meet the new boss, same as the old boss – nothing has changed in the sector. This had led to threats by the regulatory agency, NERC, to revoke the licences of some power generation companies.
Although there has been noticeable improvement in electricity supply in the country in recent time, this however, cannot obscure the fact that the power generation and supply targets envisaged under the privatisation arrangement has not been met, four years after its introduction.
When the administration of former President Goodluck Jonathan succeeded in privatising the power sector with the purpose of significantly upping power generation by 2014 and beyond, it was received with cautious optimism in view of the successes of the privatised telecom sector. However, the privatisation process was to take off in the form of the unbundling of the poorly performing PHCN from which some electricity distribution companies (Discos) had emerged.
A key component of the unbundling exercise was the issuance of licenses to gencos that met the stipulated criteria. Under the arrangement supervised by NERC, the power generating companies were supposed to generate the power to be transmitted to the end users by the discos. According to former President Goodluck Jonathan’s Roadmap on Power, the initial generation target was 5,000MW, which was expected to rise to 14,300MW by December 2013. It was also believed that when these companies came fully on stream, the country stood a chance of generating 10,000MW—20,000MW between 2013 and 2015.
But five years after, the country is still labouring to meet the initial 5000MW target. This tells an obvious story: most of the power generating companies have not met our expectations.
President Muhammadu Buhari recently woke up to the realities of epileptic power supply in Nigeria, saying that the situation was no longer funny.
The President, who was speaking in a keynote address presented at the opening ceremony of a two-day summit of the National Economic Council, NEC, in Abuja, worried that should the situation persist, it would seriously affect the change agenda of the present administration.
He said his administration must do everything necessary to increase power generation and distribution from its present status of about 1,500 to 3,500 megawatts with additional 2000 before the end of the year as a way of halting the ripple effects on the economy.
But giving high hopes on the power sector, the president stated that before his government winds up in 2019, he would achieve a historic 10,000 megawatts of electricity. He said, “Nigerians’ favourite talking point and the 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. In the three years left for this administration, we have given ourselves the target of ten thousand megawatts distributable power. In 2016 alone, we intend to add two thousand megawatts to the national grid.”
President Buhari also expressed misgivings over the privatization of the power sector in the country, saying that the process was more profit oriented than a thing of public interest. He stated that the sector was yet to show the gains of the privatization Programme as the quality of service was still in a sorry state. But being an ongoing process, the president said that it must be completed.
“This sector has been privatized but has yet to show any improvement in the quality of service. Common public complaints are: constant power cuts destroying economic activity and affecting quality of life, high electricity bills despite power cuts, low supply of gas to power plants due to vandalization by terrorists, obsolete power distribution equipment such as transformers, Power fluctuations, which damaged manufacturing equipment and household appliances, Low voltage which cannot run industrial machinery.
“These are some of the problems, which defied successive governments. In our determination to change we must and will, Insha Allah put a stop to power shortages.”
The President remarked some key points to focus on including privatization, noting that, “We are facing the classic dilemma of privatization: public interest versus profit motive. Having started, we must complete the process. But National Electricity Regulatory Commission (NERC), the regulatory authority, has a vital job to ensure consumers get value for money and overall public interest is safeguarded.”
He noted that the government will fast-track completion of pipelines from gas points to power stations and provide more security to protect gas and oil pipelines. “Power companies should be encouraged to replace obsolete equipment and improve the quality of service and technicians.”
But, in continuation of a frustrating tradition from past governments, the Federal government has just announced a new power generation target of 25,000 megawatts by the year 2020. This, however, is despite the fact that power firms in the country are struggling to generate and sustain 4,000MW of electricity after the sector was privatised in November 2013.
Making the announcement when he spoke at the 5th induction ceremony of the National Power Training Institute of Nigeria’s (NAPTIN) Graduate Skills Development Programme in Abuja, the Minister of State for Power, Works and Housing, Mustapha Shehuri, insisited that the present administration was determined to transform the power sector in four years.
Shehuri, however, had some harsh words for bureaucrats in the Power ministry, remarking that that over the years, the selfish interest of workers in the Power ministry has been one of the reasons slowing the growth in electricity generation and supply across the country.
Buttressing comments made by the keynote speaker at the event, Dr. Abdullahi Aliyu, the minister stated that improvement in the power sector had been frustratingly slow, considering the fact that the first electricity generation firm in the country was established in Ijora, Lagos in 1896, with a generation capacity of 20MW.
He said, “As the past speaker said, the journey from 1896 to 2016, that is 120 years, has been very long, slow and frustrating. And I think Nigerians deserve better than this. I came to the ministry of power some four or five months back and I’m privileged to know the troubles.
“I understand that the ministry is the reason why Nigeria is not moving forward. It has been pulling back Nigeria from independence till date, and I believe this government is here to change this for the better. I assure the inductees that after four years of this government, it will hand over to Nigerians a power sector that is better than what is obtainable today.”
On the new power generation target, Shehuri said the feat could only be achieved though robust collaboration among stakeholders as well as improvements in infrastructural development and capacity building.
Aliyu said, “Let us ambitiously assume that the current 2016 total power generation capacity in Nigeria is 6,000MW. That simply implies that the average power growth rate in Nigeria in 120 years is as low as 50MW per year.
Meanwhile, a weekly energy watch of the NERC has said that an average of 2872MW of electricity was constrained in the system last week. The figure also suggests an increase from 1895MW which it recorded in the previous week.
According to industry experts, the development means that the country’s energy systems had the capacity to generate that much but was unable to either because of lack of gas to thermal generation plants or low water levels in the hydro dams. They also said that transmission challenges could have resulted to such.
The Nigerian Electricity Regulatory Commission watch also indicated that on the average, 3682MW of electricity was generated, transmitted and distributed to consumers across the 11 distribution networks of the country last week.
While the revocation of license may be an inevitable option to bring sanity to the privatisation process, NERC, as the regulator in tandem with the federal government, should address the problems militating against the attainment of the objectives of privatising the power sector and, if need be, chart a new direction altogether for the power sector.
Nigerians hope the President Muhammadu Buhari administration will bring fresh perspectives and impetus to ensure the rapid expansion of the power sector, as no meaningful progress can be made in its effort to diversify the economy unless new grounds are broken in the power sector. They believe that a new regime under a brand new ruling political party should be able to make a big difference from the previous administration which after 16 years of multi-billion dollar experiments could not produce much result. We are convinced that once we get it right, the world will rush to partner with us in developing our power sector because of the enormous market with its vast potentials for returns on investment.