Nigeria’s intractable power sector

Power transformers

Nigeria’s business mogul, Aliko Dangote, asked a critical question recently at the gathering of some of Nigeria’s critical stakeholders in Lagos. The gathering was at the instance of the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele. He had summoned some captains of industries and government officials, policy makers and opinion leaders to brainstorm on how to stimulate growth in the economy and create jobs in the critical sectors – all in bid to insulate the economy from global shocks.

At the meeting tagged, “CBN Going for Growth, a Consultative Roundtable with the CBN Governor”, Dangote raised one of the issues that have been responsible for the prostrate state of the nation’s economy. Without mincing words, Dangote told the CBN governor, other participants and every listener that economic growth is not possible so long as the power sector remains a riddle for Nigeria to solve. Voicing his frustration with the power sector, he asked, “We’ve been struggling for 18 years without adding 1,000 megawatts, why? “How do you have economic growth without power? He then delivered the verdict: “No power, no growth because without power, there cannot be growth.”

This is, indeed, the crux of the matter. These questions and home truth coming from Dangote at such a public gathering indicate the level of frustration of the business magnet over Nigeria’s inability to provide stable electricity for its citizens. He went further to tell his audience that Egypt increased its electricity by 10 gigawatts, which is equivalent to 10,000 megawatts, in 18 months. But Nigeria has been struggling for 18 years, spending huge sums of money, and everything ending up with more and more darkness covering the land. Dangote, Africa’s richest man, urged the federal government to do more to improve the power sector, saying “no business will thrive with business owners generating power themselves”.

Unfortunately, finding solution to Nigeria’s electricity problem appears to be a hard nut to crack for Nigeria’s policy makers and implementers. The country’s electricity problem is well known all over the world. Often one hears of one country or the other offering to help Nigeria solve her power problem. They pledge finance and technical know-how. Yet at the end of the day, the situation remains the same. The lesson is thus delivered that it is Nigeria that will solve her own problems. And the problem will be solved when the government and all Nigerians decide that enough is enough, and demonstrate unalloyed commitment, eschew corruption, and stop the sabotage of the sector.

Nigeria has borne the odium of a rich country that cannot provide electricity for its citizens is long enough. So also is the nightmare Nigerians have been going through with the power distribution and generating companies (DISCOS and GENCOS), which are no better than their predecessors, PHCN and NEPA.

We, therefore, call on the federal government to take a desperate and drastic action to pull the country out of this age-long darkness. As experts and critics have suggested, it’s time for government to admit the failure of the power privatization exercise. It is clear that the GENCOS and DISCOS do not have what it takes to deliver electricity to Nigerians. Instead of continuing to invest in power projects or relying on these electricity generating and distributing companies, something more drastic and proactive should be done. In this regard, the words of former Executive Director, Asset Management Corporation of Nigeria (AMCON), Mr. Kola Ayeye, is worth repeating here.

“We will be contracting to pay for power successfully delivered to the consumers rather than contracting for the execution of power projects. Execution of power projects has produced poor results after huge investments in excess of 16 billion dollars. The nation has invested massively in power projects with poor results, so we should change the model. Rather than contracting to execute power projects, let’s contract best-in-class players to deliver power. It is not our business how they generate, transmit or distribute the power. They are to deliver the power. They will only get paid for the power they deliver to the consumers. Such big players exist and the size of the Nigerian power market is sufficient to attract them.”

Undoubtedly, this is the model that will wipe the tears off the eyes of embattled, impoverished, and exploited Nigerians who have continued to pay these so-called electricity providers for services not rendered.

Gratifyingly, the federal government appears to be looking at this option as a recent statement by the Vice-President, Prof. Yemi Osinbajo shows. The Vice-President was reported to have said in Abuja during a breakfast meeting with the Lagos Business School that the federal government was committed to “a willing buyer, willing seller” situation in the power sector market. He also said that the FG had started discussing with stakeholders on ways to restructure the nation’s power sector, declaring that the same old ways where Electricity Distribution Companies (DISCOS) controlled territories that they cannot service will not be allowed to continue.

This new thinking by government is a welcome development. As recalled by the VP, this initiative has worked in some parts of the country. The federal government’s experiment with the “energizing economies projects” where private operators have provided stable power in markets such as Sabon Gari Market in Kano, the Ariaria Market in Aba, the Sura Market in Lagos and in Ondo is an eye opener. These experimental projects enabled private power suppliers to provide power to shop owners and businesses at an agreed cost-effective tariff.

We cannot agree more with the Vice-President that the current regulatory framework of the power sector in the country must take into consideration the effective model of power supply and must accommodate the present realities.
Indeed, desperate situations really require desperate measures. Nigeria cannot continue to do the same thing year in year out and expect a different result –not with the country losing N1.3bn daily despite efforts to address the challenges in the sector. Nigeria cannot continue to waste time and resources doing the same thing all over, while the situation continues to deteriorate.

As part of the desperate efforts to find solution to the power sector problem, government should heed the call of experts and well-meaning Nigerians to hands off the control of the sector. Up to this time, all the agencies that drive the power sector are controlled by the government. For instance, the Transmission Company of Nigeria (TCN), which is seen as the weakest link in the electricity network, is 100% owned and managed by the federal government. The TCN is the heart of the generating and distributing companies, and when it sneezes, these companies catch cold.

With the way things are arranged in the power sector, the FG technically owns the DISCOS and the GENCOS. Moreover, the FG owns 40% of these privatized companies. Hence, occasionally, one hears blames and accusations among the players, including the federal government. This has been the situation that has not delivered electricity to the people. There is, therefore, need for the government to adopt a new model in handling the power sector problem.

The administration of President Buhari, having been given another chance of a second term in office, cannot afford to tell Nigerians stories at the end of the day. The problem of the power sector must be solved no matter what it takes or what must be sacrificed. The government should come up with a comprehensive power policy that will address all the issues militating against delivering stable power in the country.

Nigerians cannot continue to live with explanations and promises of stable power supply as was the case in the first term of this administration. We are tired of hearing that this quantity of power has been generated, only to hear the next week that power generation has dropped –everything boiling down to more and more darkness.

We reiterate our call on the government to go for desperate measures to sanitize the situation and deliver electricity to the people. This desperate situation must include restructuring the power sector, reviewing the privatization exercise, and opening the sector to people who can generate and deliver electricity and get paid for their services.

We also make bold to assert that the role of the government in the sector should be limited to pointing the direction the private power operators should go, and determining the capacity and quantity of power that the nation needs, and not controlling them or getting involved in their operations covertly or overtly.

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