Nigeria’s power sector has consumed billions of dollars but the supply of electricity across the country is still appalling, Okechukwu Nnodim writes
Despite the humongous funds so far pumped into the Nigerian Electricity Supply Industry without commensurate power supply, more billions of dollars are on the way for the sector.
Similarly, darkness abounds in many Nigerian cities and villages in spite of the privatisation of the power sector in November 2013.
Since the sector was privatised, the highest quantum of power generated on the grid was 5,074.7 megawatts on February 2, 2016, while the highest maximum daily energy wheeled nationwide was 109,372MW on the same day.
Power generation, however, has been hovering around 3,500MW and 4,000MW due to various challenges confronting the sector.
According to industry stakeholders, financial interventions in the sector by both the Federal Government and international agencies over the years have not yielded the desired results no thanks to several challenges especially corruption and bad politics bedevilling the sector.
Amid this, the government targets to further invest an additional N1.65tn in the sector. The new investments include the Federal Government’s planned $3bn (about N918bn) fresh World Bank loan, the N600bn power sector intervention approved by President Muhammadu Buhari, and the N133.5bn total allocation for the Federal Ministry of Power in the 2020 appropriation bill.
Findings by our correspondent showed that over N3.98tn worth of investments had been made in the power sector by both the government and multilateral donor agencies so far.
As a result, stakeholders insist that the fresh investments the government is planning to make in the power sector call for scrutiny and transparency.
For instance, operators and experts under the aegis of the Nigerian Association of Energy Economics expressed concern over the low level of energy output in Nigeria despite the humongous investments in the country’s power and petroleum sectors.
NAEE is an affiliate of the International Association for Energy Economics, which has presence in over 70 countries across the globe.
Speaking on behalf of the association, its President, Yinka Omorogbe, said, “People in Nigeria don’t realise that practically every development issue can be traced to a lack of modern energy. You can’t get good teachers into village schools if these villages have no electricity or modern water systems driven by energy.
“You also can’t have basic health without energy, because medicines need to be kept at certain temperatures.”
On Sunday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, reportedly said the $3bn loan request for the expansion of the power transmission and distribution networks in the industry had been finally approved by the World Bank.
Monetary interventions in sector
In September this year, Vice-President Yemi Osinbajo revealed that despite the privatisation of the power sector, the financial intervention of government in the industry rose to N1.5tn within two years.
“The Federal Executive Council recently approved the third round of intervention funding for the (power) sector, with a total of about N1.5tn in the last two years.
“However, if the country is to achieve its aim of channelling funding to other critical sectors of the economy, it is pertinent that structural reforms be put in place to enable the power sector to fund itself sustainably,” he stated.
In August 2019, the Market Operator, Transmission Company of Nigeria, Edmond Eje, disclosed that power sector was going to get another intervention of N600bn from the Federal Government, which also confirmed what the position of the Osinbajo.
“The plan is at an advanced level and the fund has been signed by Mr. President. The President signed for the release of the intervention and it is an intervention of N600bn,” Eje said.
The Federal Government has been intervening in the power sector and the release of the N600bn would make it the third key intervention so far carried out by the government after it officially handed over the distribution and generation arms of the sector to private investors in November 2013.
On September 30, 2014, the Federal Government announced a loan of N213bn to the privatised power firms.
On March I, 2017, the Federal Executive Council also announced the provision of N701bn as Power Assurance Guarantee for the Nigeria Bulk Electricity Trading Company for two years to pay the generation firms.
When asked whether the latest N600bn was specifically for the distribution, generation or transmission company, Eje was not specific.
He said, “At this stage, I’ll tell you that it is for the market. If the money is injected into the Gencos, it is for the market; if it is injected into the Discos, it is for the market. It is generally for the shortfall in the payment of monthly invoices.”
In December 2018, the Managing Director, Transmission Company of Nigeria, Usman Mohammed, said investments by the Federal Government and multilateral agencies on electricity transmission infrastructure under Transmission Expansion Rehabilitation Programme had risen to $1.63bn ((about N498.8bn).
According to TCN, this led to a rise in Nigeria’s power transmission capacity from about 5,000MW three years ago to 8,100MW.
Explaining how much had been expended on projects captured in the TERP, Mohammed, said, “For the Transmission Expansion Rehabilitation Programme, I’ve told you that it is $1.578bn and we have actually have an increase of $55m. So if you add this, it will become $1.63bn. That’s how it is.”
In April last year, the pioneer and former Managing Director/Chief Executive Officer of the Niger Delta Power Holding Company, James Olotu, told our correspondent that the NDPHC invested about $8.4bn (about N2.57tn) in power generation, transmission and distribution projects.
When asked to speak on the status of the projects he managed before he left the NDPHC during an interview in Abuja, Olotu replied, “The entire investment of NDPHC was $8.4bn. The investments we had in generation out of that $8.4bn was $4.4bn.
“The investments we had in transmission network infrastructure development was about $2bn. Investment in distribution infrastructure was about $1.5bn. Others were for administration, taking care of compensation, salaries, rents, etc.”
The Federal Government incorporated the NDPHC Limited as a liability company to serve as the legal vehicle to hold assets of the National Integrated Power Project in August 2005.
The NIPP was conceived in 2004 as a fast-track government-funded initiative to stabilise Nigeria’s electricity supply system, while the private-sector-led structure of the Electric Power Sector Reform Act of 2005 took effect.
A summation of the above interventions and investments in the sector, which, of course, did not capture all the investments in the industry, showed that about N3.98tn had been pumped into the sector, despite the poor supply of electricity witnessed across the country.
Speaking on measures to help address the poor power situation in Nigeria, the TCN boss stated that one of the solutions was for power distribution companies to recapitalise.
Mohammed said, “We have always said it that there must be a commensurate investment in the distribution network. So we cannot have a stable grid unless we have an adequate investment on the distribution side.
“That is why we have been calling (as transmission company) for distribution to be recapitalised. They (distribution companies) need to have a commensurate investment on the network.
The Discos on their part, stated that they were trying to address the challenges in the sector, as they were set to invest N935bn in their networks.
It was gathered that a total of N935bn is to be invested in power distribution networks across the country by electricity distributors, in response to calls for Discos to recapitalise.
Data obtained from the Nigerian Electricity Regulatory Commission on the Performance Improvement Plans of the Discos showed that the power firms had mapped out over N900bn to be invested in their networks between 2019 and 2024.
Documents submitted to the NERC by eight Discos showed that the firms would expand their networks with at least N935bn.
Of the 11 power distribution companies in Nigeria, the eight Discos that have indicated interest to invest the N935bn in their networks are Abuja, Ikeja, Benin, Kaduna, Kano, Enugu, Ibadan and Eko.
In their different Performance Improvement Plans submitted to the NERC, the Discos revealed how they plan to upgrade their distribution networks between 2019 and 2024.
Also, the Lagos Chamber of Commerce and Industry charged the Federal Government to address the liquidity crisis and tariff issues in the power sector in order to enhance investment that would enable the country meet its target of generating 25,000 megawatts of electricity by 2025.
The Director-General, LCCI, Muda Yusuf, said, “We need to address the issues of tariff and liquidity in the electricity market to enhance the economics of investment in the power sector.”
Consumer group reacts
On his part, the Chairman, Nigeria Electricity Consumers Advocacy Network, Tomi Akingbogun, said Nigerians needed to ask questions about the billions of dollars so far invested in the power sector.
He said, “It is our responsibility to ask about what the huge amount of money supposedly spent in the sector was being used for. If we don’t ask, then we are at fault as citizens. It is time we hold these our leaders to account and make them take responsibility for their actions.”
Akingbogun also stated that Nigerians needed to know if the $3bn approved by the World Bank for the power sector would be enough to solve the challenges in the industry.
He said, “Will the $3bn dollars approved by the World Bank for the power sector be enough to solve the country’s electricity problems permanently? If you need 300 and you have three, will that be enough? It is not about the sum that’s been approved.
“Rather we need to first of all find out, even from the World Bank, the amount that we really need to solve our power problems to a very consider-
able extent. If they are giving us something that is small then we will continue to be as slaves to them financially.
“But if that is what we need to solve the problem permanently, then let it be put to good use. We should also focus on the usage of that fund to know how it is actually going to be expended. However, I’ll like to say that there’s no amount of money that is too much to solve any country’s problems.”
However, whether the government which is at the centre of everything will work to ensure that Nigerians get access to stable electricity amid these planned new investments is still uncertain.
But certainly, the next three and half years of President Buhari will show how committed his administration is to the provision of stable electricity to Nigerians.