A recent online survey by BusinessDay has revealed that 79 percent of Nigerian households and businesses get less than 10 hours of electricity supply daily, with the worst-hit regions being the North-East and South-East (93 percent each), and South-South (81 percent).
They are followed by the North-Central (78 percent), South-West (77 percent), and the North-West (66 percent) geopolitical zones.
The survey was conducted about the time Kano, Benin, Ibadan, Port Harcourt and Kaduna distribution companies have their assets taken over by Fidelity Bank and Afreximbank in conjunction with the Bureau of Public Enterprises (BPE) following their inability to repay the loans they obtained to acquire these assets during the 2013 privatisation exercise.
As of December 2021, the Nigerian power sector had received approximately N819 billion as support from the Central Bank of Nigeria. In spite of this, the national grid collapsed six times in the first half of 2022.
According to Financial Derivatives Company (FDC), not less than $100 billion worth of investments will be needed to set the sector on growth trajectory, while the Economic Associates believes Nigeria will have to adopt the successful NLNG model to rejig its power sector.
“The estimated amount needed is about $100 billion over the next 20 years. The government also needs to hasten its steps to close the metering gaps as about 50% of the total population is still on estimated billing. The faster and efficiently these take place, the more the increase in investor appetite towards the sector,” FDC said in a note in March 2022.
The company further stressed that Nigeria must complete the power sector reforms as investors were willing to actively participate in the sector through partnerships, joint ventures, training of personnel and building of transmission and distribution infrastructure.
An earlier industry analysis done by BusinessDay showed that total energy supplied by all the 11 distribution companies (DisCos) in the country rose by just 5.5 percent from 1,950.6 GwH in 2015 to 2,058.3 GwH in 2020. The DisCos cumulatively realised N526.77 billion as revenue in 2020 as against N278.89 billion in 2015 due to tariff hike in the industry.
Ayo Teriba, CEO of Economic Associates, said: “Banks are taking the DisCos over because they borrowed against future income to fund acquisition of 60 percent stake in the DisCos and are not able to honour the debt service obligations partly because the expected incomes are not materialising. Bank debt is not FDI.
“FGN bonds are not FDI. Eurobonds are not FDI. It would have been better to sell the 60 percent stake to foreign investors rather than to those who need to borrow from banks to acquire the stakes. We sold 51 percent stake in NLNG to foreign investors in 1995. Banks have not taken NLNG over. You cannot fund long term investments with bank loans or bonds. You need equity. FDI is equity.”
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The survey finding showed that only 13 percent of the respondents get electricity supply between 10 to 15 hours daily, while just 8.1 percent have power supply more than 15 hours daily.
The online survey received 426 responses and was conducted between June 28 and July 6, 2022. It sought to gauge the impact of the rising cost of living on Nigerian households and businesses and how many hours of electricity supply they get daily.
Other focus areas of the survey included the food items they buy less now due to higher costs, the food items they have stopped buying outright, the percentage of them that have received a salary raise in the last one year, and the geopolitical zones they currently reside in.
Seventy-nine percent (79 percent) of the respondents are males while 21 percent are females. Also, 48.1 percent of them live in the South-West, 13.5 percent live in the South-South, 7.1 percent reside in the South-East, 6.9 percent live in the North-West, 20.9 percent in the North-Central, and 3.6 percent in the North-East.
But 17.4 percent of the individual respondents said their salaries have increased in the last one year while 82.6 percent have not received a raise in annual remuneration. 73.5 percent of the businesses that participated in the online survey said their revenues have not increased in the last one year. However, 26.5 percent responded positively as they claimed their revenues have witnessed an increase.
Findings from the survey showed that 72.7 percent of businesses said they do not owe workers, while 27.3 percent said they are not able to pay their workers regularly.
Respondents listed luxury and food items such as canned food, beverages, furniture, satellite cable subscriptions, and other imported products as what they have reduced expenditure on as cost of living rises consistently.
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