The All Progressives Congress (APC), Nigeria’s ruling party, has delivered far less electricity to homes and businesses than it pledged seven years ago as supply continues to wobble.
The country’s beleaguered power sector is seen to be moving at a snail’s pace despite over N1.6 trillion interventions by President Muhammadu Buhari’s administration, which clocked seven this week.
For decades, the country has suffered from chronic shortages of power, and repeated promises to fix the problem have long been a staple of election campaigns.
Just like his predecessors, President Buhari won the 2015 presidential election, with a promise to boost power supply in the country.
In the 2015 APC manifesto seen by BusinessDay, he said, “The APC government shall vigorously pursue the expansion of electricity generation and distribution of up to 40,000 megawatts in four to eight years.”
“We have given ourselves the target of 10,000 megawatts of distributable power. In 2016 alone, we intend to add 2,000 megawatts to the national grid,” President Buhari said while addressing the National Economic Council retreat held at the State House, Abuja on March 21, 2016.
Total power generation in the country stood at 3,128.5MW as of 6am on Wednesday, with a generation capacity of 7,652.6MW and transmission wheeling capacity of 8,100MW, according to the Nigerian Electricity System Operator (NESO).
The NESO put the all-time peak generation ever attained in the country at 5,801.6MW,
The lingering power crisis in the country has forced more people to generate electricity in small units from off-grid sources, usually fossil fuel-powered generators.
At first glance, the Federal Government’s reforms to improve cash flow and market discipline in the power sector seem to bear tangible fruits.
Last March, Nigerian lawmakers voted overwhelmingly in support of a constitutional amendment bill aimed at allowing state governments to generate and transmit their own electricity.
To take advantage of this opportunity, Lagos State is planning to have an autonomous regulatory body while its Lagos Electricity Market plan is expected to be owned and operated substantially by the private sector with an independent system operator to manage new transmission.
Also, the nine-year tussle between Geometric Power and Interstate Electric that hindered Aba, the commercial hub of Eastern Nigeria, from enjoying a 24-hour power supply, was laid to rest this year as Geometric Power paid $26 million re-acquisition value of the Aba ring-fenced area.
Experts, however, wonder why power generated and made available on the national grid, which was around 2,946.15MW in 2015, currently hovers around 4,000-4,200MW on average despite billions of dollars of investment within the last seven years.
“It is absolutely unacceptable that in 2022 after trillions of dollars have been sunk into the power sector, we still can barely generate 3,500MW,” James Harry, coordinator of the Association of Electricity Customers Monitoring Network, said.
The Central Bank of Nigeria has intervened in the power sector to the tune of N1.6tn.
The CBN said last week that it released N15.71 billion to power sector players including generation companies and gas companies, under the Nigeria Bulk Electricity Trading Plc-Payment Assurance Facility, bringing the cumulative disbursement under the facility to N1.30 trillion.
It said the sum of N22.67 billion was also released to distribution companies (DisCos) for their operational expenditure and capital expenditure, under the Nigeria Electricity Market Stabilisation Facility (Phase 2), adding,
“Cumulative disbursement under the NEMSF-2 currently stands at N251.93 billion.”
“Additionally, under the National Mass Metering Programme, the bank has disbursed N0.19 billion to DisCos for the procurement of electricity meters, bringing the cumulative disbursement for the procurement and installation of 865,956 meters across the country to N47.82 billion.”
Interventions in energy/infrastructure are designed to improve investment and develop enabling infrastructure in the Nigeria electricity supply industry, the CBN said.
“Despite this level of intervention, the generating companies had estimated receivables of over N400 billion in 2020 alone. While the interventions have been central in ensuring the profitability of operators along the industry’s value chain, they remain insufficient and unsustainable,” noted Augusto & Co.
Pedro Omontuemhen, partner and energy, utilities and resources leader at PwC Nigeria, believes so much more is still required to meet Nigeria’s power needs despite the successes achieved within the last seven years.
“This is a good development, but we are still far away from the required capacity for Nigerians energy needs,” Omontuemhen said. “Between generation and transmission, Nigeria is losing a lot of power – 9,000MW – to all sorts of fixable problems.”
Nigeria, Africa’s biggest economy, is lagging behind some of its peers on the continent in terms of electricity.
Egypt, a country with a population of 104 million inhabitants, added a total of 28,229MW to its national grid between December 2015 and December 2018, resulting in a total installed capacity of 59,000MW.
Read also: Africa requires $35 billion annual investment to meet electricity need – Sylva
According to the United States Department of Commerce, International Trade Administration, this has been achieved through a fast-track project that worked on installing 3,636MW of electricity in eight months worth $2.7 billion.
Egypt also signed another project with Siemens in March 2015, which added 14,400MW in 2.5 years by building three mega combined power cycle stations.
South Africa, Africa’s second-biggest economy, has an electricity generation capacity of 58,000MW.
“By converting old simple cycle power plants to combined cycle, another 1,850MW were installed,” the US report said.
In Ghana, between 2000 and 2020, electricity generation capacity increased at a rate of 6.4 percent a year from 1,358MW to 4,695MW, according to data from the country’s energy agency.
“Nigeria needs to have a holistic review of policy in the power sector,” Ahmad Rufai Zakari, special adviser to the
President on Infrastructure, said at PwC’s 12th Annual Power Roundtable event a few weeks ago.
Nigeria has a grid generation installed capacity of 13,014.14MW, according to NESO data.
“Within this same seven to eight years period, backup power supply has doubled, growing exponentially to an estimate of about 40,000mw,” Eyo Ekpo, a former commissioner at the Nigerian Electricity Regulatory Commission (NERC), told BusinessDay.
The International Monetary Fund estimates that Nigeria’s economy loses about $29 billion a year because of electricity supply problems.
“The inadequacy of electricity supply is one of the biggest impediments to the competitiveness of the manufacturing sector in 2022,” Muda Yusuf, the immediate past director-general of the Lagos Chamber of Commerce and Industry, said.
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