• Tuesday, November 28, 2023
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BusinessDay

Blackout reigns in Nigeria as reforms suffer setback

The worsening blackout in Nigeria following the collapse of the national grid twice this week has put the reform efforts of the Federal Government under the spotlight, with industry experts raising concerns over the state of the power sector.

Nigerians are facing persistent power outages, a situation that is affecting households and reducing the productivity of businesses, many of whom are struggling to pour capital into backup generators instead of investing in staff or equipment.

The sector was privatised in November 2013 but power generated and made available on the national grid, which was around 3,500MW and 3,834MW then, currently hovers at 4,000-4,500 MW on the average, eight years after.

Total power generation in the country stood at 3,051MW as of 6am on Thursday, according to data from the Nigeria Electricity System Operator.

In 2020, the World Bank announced a plan to invest $750 million in Nigeria’s power sector, to improve the reliability of electricity supply, achieve financial and fiscal sustainability, and ensure at least 4,500 megawatts-hour/hour of electricity is supplied to the distribution grid from 2022.

“The objective of this operation is to help turn around the power sector and set it on a fiscally sustainable path,” Shubham Chaudhuri, World Bank country director for Nigeria said on June 23, 2020.

BusinessDay gathered that only about $94.6 million out of the $750 intervention fund had been disbursed so far.

Between 2015 and 2018, Barack Obama’s Power Africa Initiative said it injected about $1 billion to revive Nigeria’s power sector.

Since 2013, the Nigerian government, through the Central Bank of Nigeria, has provided intervention funding for the power sector up to the tune of N1.6 trillion.

The CBN’s interventions in the power sector include Power and Aviation Intervention Fund (N300 billion) and the Nigerian Electricity Market Stabilisation Facility (N213 billion).

“Nigeria has some of the most brilliant ideas or templates on how to fix the power sector; the major problem is implementation,” Ayodele Oni, energy lawyer at Bloomfield Law Practice, told BusinessDay.

According to him, there are lots of deep-seated and multi-faceted problems facing the value chain of Nigeria’s electricity sector which money alone cannot solve.

Nigeria’s grid with a transmission wheeling capacity of 8,100MW cannot move more than 5,000MW without the entire system cranking up. This year alone, the grid has collapsed three times.

Between 2010 and 2019, Nigerian electricity consumers have had to contend with 206 power grid collapses, nine of which occurred in 2019, according to data from the system operator, a section of the Transmission Company of Nigeria.

A breakdown of the data showed that Nigeria witnessed 146 total collapses of the national grid and 73 partial collapses between the periods.

“It’s a huge challenge and we have to rethink and reimagine how to deliver electricity reliability to Nigeria,” Eyo Ekpo Eyo, former commissioner at the Nigerian Electricity Regulatory Commission (NERC), said.

Nigeria is now banking on the support of multilateral organisations like the World Bank’s $750 million credit and a deal with German electricity company Siemens to increase generation and raise distribution capacity three-fold to 11,000MW by 2023 at the cost of over $3 billion.

“After years of neglect, Nigeria needs to stop expecting miracles. A lot of the current investment will take time before we noticed any improvement in the national grid,” Oni said.

In its newly released report, Wood Mackenzie, an intelligence provider that empowers decision-makers with unique insights, said, “The average Nigerian consumes less than a third of the electricity used every year by a moderately efficient American refrigerator.”

According to the World Bank, 85 million Nigerians, representing 43 percent of the country’s population, don’t have access to grid electricity, making Nigeria the country with the largest energy access deficit in the world.

“There are a lot of gaps on the grid, especially the distribution arm which the operators seem to be ignoring,” Oni said.

The World Bank had on February 5 2021 approved another $500 million support fund to help boost electricity access by improving the performance of the electricity distribution companies through a large-scale metering programme.

Responding to questions from BusinessDay concerning the scheme, Chaudhuri said, “We can’t begin disbursement or even move with it until the National Assembly approves it”.

“We have to keep running at full speed even though we see a wall, in this case, the wall we see is the National Assembly approval,” Chaudhuri said on November 30.

On Wednesday, efforts to get the National Assembly’s response to this statement proved abortive as the Senate spokesperson, Basiru Ajibola, and his House of Representatives counterpart, Benjamin Kalu, did not pick their calls or respond to text messages sent to their mobile numbers.

The chairman, House Committee on Power, Aliyu Magaji Dau was also not available to respond to questions from BusinessDay about the discussion.

NERC, on Wednesday, confirmed the federal government’s removal of electricity subsidies, adding that the commission will review tariff rates every six months.

Sanusi Garba, NERC chairman, said electricity subsidy had been reduced over the last four to five years due to its unsustainable nature in terms of investor return on investment.

EXPLAINER: Why does the national power grid collapse frequently?

Nigerians are experiencing escalating power outages after the national electricity grid suffered two major failures on Monday and Tuesday, cutting off power supply to homes in the midst of scorching weather and a surge in fuel and diesel prices.

This, in turn, is having a significant impact on businesses as it threatens their survival and has raised further concerns about the country’s power sector’s trajectory.

Read also: Rising energy cost: What is your experience as a tenant living in serviced apartment?

Nigeria has the capacity to generate 13,000 megawatts of power, but its aging grid provides only about 5,000MW of power to its 200 million citizens — roughly the same as the city of Edinburgh provides for its 500,000 residents.

The grid, managed by the government-owned Transmission Company of Nigeria (TCN), has continued to suffer system collapse over the years amid a lack of spinning reserve that is meant to forestall such occurrences.

Power grid

A power grid is a network of electrical transmission lines that connects several generating stations to loads spread across a large area.

Generator stations, transmission lines and towers, and individual consumer distribution lines comprise the power grid.

It is intended to operate within certain limits, known as stability limits, in accordance with voltage, current, and frequency.

As a result, whenever these limits are outside of the stability range, the grid’s operation becomes unstable and may collapse.

Consequences of national grid collapse

According to the Nigerian Electricity Regulatory Commission (NERC), the grid collapse is divided into two basically; which include the total grid collapse and the partial grid collapse.

The total system collapse according to NERC means a total blackout nationwide while the partial system collapse is a failure of the section of the grid.

The end product of both system failures is that it leads to erratic power supply. NERC says the power grid will remain vulnerable without adequate spinning reserves.

What is a spinning reserve?

A spinning reserve is the generation capacity that is online but unloaded and that can respond within 10 minutes to compensate for generation or transmission outages.

Power stations that supply the grid ought to have a spinning reserve, when not available, collapse becomes certain. The grid also fails when there’s also too much generation that it is incapable of wheeling it across the country.

Frequent fluctuations and distortions are other technical issues that affect the integrity of the grid.

NERC says that adequate technology and infrastructural investment including smart grids could make a difference.

According to TCN data, the national grid has collapsed 108 times since the power sector was privatised.

Nigeria experienced 146 total national grid collapses and 73 partial collapses between the periods, since 2010.